Peruvian startup Leasy raises $17M in debt and equity to provide car loans to LatAm taxi drivers – TechCrunch
Leasy, a startup that offers car financing to ride-hailing drivers in Latin America through a subscription model, raised $2 million in equity and $15 million in debt.
Gregorio Gilardini, originally from Italy, and Alejandro Garay, originally from Spain, met in Peru several years ago and discovered that they both had an interest in using technology to make a social impact and help people. people to escape the “poverty trap”.
They founded Leasy in 2018 with a mission to help people who want to earn an income as VTC drivers to be able to afford a car, thus earning a stable income. Traditional financial institutions charge exorbitant interest rates and require large down payments, making it almost impossible for members of a low-income population to buy their own car.
Based in Lima Leasy is different, Gilardini said, in that its interest rates are much lower and its terms much more flexible. It says it offers loans “built around the needs” of a ride-hailing driver at competitive prices that match rental market prices. It also requires a 5% down payment, compared to 20% to 30% required by most banks.
“It’s an amount of money that most people don’t have,” Garay said. “Many live hand to mouth and the drivers are like ghosts in the system.”
Until now, Leasy was initiated outside the credit lines of Credit Bank of Peru (BCP) and Mitsui Auto Finance (MAF) – whose founders say they are grateful because the startup scene in Peru is evolving.
Magma Partners led its seed round, and other investors include IncaVentures, BuenTrip Ventures, GRAM, Otto Holdings, and Nucleus EMV, among others. It is also part of the Endeavor ScaleUp program. The company sought capital because it realized it “needed to scale faster”.
Impressively, Leasy has been profitable – and that means both positive net profit and positive EBITDA – since its first month of operation, according to Gilardini, and has seen revenue grow 170% in 2021 compared to 2020. This positive cash position has been valuable during the fundraising process, Gilardini said, as it has enabled the team to negotiate good terms.
“Coming from a region where venture capital investing still has a lot to improve on, we didn’t have much visibility on how long the fundraising would take and we couldn’t afford to run out of cash at any time. “, he added.
At first, the duo were surprised that so many chauffeur-driven vehicles rented because they couldn’t qualify for car financing. For many, it was the only way to gain access to the job market they wanted to pursue. And while Leasy started with leasing and convinced Hertz to be its first pilot, they eventually considered moving to car financing with a subscription model.
The company structure is designed to make it easy for VTC drivers to finance a car, with insurance included in the transaction and a “simple” payment process. Flexible terms also relieve pressure. For example, if a driver decides they want to move to another city and no longer need the vehicle, they can return the car to Leasy without penalty, Garay noted.
In terms of technology, Gilardini told TechCrunch that it was “pretty developed” from the start.
“When we embarked on this project, we knew we needed something that was going to be scalable,” he said. “We also recognized that we were operating in a very credit risk averse region and needed to prove how we mitigated the various risks associated with banking an unbankable person. It actually forced us to reduce all of our technology to a T from the start.
Its app for drivers is designed to provide full transparency on how their payments are going and when they are due to pay.
“It’s kind of like creating this ecosystem and creating a connection with the riders so they feel like they have this 24/7 support,” Gilardini explained.
In 2019, Leasy partnered with Uber to find potential drivers to work with and collect data. It’s selective about who it funds, and since it’s connected to Uber through its APIs, Leasy is able to do background checks and review driving history and whether they’ve gotten tickets.
Leasy plans to use the data it has collected internally for a predictive analytics model to estimate when people are most likely to default. On the consumer side, they can provide insight into the quality of their driving, how much fuel they have, and how much money they spend on fuel.
“It helps them keep a kind of record and make sure they have all the information they need to do a good job and that they’re two steps ahead of their funding,” he said. -he adds.
In fact, Garay told TechCrunch that Leasy has so far seen 1% churn or defaults.
“We are very flexible compared to a bank, and we want them to succeed,” he said. “Let’s say they have a car accident and can’t work for 10 days, we don’t charge them for that time.”
So far, the startup has taken out over 370 loan deals and has a waiting list of over 1,500 people. The funds will be used to support the company and help it expand out of its home country of Peru, starting in Mexico and then into markets like Colombia and Chile.
Nathan Lustig of Magma Partners thinks Leasy solves a “real problem” for Latin Americans trying to access what is for many their greatest asset.
“A car can help bring Latin Americans into the middle class, and a car owner can use it to generate the top 30% income for their family,” he said. “Traditional financial institutions neglect huge swaths of Latin Americans.”
The startup’s “great” tech, distribution, customer service and collections, combined with its “very strong” unit economy, made it an attractive investment, Lustig added.
“They fit the model of successful founders starting out in neglected Latin American markets like Peru, Ecuador, Chile and Uruguay and likely succeeding in expanding to larger Latin American countries,” did he declare.
Last August, TechCrunch reported on the $104 million raised of the Brazilian startup Kovi, which has a mission similar to that of Leasy.
He also operates a car subscription model on the assumption that more people in Latin America would work for ride-sharing companies if they could afford to use the necessary vehicle.