Today, Nexu, a Mexican fintech in the auto loans space, announced the close of a $50 million Series A round of funding. This brings the startup’s total funding to $53 million. The round includes a mix of debt and equity financing, though Nexu would not specify the breakdown.
Nexu, a Y Combinator-backed company, allows most Mexicans to get a loan on the spot when buying or leasing a car, therefore also helping sales people to close more deals and earn more commissions.
Normally, buying or leasing a car in Mexico isn’t an easy and quick transaction. It’s paper-based and can often take weeks because getting financing has traditionally been a lengthy and complicated process. And yet most people still don’t get approved. In fact, only 30% do. “This leaves 70% without an option and they are good customers,” said Fernando Gómez, co-founder and co-CEO of Nexu.
The few who do get approved are usually the wealthy.
“You walk into a dealership and just the elite get approved – you have to bring all this paperwork and it takes weeks to get approved,” said Abdon Nacif, co-founder and co-CEO of Nexu. “It’s not like in the U.S. where you walk in and walk out with a car,” he added.
Nexu has been able to double the number of people approved for a loan to 60%, and they said there’s still room for improvement. For the underwriting process, the company, which functions as a lender, asks potential customers to fill-in eight fields on the company’s app, and with that information alone they are able to underwrite a customer. Their “trick” Gómez said, is that they “access several databases that many times are simply not used.”
For dealerships, the service is absolutely free, and by originating more loans, the dealership can close more sales, so it’s a win-win situation for them.
The company, which has 120 employees, reported that it’s bringing in $1 million in MRR (monthly recurring revenue) and that it services 70 dealerships. It also said it has made loans to more than 2,000 people so far.
Nexu plans to use the money from this round to expand across Mexico, offer more products on the platform, and make more precise and automated risk assessments.
Firms that invested in the round include Altos Ventures, Wollef Ventures, Squareone Capital, Architect Capital, Clocktower, Tresalia Capital, FJ Labs, Gilgamesh Ventures, and CAPEM (Grupo Capital Empresarial).
Nacif and Gómez met at the Wharton School at the University of Pennsylvania while they were there earning their MBA’s. Together, they identified this gap in the market in their native Mexico, but needed to start collecting data before they could start underwriting anyone. In 2015, they launched an online car broker, and with the data generated from that business, in 2018 they were able to launch Nexu.
“We identified this opportunity in the auto industry and that many people were being left out from something that can change their life,” said Nacif.
But Nexu isn’t the only Mexican company that identified the problem and pounced on a solution. Earlier this month, Mercado Libre Mexico announced that they too would be providing on-the-spot financing for cars. The Mexican arm of the Latin American e-commerce giant partnered with BBVA - Mexico’s largest financial institution - to provide credit to auto buyers. The news came just months after it was reported that Meli took $375 million from Citi to expand its credit offerings in Brazil and Mexico.
Today, Nexu, a Mexican fintech in the auto loans space, announced the close of a $50 million Series A round of funding. This brings the startup’s total funding to $53 million. The round includes a mix of debt and equity financing, though Nexu would not specify the breakdown.
Nexu, a Y Combinator-backed company, allows most Mexicans to get a loan on the spot when buying or leasing a car, therefore also helping sales people to close more deals and earn more commissions.
Normally, buying or leasing a car in Mexico isn’t an easy and quick transaction. It’s paper-based and can often take weeks because getting financing has traditionally been a lengthy and complicated process. And yet most people still don’t get approved. In fact, only 30% do. “This leaves 70% without an option and they are good customers,” said Fernando Gómez, co-founder and co-CEO of Nexu.
The few who do get approved are usually the wealthy.
“You walk into a dealership and just the elite get approved – you have to bring all this paperwork and it takes weeks to get approved,” said Abdon Nacif, co-founder and co-CEO of Nexu. “It’s not like in the U.S. where you walk in and walk out with a car,” he added.
Nexu has been able to double the number of people approved for a loan to 60%, and they said there’s still room for improvement. For the underwriting process, the company, which functions as a lender, asks potential customers to fill-in eight fields on the company’s app, and with that information alone they are able to underwrite a customer. Their “trick” Gómez said, is that they “access several databases that many times are simply not used.”
For dealerships, the service is absolutely free, and by originating more loans, the dealership can close more sales, so it’s a win-win situation for them.
The company, which has 120 employees, reported that it’s bringing in $1 million in MRR (monthly recurring revenue) and that it services 70 dealerships. It also said it has made loans to more than 2,000 people so far.
Nexu plans to use the money from this round to expand across Mexico, offer more products on the platform, and make more precise and automated risk assessments.
Firms that invested in the round include Altos Ventures, Wollef Ventures, Squareone Capital, Architect Capital, Clocktower, Tresalia Capital, FJ Labs, Gilgamesh Ventures, and CAPEM (Grupo Capital Empresarial).
Nacif and Gómez met at the Wharton School at the University of Pennsylvania while they were there earning their MBA’s. Together, they identified this gap in the market in their native Mexico, but needed to start collecting data before they could start underwriting anyone. In 2015, they launched an online car broker, and with the data generated from that business, in 2018 they were able to launch Nexu.
“We identified this opportunity in the auto industry and that many people were being left out from something that can change their life,” said Nacif.
But Nexu isn’t the only Mexican company that identified the problem and pounced on a solution. Earlier this month, Mercado Libre Mexico announced that they too would be providing on-the-spot financing for cars. The Mexican arm of the Latin American e-commerce giant partnered with BBVA - Mexico’s largest financial institution - to provide credit to auto buyers. The news came just months after it was reported that Meli took $375 million from Citi to expand its credit offerings in Brazil and Mexico.