Minu Secures $14M Series A Funding - Pay-on-Demand Startup
Financial Inclusion Drives Startup Funding in Mexico
A significant number of startups securing funding in Mexico are concentrating on financial inclusion. Their aim is to create a more equitable system within a nation where a substantial portion of the population remains unbanked, yet the middle class is expanding.
Minu Secures $14 Million in Series A Funding
Minu, a Mexico City-based pay-on-demand startup, recently announced the completion of a $14 million Series A funding round. FinTech Collective spearheaded the investment.
New investors including VEF, XYZ Ventures, and FJ Labs participated, alongside DocuSign founder Tom Gonser and Gusto CFO Mike Dinsdale. Existing investors QED, Next Billion Ventures, and Village Global also contributed further capital.
This financing, which included $2.5 million in debt from Banco Sabadell Mexico, brings Minu’s total funding since its 2019 launch to $20 million.
Addressing Employee Liquidity Challenges
The company was founded by Nima Pourshasb, Rafa Niell, and Paolo Rizzi, who identified a need for a pay-on-demand solution in the Mexican market.
Pourshasb stated that a lack of financial health is a key impediment to the potential and productivity of Mexican society.
Minu is designed to bridge the gap in employee liquidity between pay periods. This aims to reduce financial stress and help individuals avoid high-cost loans. The service provides 24/7 instant access to earned wages for a flat $2 withdrawal fee.
Growing Client Base and Revenue
Currently, Minu serves over 100 large enterprise clients. These include TotalPlay, Telefonica, Scotiabank, OfficeMax, Rappi, Adecco, Manpower, and Cap Gemini. The company also works with public sector clients, such as the Electoral Institute of the State of Mexico.
In 2020, Minu experienced an 18-fold increase in both transaction volume and revenue, although starting from a relatively small base. Specific revenue figures were not disclosed.
The Prevalence of the Liquidity Gap in Mexico
Minu operates on the understanding that a significant liquidity gap exists within Mexican society. Approximately 70% of workers live paycheck to paycheck, with an average wage of $550 per month, as noted by Pourshasb.
Furthermore, only 37% of Mexicans aged 15 and over possess a bank account, according to recent data from the World Bank.
Pourshasb explained that many individuals are consistently relying on loans – often at very high interest rates – to cover essential expenses like food and transportation.
How Minu’s Pay-on-Demand Service Works
Minu’s initial offering provides instant, 24/7 access to wages that have already been earned.
Pourshasb emphasized that this is not a loan, but rather access to funds employees have already accrued. Users can view their available balance through an app and instantly withdraw funds when needed.
The company utilizes a B2B distribution model, partnering with large enterprises to offer wage access as an employee benefit. Businesses find this model appealing as it requires no cost or changes to their existing payroll processes.
Integration with payroll systems automates the process, and there is no additional workload for employers. It also doesn’t impact cash flow, as withdrawn funds are deducted from the next payroll cycle.
Some employers choose to subsidize the transaction fees for their employees.
Future Plans for Expansion and Product Development
With the new funding, Minu intends to expand its team of 60 and broaden its services. Future offerings will include financial education, savings tools, smart spending features, and insurance products.
The company also plans to extend its operations beyond Mexico.
Investor Confidence in Minu’s Potential
Carlos Alonso Torras, who leads Latin America investing for FinTech Collective, believes Minu possesses a “strong combination of an exceptional founding team and favorable macroeconomic conditions.”
He stated via email that the company’s current product serves as a foundation for a platform that will deliver a range of essential financial products to an underserved demographic.
Torras highlighted Minu’s ability to build a competitive advantage through deep integrations, high client satisfaction, and a growing financial wellness offering. He believes the company is well-positioned to capitalize on the significant growth potential within the pay-on-demand market.
This investment represents FinTech Collective’s fifth in Mexico. The firm actively seeks and supports entrepreneurs who are innovating the flow of money globally.
Torras added that the COVID-19 pandemic has exacerbated financial instability for millions, and fintech plays a crucial role in fostering the growth of an underserved middle class.
Mexico’s Thriving Fintech Landscape
Fintech companies in Mexico are experiencing a period of significant activity. Stori recently raised $32.5 million in a Series B round, aiming to become a leading credit card provider for Mexico’s growing middle class.
In February, Flink secured $12 million in a Series A funding round led by Accel.
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