Mexican fintech Kapital raised $40 million in a Series B funding this month, together with $125 million in debt financing, as the SME-focused bank seeks to expand its reach elsewhere in Mexico and Latin America.
Tribe Capital, a venture capital fund based in California, led the funding round. Other participating investors included Cervin Ventures, Tru Arrow, MS&AD Ventures, and Alumni Ventures. While the company has not disclosed its valuation post the funding round, it has raised over $370 million in debt and equity, as reported on Crunchbase.
Co-founded in 2020 by Rene Saul and Fernando Sandoval, Kapital provides small businesses in Mexico, Colombia, and Peru with financial dashboards and real-time management of operations and cash flow. This is similar to what an ERP does for larger corporations.
The fintech also underwrites loans to these enterprises leveraging artificial intelligence technology and offers products such as credit cards.
Fintech Kapital bought a bank this year
The company conducted a $23 million Series A round earlier in the year. It used the funds to support its expansion efforts and develop its platform. In September, it acquired Banco Autofin Mexico, a strategic move as it seeks to enhance its services in the country. The merger between traditional banks and fintech companies is an ongoing trend, its CEO, Rene Saul, said back then.
With the recent equity funding, Kapital plans to invest in its technology platform. Also to pursue a more aggressive regional expansion beyond Mexico. The company currently serves over 80,000 customers in the region.
Kapital aims to address the financing gap for small businesses. It highlighted that in Mexico, only 10.5% of small businesses have access to the total bank credit available for companies.
Latin America expansion
“Our recent funding round will propel us forward as we embark on an exciting expansion across Latin America,” said Saul. The executive emphasized that Kapital’s introduction of new AI-driven products is a core value proposition as the company expands into neighboring markets.
Proceeds from its debt funding, in turn, will translate into loans to SME clients in its existing markets, its CEO said. Lending products play a crucial role in Kapital’s offerings, often serving as an entry point for customers to explore the company’s range of products.
“Kapital is punching way above its weight,” said Arjun Sethi, Chairman and CIO at Tribe Capital in a press release. “So many financial platforms raise billions before achieving this level of success: They’ve not only achieved venture-scale growth in a fraction of the time, but they’ve also done so profitably.”
