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Arendah, a Mexico City-based fintech company offering digital financial services to the Latin American real estate market, has closed a pre-seed round of equity and debt for $26.5 million.
The funding was a mix of $1.5 million in equity and $25 million in debt financing. Fasanara Capital led the investment and was joined by Cube Ventures, ODX, Tohohold Ventures, Wharton Fintech, Lightspeed Venture Partners Scout Fund, PRMM Inmobiliaria and a group of angel investors.
Joe Merulo, founder and CEO, grew up in Boston and started his first career in real estate at the age of 19. He was hired by June Homes, a startup in the proptech space that integrates technology with the residential real estate industry, specifically rentals. While there, he had the opportunity to work in Mexico, and the problem of finding a place to live gave him the idea of Arrenda.
The company, formerly known as Vivefacil, will start offering insurance in 2021, like the JT or Rhino, but Mexico’s Merulo told TechCrunch. That concept failed, but it led Merulo and his team to credit. The company headed to Arrienda in 2022.
Its first service is Adelanta, an income-based financing offering that uses Arenda’s proprietary technology to enable landlords in Mexico to advance future lease payments for up to a year in 24 hours or less.
Rent smartphone app for landlord loan tool. Image Credits: Rent
Merulo believes this is a unique company in Mexico, with 5.5 million rental households and a core location where traditional financial institutions still go for loans. However, what Arrenda sees distinguishing itself is its proprietary underwriting process, which provides financing terms quickly.
We have developed a risk model that allows us to collect information such as bank accounts, credit bureaus, tax bureaus and crime bureaus, to understand the risks associated with the finance and then make a decision to grant credit. It’s based on that,” Merulo said. “We’ve combined that with underwriting the invoices we get in the lease to make a decision in that 24-hour window.”
The company is launching its website in pre-revenue with 900 people on its waiting list. He is signing financing contracts of about $12,000 over a 10-month period with an average financing amount of $250 to $10,000 per month.
Merullo plans to use the debt portion of the new funding for loans and financing. The bill would go toward adding to Arrenda’s 18-person employee base. The company has grown two people a month since February and is hiring more. It also plans to expand into large metropolitan centers in Mexico and establish distribution channels with industry groups.
Going forward, the company plans to reach $1 million in annual recurring revenue in the fourth quarter of this year. There are plans to expand financing into the commercial real estate space to landlords of warehouses, offices and malls.
“We’ve had incredible feedback from these types of people who are now building an underwriting model to support these people,” Merulo said. “In addition, we monitor products for tenants. In the year In 2023, we plan to roll out more products to help make renting easier for tenants, like we did initially with insurance, such as ‘pay rent now’ type of loan products.
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