Kueski Series C funding round BNPL startup fintech
Adalberto Flores, co-founder and CEO of Kueski. Photo: Courtesy

Mexican buy now, pay later fintech Kueski closes $202 million Series C mega-round

The fintech has already granted more than 5 million microloans to online consumers; the round was led by StepStone Group and Victory Park Capital

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With digital commerce speeding up during the pandemic, Latin America had an explosion of the so-called Buy Now Pay Later (BNPL) – a new payment option that lets consumers pay for online purchases via short-term loans that most often have no interest fees. In Mexico, one of the startups leading the BNPL boom is Kueski. The Mexican fintech has now raised a massive $202 million Series C to increase its portfolio, expanding the footprint of its BNPL product, called Kueski Pay, in Mexico and building out an ecosystem of financial products for Mexican consumers.

The funding round was led by StepStone Group and Victory Park Capital. They were joined by other new investors including One Prime Capital, and Glisco Partners, as well as existing institutional investors Altos Ventures, Richmond Global Ventures, Cometa, Cathay Innovation, Rise Capital, and Angel Ventures Mexico.

READ ALSO: Buy Now Pay Later (BNPL) ignites e-commerce in Latin America and beyond

The accelerated growth of e-commerce in Mexico, combined with a young population that is eager to spend, but that lacks access to traditional financial products, boosted the company’s growth, co-founder and CEO of Kueski, Adalberto Flores, tells LABS.

“We are enabling people to continue their financial lives even in the middle of a COVID-19 crisis. We enable anyone in Mexico, as long as they are 18 years old, it doesn’t matter if they have a bank account or a history of credit card, through Kueski Pay they can buy stuff online. And that was not available before,” says Flores.

The company saw Kueski Pay grow nearly 210 times in Gross Merchandise Volume (GMV) between September 2020 and September 2021, and a 320% YoY growth for Kueski Cash, its personal loan product (Kueski does not disclose its earnings metrics).

More recently, the Mexican fintech company launched Kueski Up, an earned wage access product that gives employees interest-free payroll advances.

[In Mexico] there is no incentive towards being part of the financial economy. But if we can actually enable people to start building credit history with our products. And getting access to merchants without a bank account; that’s incredibly powerful

Adalberto Flores, CEO of Kueski

Founded in 2012, Kueski estimates that nearly 5 million loans have been issued online. Since its inception, over 6 million unique clients have applied for Kueski’s services.

READ ALSO: Mastercard joins the buy now, pay later fever

Kueski Pay offers a new way to make interest-free monthly purchases without the need for a credit or debit card, which explains Kueski’s growing popularity among businesses and consumers. Mexico has the fifth-highest rate of unbanked citizens globally, and nearly 90% of retail transactions are made with cash.

Flores also believes that technology was an essential driver for the company’s growth since the beginning of the pandemic. Especially, as Kueski automated a great part of the processes used to find out the level of vulnerability in terms of non-payment or late payment of the startup loans.

“The reality is that we have a significant data asset. When the pandemic started, things from the credit perspective started to move. So we made changes to the underwriting models on a daily basis and many other financial institutions didn’t do that because they didn’t have the agility, technology, or the team to do that. So, fast forward, what happens is we end up having a higher approval rate with lower loss rates compared to even previous to the pandemic,” explains Flores.

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“Driven by limited consumer credit penetration in the region, and Kueski’s formidable competitive advantages, we anticipate many years of strong growth ahead,” mentioned Gordon Watson, a partner at Victory Park Capital.

The ecosystem of Kueski’s products

By the end of this year, the startup is expecting thousands of merchants to be integrated into its BNPL ecosystem. Currently, Kueski Pay is integrated with Walmart, the largest retailer in Mexico, and already offers purchases from other leading stores and services such as Kipling, VivaAerobus, Nautica, Steve Madden, Motorola, and Xiaomi Shop.

“We are excited by the opportunities in the BNPL sector in Mexico and the rest of Latin America, and are delighted to be partnering with the undisputed market leader, Kueski,” said Jim Lim, partner at StepStone Group.

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Kueski will also launch a mobile application, which will allow users to verify their profile, manage payments, and browse partner stores. In November, Kueski plans to launch its BNPL product in brick-and-mortar stores, to provide an alternative to the traditional high-interest financing plans that have been offered by Mexican banks.

As for now, the CEO of Kueski does not have news to share on the startup plans for international expansion. But that’s something the company is definitely looking forward to. “The question that we have right now is ‘when is the best timing’? We are discussing that and I think we have all the resources: people, capital, and technology to do that expansion. But we are interested”, explains Flores.