Fairplay Raises $35M to Fuel Revenue-Based Financing for Entrepreneurs

Fairplay Secures $35 Million Series A Funding for Latin American E-commerce

Fairplay, a revenue-based investment startup operating in Mexico, has successfully raised $35 million in a Series A funding round. These funds are earmarked for investment in the online marketing initiatives of direct-to-consumer (DTC) e-commerce businesses and sellers on various marketplaces throughout Latin America.

Funding Details and Investors

The funding round is comprised of $15 million in equity, jointly led by Dila Capital and Kayyak Ventures, with additional participation from Speedinvest and Elevar Equity. A further $20 million has been secured through debt financing, spearheaded by Architect Capital.

Existing investors, including QED Investors, Nazca, and prominent individual investors such as Carlos García (Kavak CEO), Ricardo Weder (Jüsto CEO), and Carlos Salinas (ZeBrands CEO), also contributed to the round. This brings the company’s total funding to $40 million.

Addressing Challenges for Growing Businesses

Founded in 2019 by Manolo Atala and Andrew Devlyn, Fairplay was created to address a common dilemma faced by small business owners. According to Atala, entrepreneurs frequently must prioritize between investing in inventory, logistics, or marketing, and an incorrect decision can significantly hinder growth.

He further noted that marketing budgets are often heavily concentrated on platforms like Google and Facebook.

A Novel Funding Approach

Traditional loan processes can be lengthy and demand substantial guarantees from business owners. Fairplay offers a different solution: a sales advance funded by a flat fee and a percentage of future revenue, repaid as earnings are generated. Crucially, Fairplay directly remits funds to the client’s vendors, rather than providing capital directly to the business.

Expansion Plans

The newly acquired funding will be utilized to expand Fairplay’s team. Atala anticipates doubling the current employee base of 38 individuals within the coming months.

Client Profile and Investment Size

Fairplay serves a diverse clientele, ranging from smaller businesses with monthly sales of $15,000 to larger DTC companies generating $10 million in monthly revenue. The average investment made by Fairplay is approximately $85,000.

“A significant portion of the funding is allocated to inventory, as the time between order placement and product sales typically ranges from 45 to 60 days,” Atala explained. “Our capital injection helps e-commerce companies accelerate this cycle and mitigate cash flow issues.”

Market Growth and Performance

The Mexican e-commerce market is projected to reach $45 million in 2022, and Fairplay is experiencing parallel growth. The company’s third quarter of 2021 marked its most successful period to date, with a 250% increase in originations compared to the second quarter and revenue growth exceeding 200%.

Double-digit growth was projected for the fourth quarter of 2021, with an anticipated five-fold increase in 2022.

Industry Perspective

Mike Packer, a partner at QED Investors and a member of Fairplay’s board, believes the company is capitalizing on a significant “megatrend” impacting e-commerce infrastructure in Latin America. He observed Fairplay’s initial success two years ago and has been impressed by the team’s development and the validation of their core hypothesis.

“We’re witnessing an accelerated shift of commerce online, exposing infrastructure gaps,” Packer stated. “There’s a substantial opportunity to streamline business operations, and Fairplay is strategically positioned to facilitate this.”