Exclusive: Mexican auto financing platform Nexu raises $20M

Nexu, a startup providing financing solutions to car dealerships in Mexico, has raised $20 million in Series B financing led by Valor Capital Group, the company tells Axios exclusively.

Why it matters: Auto financing is tough to come by in Mexico, reducing accessibility for car buyers and lowering conversion rates for dealers.

How it works: Nexu created a platform that enables car buyers to apply for and receive an instant decision on financing for their vehicles.

• The company partners with car dealerships to make that financing available at the point of sale, which increases conversion rates and expands access to previously underserved car buyers.

Context: Unlike the U.S., where financing accounts for 80% of new vehicle sales and 40% of used vehicle sales, auto financing in Mexico is much harder to secure.

• Fewer than 60% of new vehicles and fewer than 2% of used vehicles are financed in Mexico.

Between the lines: The lack of financing is due in part to low approval rates from incumbent banks, as well as an analog application process.

• "When you apply for financing at a car dealership [in Mexico], you need to wait on average three days, but at least a day to get a response," says Nexu co-CEO Abdon Nacif. "So it's a very bad experience for the car buyer, which provides a lot of uncertainty."

Yes, but: With its proprietary risk algorithm, Nexu says it can approve more than twice as many car buyers as traditional banks.

• "We created our own credit score based on information that comes from public and private data sources and variables that we built ourselves," co-CEO Fernando Gómez Arriola says.

Of note: In addition to the Series B round, the company has raised a debt facility from HSBC but isn't disclosing the amount.

• Nexu had previously raised a total of $53 million in a mix of equity and debt financing.
• Other investors include Fintech Collective, Endeavor Catalyst, Altos Ventures, Wollef, Squareone, Clocktower Ventures, Gilgamesh, FJ Labs, Ivernet and Capem.