Monterrey, Mexico-based Kredi raised $3.1 million in seed funding to enable Mexicans — and eventually people all over Latin America — who want to be homeowners, to access the best mortgage rate and terms.
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Amplo led the oversubscribed seed round and was joined by Liquid2, Soma Capital, Harvard Management Co., Emles Venture Partners and a group of angel investors.
Kredi is one of the latest Latin America-based financial services companies to attract venture capital. More than $7 billion was invested into these kinds of companies since 2016, according to Crunchbase data. Annual investment dollars have also grown since 2018, rising to $2 billion in 2020. So far this year, dollars invested in the sector are already neck and neck with last year’s total, meaning 2021 investment will almost certainly eclipse 2020.
Prior to founding Kredi with friends Fernando Nader, Hernán Belden and Juan Carlos Mercado earlier this year, CEO Javier Aldape was exiting his previous startup when he personally experienced how difficult it was to get a loan in Mexico.
“You have to go to the bank, fill out paper forms, and I was ultimately denied access to a mortgage over and over because banks would not respond to me,” Aldape said. “I got frustrated because there was no innovation in this space. That led me to think that there should be an Expedia-like credit platform that could give us all of the existing options. From there, you could choose the best one that fits your budget and has terms that you are comfortable with.”
Aldape sees Kredi as the “Rocket Mortgage of Latin America,” with the aim of improving the homebuying experience.
The process starts with a client filling out a single credit application via Kredi. The company then does a prequalification by linking to resources, such as credit bureaus and tax collection agencies. When approved, Kredi goes to the banks in their networks and fields offers for the mortgage applicant.
Aldape plans to use the new funding mainly on operations, to grow the team in engineering and sales, as well as on underwriting its own personal loans. To do that, he is also looking for a warehouse facility of $10 million.
Kredi was part of Y Combinator’s Winter 2021 cohort, and since the beginning of the year has originated more than $8 million in mortgage loans. The company also has 17 employees and is growing 30 percent in revenue month over month, he said.
Aldape sees similar mortgage loan difficulties in other countries and intends to expand to Brazil, Chile and Colombia over the next 18 months.
“The biggest thing we are trying to change is to be transparent with the customer,” he added. “If there is something wrong with a credit history that is damaging the opportunity for a loan, most banks don’t like to share that. We want to give that information. We want to let people know if they have a debt so they can pay it off. Everyone should have access to a home, and if they need a mortgage, we want to help them do it.”
That transparency attracted investors like Samuel Garcia, a senior associate from Amplo, who will join Kredi as a board observer as part of the seed investment.
Although he has seen a lot of companies come out of Y Combinator wanting to be the “X of a certain industry,” it was the first time he heard of a company wanting to be like Rocket Mortgage. Growing up in South Texas, Garcia said he saw that Latin America was missing a wealth-building component that the U.S. had — home ownership.
“Homeownership in Latin America is super difficult because of the mortgage process with banks,” he said in an interview. “Kredi tells people exactly what they want to know. I’m excited to see where they are going. They are helping people build wealth, and just in Mexico, this is an enormous opportunity.”
Illustration: Dom Guzman
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