The company, known for its Buy Now, Pay Later app, has garnered significant attention since its establishment in 2018, amassing a significant customer base.
Of the USD 86 million raised, USD 36 million came in equity funding from investors including important venture capital firms such as Union Square Ventures and Andreessen Horowitz, alongside GIC Private Ltd., which is the manager of Singapore’s foreign reserves. Additionally, Goldman Sachs Group extended USD 50 million in debt financing to the company.
This funding marks a significant step forward for Addi, following a previous funding round in late 2021 that valued the startup at over USD 700 million. However, the company's CEO and co-founder disclosed a decision to reduce the company's valuation by approximately half.
He explained that the decision stemmed from Addi's participation in the fintech boom during its fundraising phase and expressed confidence in the revised valuation. Furthermore, the company has opted to postpone its expansion plans into Brazil and Mexico, focusing instead on solidifying its presence in the Colombian market.
Despite the valuation adjustment, Addi has demonstrated a potential for growth in recent years. According to contxto.com, the company experienced a 60% surge in its client base in 2023, serving over 13,500 retailers with its payment-processing system, an increase from the 1,000 merchants served in 2021. Sales at affiliated stores surpassed 1.6 trillion pesos (USD 413 million) last year.
Contxto further reports that the popularity of Buy Now, Pay Later services has surged globally, with US consumers alone spending nearly USD 10 billion through such apps during Black Friday in the previous year. While these services often promote lower interest rates compared to credit cards, critics raise concerns about the potential for fostering irresponsible spending habits.
In response to such concerns, Addi officials brought attention to the company's creditworthiness modelling, which has maintained the company's loan portfolio at a past-due rate of just 1%. This has enabled Addi to extend credit amid tightening lending practices by local banks, offering financial alternatives to Colombians who may otherwise lack access to credit.
According to the Colombia Buy Now Pay Later Business and Investment Opportunities Databook, BNPL payments in Colombia are expected to grow by 39.6% on an annual basis to reach USD 1.63 billion in 2024.
Moreover, the medium to long-term growth story of the BNPL industry in Colombia remains strong, as BNPL payment adoption is expected to grow steadily over the forecast period, recording a CAGR of 26.9% during 2024-2029. According to the same source, the BNPL gross merchandise value in the country will increase from USD 1.17 billion in 2023 to reach USD 5.37 billion by 2029.
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