Divibank Raises Millions to Expand LatAm Fintech Services

Divibank Secures $3.6 Million in Seed Funding to Empower LatAm Businesses

Divibank, a financial platform dedicated to providing growth capital to Latin American businesses, has successfully completed a $3.6 million seed funding round. The investment was spearheaded by San Francisco-based venture capital firm, Better Tomorrow Ventures (BTV).

Company Origins and Core Mission

Established in São Paulo in March 2020, coinciding with the onset of the COVID-19 pandemic, Divibank has developed a data-driven financing solution. This platform is designed to offer businesses access to capital without requiring them to relinquish equity, utilizing a revenue-share financing model.

“Our aim is to revolutionize how entrepreneurs expand their online ventures by delivering swift and cost-effective capital to startups and SMEs throughout Latin America,” stated Jaime Taboada, co-founder and CEO of Divibank.

Target Markets and Service Expansion

Divibank primarily focuses on serving e-commerce and SaaS companies. However, its client base also includes businesses in the edtech, fintech, and marketplace sectors.

The company has expanded its offerings to include marketing analytics software, enabling clients to maximize the benefits derived from their received capital.

Investor Participation

In addition to BTV, the funding round attracted participation from a diverse group of investors. These include existing investor MAYA Capital, and new contributors such as:

Village Global
Clocktower Ventures
Magma Partners
Gilgamesh Ventures
Rally Cap Ventures
Alumni Ventures Group

Furthermore, a number of prominent angel investors contributed to the round, including Sebastian Mejia, founder and president of Rappi, Tayo Oviosu, founder/CEO of Paga (through Kairos Angels), Karim Atiyeh, founder and CTO of Ramp, and Josh Abramowitz and Daniel Simon, the founders of Bread.

Impressive Growth Trajectory

Over the past year, Divibank has demonstrated substantial growth. Specifically, the company has onboarded over 50 new clients in the last six months.

Key growth metrics include a 7x increase in total loan issuance volume, a 5x rise in revenues, an 11x expansion of its customer base, and a 4x growth in its employee count. Current clients include Dr. Jones, CapaCard, and Foodz.

Addressing a Gap in the Market

“Conventional banks and financial institutions often lack the expertise to assess internet-based businesses, leading to loan denials or complex, costly processes,” explained Taboada. “Our revenue-share model allows entrepreneurs to invest in marketing and growth without needing to pledge personal assets, incur credit card debt, or cede ownership.”

Strategic Focus and Future Expansion

Currently, Divibank’s operations are centered in Brazil, a country with over 11 million SMEs and significant growth potential. The company intends to extend its reach to other Latin American countries and emerging markets, though a specific timeline remains undefined.

The Impact of the Pandemic

The COVID-19 pandemic accelerated the digitalization of businesses globally, creating a favorable environment for Divibank’s growth. The company was founded during the initial lockdown period in Brazil.

“We launched Divibank as lockdowns began in Brazil, observing a rapid shift of industries towards online advertising on platforms like Google and Facebook Ads,” Taboada shared with TechCrunch. “This trend significantly bolstered our core thesis, as many of our clients transitioned from primarily offline sales to online channels. Digital advertising is the most effective way to attract new customers online.”

Capital Allocation and Team Expansion

The newly acquired capital will be used to accelerate product development, enhance the go-to-market strategy, and expand the team. Investment will be prioritized in engineering/tech, sales, marketing, credit risk, and operations.

The current team of eight employees in Brazil is projected to grow to over 25 or 30 within the next 12 months.

Development of Value-Added Software

Divibank is also developing software designed to help clients optimize their digital advertising campaigns and improve their return on investment.

Future Financial Products

Looking forward, Divibank plans to introduce additional financial products tailored to the Latin American e-commerce and SaaS markets, valued at over $205 billion. These include inventory financing and recurring revenue securitizations.

The company will continue to refine its banking tech platform through automation of the credit process, enhancement of its analytics platform, and development of its data science/ML capabilities to improve its credit risk assessment.

Industry Perspective

Jake Gibson, general partner at Better Tomorrow Ventures, highlighted his firm’s investment in Clearbanc, another provider of non-dilutive financing. Clearbanc’s “20-minute term sheet” enabled e-commerce companies to access marketing growth capital between $10,000 and $10 million based on revenue and ad spend.

“We firmly believe that not all companies require venture capital funding, and limited funding options can hinder entrepreneurial endeavors,” Gibson stated. “Combined with the growth of e-commerce in Brazil and Latin America, and the acceleration driven by COVID-19, the opportunity to create something impactful was clear.”

Untapped Market Potential

Better Tomorrow Ventures recognizes the limited availability of similar offerings in the region, viewing the market addressed by Divibank as a “massive untapped opportunity.”

Divibank shares similarities with U.S.-based fintech Pipe, both aiming to provide innovative financing solutions for companies with SaaS, subscription, and recurring revenue models, enabling growth without equity dilution.

“Similar to the e-commerce market, we anticipate rapid growth in the SaaS and recurring revenue sectors,” Taboada concluded.