Google leads new investment in embedded lending fintech R2

Latin American embedded lending fintech R2 has raised $15 million in a Series A funding round led by Google’s AI-focused venture fund, Gradient Ventures, just seven months after completing a seed round.

The Mexico City-based startup offers a white-label solution that allows brands to easily embed lending experiences into their digital platforms using R2’s APIs. Over the past year, fintech has partnered with some of the region’s largest technology platforms, funded over 3,000 small businesses and increased monthly revenue by a factor of more than 20.

The fintech plans to use the latest capital raising to expand its workforce, recruiting for roles in engineering, product development, data and risk, finance and compliance, and new business. The Series A round also includes participation from new investors Femsa Ventures and PayU, as well as some angel investors. That reportedly leaves R2 with a value of $100 million.

Google investment gives R2 fintech ‘confidence to scale’

“It is a testament to our mission, progress and team that amidst market turbulence and fundraising uncertainty we were able to achieve this milestone,” said R2 founders Roger Larach and Roger Teran. “In Latin America, 87% of credit demand from small businesses is unmet – in tough times like these, capital becomes even more scarce. But technology platforms such as POS systems, payment processors and marketplaces have accumulated reams of insurance-rich data, paving a new path to reach these small and medium-sized businesses.”

Larach and Teran describe R2 as being at an “inflection point,” with more businesses poised to realize the customer retention gains and additional revenue streams that come with embedding R2 into their platforms.

“We’re just getting started,” Larach and Teran say. “Small businesses in Latin America still face a US$1.2 billion credit gap. As more businesses go online and transact digitally across the region, we are well positioned to leverage new data sources to further enhance our underwriting capabilities. More importantly, by virtue of already analyzing millions of small businesses and funding thousands of them in such a short time, we have accelerated our learning process to reach even more SME customers through the platforms we work with.

“As we gather more data, we feel particularly fortunate to be partnering with Gradient in this round. Gradient’s deep expertise in machine learning and AI – which drives our risk management lifecycle – and the institutional resources they bring from Google position us well to continue to provide greater access to capital to previously overlooked but resilient small businesses. We have never been more steadfast in our mission and confident in R2’s ability to scale its impact to millions of SMEs across Latin America and beyond.”