The venture capital arm of Banco Santander has led a $5 million round in a55, an alternative lender to SMEs is Brazil and Mexico.
Founded in Brazil on the back of a $3 million seed round, a55 offers revenue-backed credit lines to companies with recurring revenue. It aims to become the financing platform for service-based companies in Latin America, starting with software-as-a-service (SaaS) businesses and has recently launched operations in Mexico.
The company underwrites SMEs through a technology platform connecting bank accounts, escrow solutions, billing, payment means and credit intelligence. For borrowers, it provides a credit monitoring dashboard, an insights section on revenue and cost metrics, an integrated cash flow covenant management system and escrow and revenue lock up tools to redirect a portion of the borrowers’ cash flows. For lenders, a55 developed a portfolio management and monitoring platform fed in real time by transactional data.
Since launch in 2018, a55 has underwritten 50 companies in Brazil and Mexico through 350 different operations, with between €6 and $7 million in Mexico and €17 and $19 million in Brazil. The company says it expects to double those numbers in the next 12 months.
Manuel Silva Martínez, managing partner at Santander InnoVentures, said: “The current crisis will accelerate shifting consumer habits to digital and subscription models. This will tremendously benefit software-as-a-service companies, which will need alternative financial services providers to support their growth and success.”
Santander InnoVentures has already invested in over 30 fintech companies after being established six years ago. This is its fourth investment in Latin America.
A55 joins other startups in the InnoVenture's lenders portfolio, which includes direct lenders like Kabbage in the US, Klar in Mexico, and companies supporting lending processes like MarketFinance in the UK, and Roostify (mortgages) and Autofi in the US.