Having reliable transportation is at the top of any gig worker’s list, but in Latin America, that’s not always easy to secure.
Chile-based Migrante is working to change that. Initially starting in Venezuela, now with $30 million in Series A funding and $80 million in a debt facility, it is moving into both Colombia and Mexico.
In 2018, Ignacio Canals, Diego Fleischmann and Benjamin Izikson got the idea for the e-commerce and lending company to provide durable goods, like cars, motorbikes and mobile phones, for gig workers in the Andes region.
They saw the lack of financial access by Venezuelans leaving their country for others with no financial aid. Initially, Canals and Fleischmann started Migrante MVP to address this issue and give them support as they joined the workforce.
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 sold it to DEG, also in 2019.
“We saw a huge opportunity to support immigrants,” Canals told TC. “We both believe in the value of immigrants and how financial access empowers them to power opportunities.”
The company decided to develop secured loans for products that enable borrowers to improve their income — like motorcycles, cars and trucks — and unlike their competitors providing used vehicles, Canals said Migrante offers new vehicles.
The team built their own online marketplace with embedded financial tools, a strategy Canals said was so they could control the entire customer journey.
Migrante is not alone in working to reduce the financial gap people have in making large purchases. Other startups, like Graviti in Mexico City, are also providing financial tools — in Graviti’s case buy now, pay later — so that people can purchase home appliances if they don’t have much upfront capital.
Fleischmann explained that Migrante’s lending model further differentiates itself from competitors in that it uses information about work history and income to determine the kind of vehicle they need and if they have the ability 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 process with a lot of friction.”
Buying a vehicle is often out of reach for people, and through Migrante’s lending model and vehicle connections, the company is able to offer an average APR of 26% compared to other car dealerships in Chile, where it is often over 30%
Despite social unrest in Chile at the end of 2019 and then the global pandemic in 2020 and 2021, Migrante saw some early traction as it began lending money, namely a marketplace that grew from zero to $30 million in annualized gross merchandise value, sales of over 700 units per month and a loan default rate of less than 1.5%. In addition, the company closed out 2021 with 15,000 active clients and annual deferred revenue of $25 million.
As a result, they decided to ramp up Migrante into other underbanked communities, including Peru. There, Canals said the company is growing 30% month over month and selling an average of over 200 units a month.
The company’s Series A was led by Kayyak Ventures and included individual investors like Creditas’ Sergio Furio, Betterfly’s Eduardo della Magiora and Affirm’s Huey Lin.
As mentioned, the latest funding enables Migrante to launch in Colombia and Mexico and offer new products, including rent-to-own and electric vehicle financing products.
The company is also growing its employee headcount. Eighteen months ago, Migrante was a five-person operation; it now has 250 employees. It rounded out 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 has looked at different fintech companies in the region and thought Migrante’s model was unique because it started in a specific segment and owns the customer lead instead of financing from someone else. Kayyak invested in Migrante’s previous rounds, including pre-seed and seed rounds that total $4 million.
“They can provide financing at the point of sale,” Silva Lombardi added. “Also, these two guys have a strong track record managing different cycles. In Chile, we faced a big macro shock in 2019 with social unrest and then had COVID, yet their portfolio did extremely well and their track record helped them to grow in an assets-light way. They started in Chile, which is a competitive market, and are now growing in Peru and into Colombia and other parts of the region. There is a huge market that is ripe for disruption and they are leaning in to penetrate it.”