Truepay Secures $32M Investment Led by Lee Fixel - Buy Now, Pay Later

LatAm Continues to Attract Global Investment

International investors are consistently demonstrating strong interest in Latin America. This trend is exemplified by recent activity surrounding emerging fintech companies in the region.

TruePay Secures $32 Million Series A Funding

TruePay, a São Paulo-based “buy now, pay later” startup established just last year, has announced the successful completion of a $32 million Series A funding round. The round was spearheaded by Addition, led by Lee Fixel.

Addition’s First LatAm Series A Lead

This investment signifies Addition’s inaugural lead role in a Series A funding round within Latin America. It follows closely on the heels of an $8.5 million seed round completed three months prior, co-led by Kaszek and Monashees, with contributions from ONEVC and Global Founders Capital.

TruePay’s B2B BNPL Network

TruePay is focused on establishing a B2B “buy now, pay later” network. This network aims to empower sellers across various industries to extend credit without the risk of default. Simultaneously, it provides buyers – merchants – with seamless and affordable access to credit for inventory purchases from their suppliers.

Founders and Rapid Growth

The company was founded by Pedro Oliveira and Luis Eduardo Cascão, both formerly venture capitalists. TruePay reports having clients throughout Brazil, boasting a merchant base “in the thousands” after only five months of operation. The founders indicate that the company has experienced monthly growth rates ranging from 100% to 200% throughout 2021.

Projected Expansion in 2022

TruePay anticipates a substantial increase in growth, projecting expansion between “ten-to fifteen-fold” in the coming year, 2022.

From Venture Capital to Fintech

Oliveira and Cascão transitioned from their roles as venture capitalists at Kaszek and DNA Capital, respectively, in December 2020 to launch the fintech venture. They differentiate TruePay from other BNPL solutions by focusing on converting retailer’s credit card receivables – also known as merchant cash advances – into purchasing power.

Guaranteeing Payments to Suppliers

By leveraging these receivables as collateral, TruePay asserts its ability to guarantee payments to suppliers. This approach aims to eliminate default risk, thereby streamlining the commercial interactions between merchants and their suppliers.

Improved Payment Terms for Retailers

According to CEO Oliveira, utilizing TruePay allows retailers to secure more favorable payment terms from their suppliers. This facilitates larger purchases with extended repayment periods, ultimately enhancing their operational working capital.

Benefits for Suppliers

“Suppliers are no longer exposed to the potential default risk associated with merchants,” Oliveira explained to TechCrunch, “and are therefore able to offer more credit, leading to increased sales.”

Future Hiring Plans

The newly acquired funds will be primarily allocated to expanding the company’s workforce. Currently employing 50 individuals, TruePay aims to reach a team of 100 by the end of the year.

Fixel’s Perspective on TruePay

“The core strength of TruePay’s solution resides in addressing a genuine and previously unmet need for retailers to unlock credit and improve working capital,” stated Fixel. “Combined with a substantial addressable market and a highly skilled team, we are excited to support the company’s continued development of its innovative, convenient, and cost-effective payment technology.”

Financial Inclusion in Latin America

As previously reported, numerous startups in Latin America are developing technology not solely for innovation, but also to promote greater financial inclusion throughout the region.

Addressing the Working Capital Gap in Brazil

Cascão highlights that Brazilian retailers often face a challenging situation characterized by lengthy receiving terms and short paying terms, creating a significant working capital deficit.

Breaking the Negative Credit Cycle

“These businesses effectively support the national economy, yet lack access to affordable capital to address this gap,” he explained. “Consequently, they often resort to expensive solutions like factoring receivables or securing credit from banks at exorbitant interest rates. Suppliers, in turn, are frequently forced to choose between foregoing sales or extending credit with the risk of default, for which they are typically unprepared. TruePay was created to disrupt this detrimental cycle and transform the relationship into a positive one.”