Many of the start-ups that raise capital in Mexico are focused on economic inclusion and aim to compare the conditions in a country that is largely unbanked and has a growing middle class.
Such a company, minu, a Mexico City-based, pay-on-demand startup, announced on Wednesday that it has raised $ 14 million in a Series A funding round led by FinTech Collective.
New investors VEF, XYZ Ventures and FJ Labs as well as DocuSign founder Tom Gonser and Gusto CFO Mike Dinsdale also participated in the financing. Existing supporters QED, Next Billion Ventures and Village Global are also putting more money into the company.
The financing – which included $ 2.5 million in debt from Banco Sabadell Mexico – gives minus total collected since the start in 2019 to a total of $ 20 million.
Co-founders Nima Pourshasb, Rafa Niell and Paolo Rizzi were driven to expand a wage demand in Mexico.
“We truly believe that the lack of economic health is one of the main drivers of the potential and productivity of Mexican society,” Pourshasb said.
Minu strives to close the employees’ liquidity gap between paychecks in an attempt to help people see reduced financial stress and avoid expensive loans. The company offers 24 × 7 instant access to employees’ salaries for a fixed withdrawal fee of $ 2.
Today, minu has over 100 large corporate customers including TotalPlay, Telefonica, Scotiabank, OfficeMax, Rappi, Adecco, Manpower, Cap Gemini and customers in the public sector such as the Electoral Institute in the state of Mexico. It saw its transaction volume and revenue grow 18 times in 2020, albeit from a small base. The company refused to disclose figures for hard revenue.
Minu works on the condition that the liquidity gap is deep in Mexican society. An estimated 70% of workers live from paycheck to paycheck with average salaries of $ 550 / month, noted Pourshasb. And only 37% of Mexicans over the age of 15 have a bank account, according to the latest statistics from the World Bank.
“Some people get continuous loans – at very high interest rates – to cover recurring expenses such as food and transportation,” Pourshasb said.
Minus first product offers instant 24-7 access to earned salaries.
“This is money that has already been earned,” Pourshasb said. “Our users have an app to see how much is available and if they need the money, they can receive it immediately.”
The company’s distribution model is B2B so it works with large companies to offer access to salaries as a benefit to employees. Companies are attracted to that model, Pourshasb explained, because they do not have to pay for it or change their payroll process.
“We integrate with the salaries so that the process is automated and there is no extra work for them,” he added. “It does not affect cash flows either. These are funds in advance, so if someone withdraws money, they are deducted from their salary. ”
Some employers subsidize the cost of the transaction fee for employees.
Looking ahead, minu says they will use their new capital to increase the number of employees to 60 and expand their offering to include financial education, savings, smart expenses and insurance products. The company also plans to expand outside of Mexico.
Carlos Alonso Torras, who leads Latin America investing in New York-based FinTech Collective, believes minu leverages “a strong combination of an exceptionally founding team and promising macro trends.”
“We see the company’s current product as the basis for a platform that will offer a range of essential financial products to a very late demographic,” he wrote via email. “Minu is already creating a moat towards competitors through deep integrations, high customer satisfaction and a broader financial well-being range. As the early driving force in a market whose characteristics promote the success of pay as needed, the immediate growth potential is remarkable, and Minu is uniquely positioned to excel. ”
The investment marks the company’s fifth place in Mexico. Overall, FinTech Collective says it seeks and supports entrepreneurs “who are reworking how money flows through the world.”
“Because of COVID, we see a world plagued by a pandemic where hundreds of millions of people are facing greater financial instability, and we believe that fintech has an important role to play in accelerating the emergence of a class of expenditure that is not equipped with traditional financial systems. . “Torras added.
Fintechs in Mexico has been busy. Last week, Stori rose a Series B of $ 32.5 million round with the goal of “becoming Mexico’s leading credit card issuer for the rising middle class.”
Also in February, Flink collected $ 12 million in a Series A led by Silicon Valley-based venture capital firm Accel.