This post is also available in: Español (Spanish)
Contxto – Mexican fintech Resuelve Tu Deuda has raised a round worth $453 million pesos (approximately US$24 million) consisting of both equity and financing in order to continue its expansion within and without Latin America.
The round was led by Alloy Merchant Finance, along with rising Latin American venture capital-darling, DILA Capital.
The debt repair company has been pursuing an aggressive expansion strategy for a little while. The current investment is therefore going specifically to consolidate and reinforce their current gains in Latin America and Europe—aka, Mexico, Colombia, Argentina, and Spain.
But don’t think for a second that they will be forgoing their expansion strategy even in the medium term. In fact, Juan Pablo Zorrilla and Javier Velasquez—cofounders of Resuelve Tu Deuda—have pointed out that as soon as the consolidation is completed they will seek another round to continue to grow beyond their current efforts in Brazil and Italy.
In a press release they stated that, “depending on whether we find even a fraction of the market depth that we have estimated, we will likely not even have enough with the funds we currently have. Therefore, we’ll probably have to raise a second round in order to carry out these exploratory efforts and gain a foothold in Brazil and Italy.”
First come, first served
Debt is a perennial problem for humanity. However, society has moved on from the type of debt peonage that historically plagued countries all across Latin America.
Now, technological solutions are giving many indebted people drowning in high-interest rates, a second chance.
Indeed, Resuelve tu Deuda, was one of the very first fintech companies to emerge in Mexico. Their purpose, as of 2009, is to “repair” debt. In other words, to restructure and absorb people’s individual debts in order to substantially lower their interest rates.
The startup claims it can reduce the final amount paid by debtors by 70 percent from their original fees. That is not unfathomable since predatory loan sharks abound in a credit-poor country like Mexico, where most banks would not dream of giving a loan to the vast majority of the population.
Some help from an old friend
Attentive readers of Contxto will have noticed that all throughout the beginning of the year, venture capitalists (VCs) across the region have been on a roll. None more so than DILA Capital, the Mexican investment fund that led Resuelve tu Deudaa’s round. Of the total, $453 million pesos, DILA contributed $93 million pesos in equity, and has been giving out money here, there, and everywhere for growth-hungry startups.
Meanwhile, Alloy Merchant Finance contributed with $360 million pesos in financing.
So, this massive investment flurry gets one wondering: What ever happened to that oft mentioned, ominous global recession that everyone keeps talking about? It seems nowhere to be seen. But, then again, Resuelve tu Deuda’s press release clarifies that they are a special case:
“Our operations definitely run on a counter-cyclical effect, due to the fact that, if the economy hits any sort of recession, then people start being unable to pay back their loans.”
But don’t despair, because they also found that “this growth, however, has been particularly fast-paced.” So, that either means that there’s nothing to worry about or that there is an unexpectedly bad depression looming in the undertow.
Let’s keep positive, but attentive. Always remember: hope for the best, but plan for the worst. And it doesn’t work out, I guess you can always restructure your debt.