Today, Miami-based Buy Now, Pay Later fintech Keo World announced a seven-year debt facility of up to $500 million from British alternative asset management firm Hayfin Capital Management LLP. The startup, which focuses on the B2B market, plans to use this investment to expand its services in Mexico.
Since it was established in 2020, Keo World has grown to serve 12,000 businesses in six countries. Its Workeo product issues virtual American Express cards to small- and medium-sized businesses (SMBs). If these SMBs successfully make it through a digital approval process, they are then given a credit line.
“We are delighted to have this funding arrangement which will enable us to grow the reach of our B2B supply financing program to businesses across Mexico,” Keo World’s founder and CEO, Paolo Fidanza, said in a statement.
It is notoriously difficult for SMBs to gain access to capital. The good news for these businesses is that there is an emerging industry of startups working to solve these problems.
“In a market where less than 12% of total traditional credit is extended to SMBs, our Workeo product allows business buyers to access key inventory on credit, and suppliers to increase their recurring sales,” Fidanza continued. “Our product enhances working capital management via an all-digital frictionless and low-cost inventory financing platform, thanks to the American Express network.”
Mario Luna, Vice President Global Network Partnership Latino América at American Express, emphasized the important role SMEs play in Mexico’s B2B payment ecosystem. “This agreement enables further product development and expands our volume so we can continue to help these businesses grow,” Luna commented in a statement.
It is undeniable that the Buy Now, Pay Later (BNPL) market is large – and growing. Europe’s biggest fintech is Klarna, which now sits at a $46 billion valuation. PayPal recently acquired Paidy for $2.7 billion, while Square investors approved a $29 billion buyout of Afterpay.
Why the sudden interest? In short, the pandemic pushed consumers to shop online, and the habits stuck. Simultaneously, Millennial and Gen Z consumers, who are more likely to shop online in the first place, have more spending power today than ever before. 2.1% of global eCommerce transactions in 2020 – almost $100 billion – came through BNPL. That’s a pretty penny if you consider that BNPL companies typically charge merchants anywhere from 2% to 8% of the purchase amount to give shoppers the privilege of putting off payments.
Another revenue stream for some BNPL companies is late fees from customers. These fees are a reason why British consumer advocacy group Which? has called for increased regulations on the BNPL industry. According to Which?, about a quarter of consumers end up spending more than they had planned because of BNPL’s ease of use. That said, the BNPL industry is here to stay. And with Latin America’s rapidly-expanding middle class and vibrant fintech scene, Keo World’s bet on the region may just pay off.
READ MORE ON REFRESH MIAMI:
- The sky’s the limit for construction companies using Flexbase’s new credit card
- Challenger bank Fortú raises $5M, lands in Miami with sights set on Hispanic market
- Swedish founders target Miami to grow immigrant-focused banking startup MAJORITY
- Superlogic lands $7.6M strategic round to pioneer the future of loyalty points - April 19, 2024
- AI, climatetech and healthtech reign supreme on Day 1 of eMerge Americas’ 10th anniversary - April 18, 2024
- Brought together by tech, kept together by culture: Miami’s protagonistic role in LatAm’s startup story - April 15, 2024