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Konfío completes US$235 million capital raise at a US$ 1.3 billion valuation

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An additional US$110 million fresh capital injection adds to the US$125 raised in June finalizing Konfio´s Series E equity round and bringing Konfio to a US$ 1.3 billion valuation.

Konfio gains further support to deepen its Mexico-focused strategy, usi

MEXICO CITY, September 29 2021-- Konfío, a technology company aimed at boosting the growth and productivity of companies in Mexico, today announces the closing of a US$ 110 million extension of its series 'E' capital raising round at a US$1.3 billion valuation. This completes Konfio’s Series E round for a total of US$ 235 million.

Konfio, founded and led by David Arana, will use the funds to primarily expand its platform offer in Mexico, and to boost the market reach of Konfio’s payments solutions and business tools. Konfio’s use of capital has become increasingly efficient as the number of funding options has continued to increase, and funding terms improve on the back of Konfio’s track record. Additionally, Konfio will continue to be on the look-out for acquisition and integration opportunities that will help consolidate Konfio’s offer as the operating system of choice for SMEs in Mexico.

The round extension was co-led by Tarsadia Capital and QED Investors, and was joined by existing Konfio shareholders Softbank, VEF, Kaszek Ventures, IFC, and Lightrock. The investors’ support reflects strong belief in Konfio’s team, Konfio’s achievements so far and the immense potential and unique opportunity the Mexican SME sector offers to be served better. "Small and medium sized businesses are the economic engine of Mexico, accounting for 88% of private sector employment,” said Ravi Bellur, Portfolio Manager at Tarsadia Capital. “Konfio’s platform of merchant solutions helps its clients improve profitability and productivity and, over time, will be a meaningful driver of GDP growth, increased economic formality, and financial inclusion. We are inspired by management’s mission to empower these owner-operators and their employees." adds Ravi.

Konfio’s strategy is geared towards being the one-stop shop for businesses in Mexico allowing companies to thrive by having access to financial services, payments, and business tools in the same platform:

• Financial Services. With nearly 35,000 working capital loans granted since its going live in January 2014, Konfio has honed agile AI-based underwriting, monitoring, and collection models, allowing it to have strong unit economics across different cycles. Konfio’s financing offer currently involves a working capital loan product and a corporate credit card.
• Payments. Konfio offers a B2B platform, and is now integrating a recently acquired B2C payment solution, SrPago, that offers the full spectrum of payment needs, from card present point of sale to ecommerce transactions.
• Business management tools. Konfio acquired by the end of 2020 a cloud-native business intelligence, accounting and tax solution (“cloud-ERP”), Gestionix, that caters intently to the needs of both SMEs and accountants.

“David’s vision for building a holistic, end-to-end suite of financial services products and business management tools for SME customers in Mexico continues to crystalize,” said QED Partner and Head of International Bill Cilluffo. “Konfio is enabling benefits in orders of magnitude greater than those of any one single business offering alone. We believe in both David’s vision and the execution of that vision, and we’re confident this growth capital will allow him to rapidly execute on his plan.”

Mexico offers extraordinary conditions to deploy and scale Konfio’s strategy. With a population of nearly 130 million, Mexico is the second-largest economy in Latin America and the 15th in the world. Around 45% of its population is under 25, and the average age is 29. Mexico also stands out as a US-linked economy, being the US second largest trading partner overall and its largest goods trading partner. In spite of this scale and activity level, SMEs productivity significantly lags that of comparable markets. Low SME access to credit at under 4% of GDP, lower than the 6%-8% reported for Colombia, Peru and Brazil, is known to be supply driven, thus prone to be improved by new models such as Konfio's. On the payments front, card payment and digital payment terminal penetrations are estimated to be half that of Brazil. Finally, SMEs lack digital business management tools, and their book-keeping is still performed mostly manually or through accountants who continue to use one of a handful of traditional off-cloud accounting systems.

This opportunity, in terms of total addressable market for Konfio, represents US$100 billion of potential SME loans in Mexico (from current US$ 43 billion), over US$4.3 billion in revenues from digital payment services, and over US$ 1 billion in revenues from accounting services to SMEs.

“The SMEs in Mexico are vastly underserved, and we are obsessed with solving their needs by maximizing the use of data and technology. We are convinced that a long term strategy for servicing SMEs is favored by an integrated multi-product approach, where credit is an important lever, and by which customer interactions are optimized,” said David Arana, Konfio’s Founder and CEO. “The market response to our strategy has been encouraging. Konfio’s risk and collection models allowed us to successfully weather the peak of the pandemic, and are now backing a healthy 10% and 40% month-over-month growth in Konfio’s working capital loan book and in the number of users of our innovative business credit card product. In 2021, Konfio’s product adoption lept to 1.4 services per customer from 1.0 in the beginning of the year. Now imagine the value that can be added to growing companies by leveraging the data from an integrated multi-service platform”.

“Konfio is the rare combination of attractive unit economics with an accelerating growth profile as they scale. We are excited to partner with this talented team as they democratize access to expense management and financial solutions across the region.” said Scott Polley, Principal at Tarsadia Capital.

“David has assembled a world-class team and he has been an unbelievable partner to QED as he has grown the business. The past 18 months have been difficult for many small businesses in Mexico, but he has handled the impacts of the pandemic in a thoughtful and deliberate way. As SMEs in the region begin to rebuild and as the importance of access to credit increases, we’re confident Konfio will remain one of the best-in-class solutions for SME owners.” said Bill Cilluffo, from QED Investors.

About Konfío

Konfío is a technology-leading company focused on boosting the growth and productivity of companies in Mexico, with an offer of solutions-oriented from three strategic pillars: financing, payments, and business management tools. Founded in 2013, Konfío offers access to agile credit with an immediate decision process based on data and artificial intelligence, business-to-business payment management and financing platform, a business-to-consumer payment solution, and a cloud-based system for operational, accounting, and financial business management available to both companies and accountants who provide services to businesses. https://www.konfio.mx

About Tarsadia Capital

Tarsadia Capital, LLC is the New York-based investment management company of a single-family office. Tarsadia Capital has a flexible and long-duration crossover investment mandate. The firm’s investment process employs deep fundamental research on secular inflections to identify and build conviction around asymmetric risk/reward opportunities that will play out over multi-year time horizons. Building on the multi-decade investing legacy of the Tarsadia family, the team at Tarsadia Capital strives to be supportive, engaged partners throughout the life cycle of its portfolio companies in private and public markets. The family has concentrated historically on investments behind visionary entrepreneurs and managers whose businesses address critical market needs across geographies. https://www.tarsadiacapital.com/

About QED Investors

QED Investors is a global leading venture capital firm based in Alexandria, Va. Founded by Nigel Morris and Frank Rotman in 2007, QED Investors is focused on investing in early stage, disruptive financial services companies in the U.S., U.K., Latin America and Southeast Asia. QED Investors is dedicated to building great businesses and uses a unique, hands-on approach that leverages our partners’ decades of entrepreneurial and operational experience, helping their companies achieve breakthrough growth. Notable investments include Avant, AvidXchange, ClearScore, Current, Creditas, Credit Karma, GreenSky, Kavak, Klarna, Konfio, Loft, Mission Lane, Nubank, QuintoAndar, Remitly and SoFi. https://www.qedinvestors.com/

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