Reliable transport is at the top of every handyman’s list, but in Latin America it is not always easy to secure.
Chile-based Migrante is working to change that. Initially started in Venezuela, now with $30 million in Series A financing and $80 million in a debt facility, it is moving to both Colombia and Mexico.
In 2018, Ignacio Canals, Diego Fleischmann and Benjamin Izikson came up with the idea for the e-commerce and credit company to supply durable goods, such as cars, motorcycles and mobile phones, to handymen in the Andean region.
They saw the lack of financial access of Venezuelans who left their country for others without financial aid. Initially, Canals and Fleischmann started Migrante MVP to address this issue and support them in their hiring process.
This is the second company for Canals, who previously founded Lemontech, which was sold to KKR in 2019. Fleischmann is a serial entrepreneur who founded AVLA Insurance and also sold it to DEG in 2019.
“We saw a huge opportunity to support immigrants,” Canals told TechCrunch. “We both believe in the value of immigrants and how financial access empowers them to seize opportunities.”
The company decided to develop secured loans for products that help borrowers improve their income – such as motorcycles, cars and trucks – and unlike their competitors who supply used vehicles, Canals offers Migrante offers new vehicles.
The team built their own online marketplace with built-in financial tools, a strategy Canals said was so they could control the entire customer journey.
Migrants aren’t the only ones working to narrow the financial gap people have when making major purchases. Other startups, such as Graviti in Mexico City, also offer financial instruments — in Graviti’s case, buy now, pay later — so people can buy home appliances if they don’t have a lot of upfront capital.
Fleischmann explained that Migrante’s loan model further differentiates itself from competitors in that it uses information about work history and income to determine what kind of vehicle they need and whether they are able to repay the loan.
“We work in a space where the processes are broken,” Fleischmann added. “We sell expensive products that most people can’t buy without calling the bank, which is a very frictional process.”
Buying a vehicle is often out of reach for people, and Migrante’s loan model and vehicle connections allow the company to offer an average APR of 26% compared to other car dealerships in Chile, where it is often more than 30%
Despite the social unrest in Chile at the end of 2019 and then the global pandemic in 2020 and 2021, Migrants saw some early traction as it began to borrow money, namely a market that grew from zero to $30 million in gross trade value year on year, a turnover of more than 700 units per month and a default rate of less than 1.5%. In addition, the company closed 2021 with 15,000 active customers and annual deferred revenue of $25 million.
As a result, they decided to step up Migrante in other communities with few banks, including Peru. There, Canals said the company is growing 30% month over month and selling more than 200 units per month on average.
The company’s Series A was led by Kayyak Ventures and included individual investors such as Sergio Furio of Creditas, Eduardo della Magiora of Betterfly and Huey Lin of Affirm.
As mentioned, the latest financing will enable Migrante to launch and offer new products in Colombia and Mexico, including car rental products and electric vehicle financing products.
The company is also expanding its workforce. Eighteen months ago, Migrante was a five-man operation; it now has 250 employees. It completed its leadership team with new hires, including Francisco Eterovic, former CEO of Creditú; Alejandra Duran, former CFO of Gelato; and Ignacio Gajardo, former CTO of Chilean digital wallet MACH.
Cristóbal Silva Lombardi, general partner at Kayyak Ventures, said he looked at several fintech companies in the region and thought Migrante’s model was unique in that it started in a specific segment and owns customer lead rather than financing. someone else. Kayyak invested in Migrante’s previous rounds, including pre-seed and seed rounds totaling $4 million.
“They can provide financing at the point of sale,” Silva Lombardi added. “In addition, these two guys have a strong track record in managing different cycles. In Chile, in 2019 we had a big macro shock with social unrest and then we had COVID, but their portfolio has been doing extremely well and their track record has helped them grow in an asset-light fashion. They started in Chile, a competitive market, and are now growing in Peru and in Colombia and other parts of the region. There’s a huge market ripe for disruption and they’re relying on it to penetrate into it.”
This post Migrant turns to car leasing gas for handymen in Latin America – TechCrunch was original published at “https://techcrunch.com/2022/03/29/migrante-steps-on-the-gas-of-vehicle-leasing-startup-for-gig-workers-in-latin-america/”
