REDEFINING THE FINANCIAL LANDSCAPE IN LATIN AMERICA: R2 ENABLES PLATFORMS TO PROVIDE FRICTIONLESS CAPITAL TO MERCHANTS

MEXICO CITY, Feb. 3, 2022 /PRNewswire/ -- R2, a rapidly-growing company dedicated to redefining the financial landscape in Latin America, is on a mission to enable technology companies to offer capital to merchants in the region. What sets R2 apart is that they provide a proprietary embedded lending infrastructure that introduces white-labeled components via its API. The company, which was started at the height of the pandemic by two Central American founders, ultimately seeks to provide the 40+ million small businesses in Latin America with access to frictionless capital.

This week, R2 is thrilled to announce closing a round of $5.9M in series seed financing led by General Catalyst, with participation from Y Combinator, and 166 2nd. In addition, R2 released a new lending partnership with Clip, a leading POS provider in Mexico, to finance its merchants.

According to the World Bank, small businesses in Latin America face a $1.2 trillion credit gap. Visa reports that 85% of small businesses in the region cannot access financing, limiting their growth potential. R2 seeks to reduce this gap by enabling technology platforms, such as payment processors and marketplaces, to offer capital to their merchants.

As Central Americans, co-founders Roger Larach and Roger Terán knew the importance small businesses carry in terms of job creation and productivity. They realized that financial institutions in Latin America often left small businesses unattended because they could not underwrite this segment profitably. "We realized the inability of banks to profitably finance small business is largely a data problem: How can they assess the risk profile of small businesses that typically don't have financial information on hand? And if they do have it, does that information provide enough of a signal to predict their future performance?" said co-founder Roger Terán, who leads the company's data and risk efforts.

With the onset of the pandemic, cash transactions fell by 35%, which forced many small businesses to buy and sell digitally via technology platforms. These platforms began to capture increasing reams of data on small business activity. According to Visa, 80% of the companies that started accepting electronic payments during the pandemic were small businesses. The shift to buy and sell digitally sparked R2 to empower technology companies to finance their merchants in a risk-free and cost-efficient manner with its end-to-end lending infrastructure.

"Technology platforms are a more natural and comfortable place for small businesses to receive financial services. But offering capital, which looks straightforward, requires a different core competency: risk management. With R2, platforms don't have to make a trade-off between growth and risk. We abstract away all the complexity — underwriting, compliance, servicing, collections, and capital markets — through our infrastructure," said co-founder & CEO Roger Larach. "Platforms can now offer capital to their merchants without putting their balance sheet at risk, while maintaining control of the experience with white-labeled components available through our set of APIs."

R2 currently offers two financial products. First, platforms can leverage R2's infrastructure to offer revenue-based financing to their sellers. By investing the cash into inventory or marketing campaigns, sellers often witness an immediate uptick in sales, which boost a platform's transaction volume. In addition, through a partnership agreement, these platforms participate in the upside generated from financings offered through R2. Second, for businesses buying online, R2 enables platforms to add a white-labeled "Buy Now, Pay Later" experience. Leveraging R2's lending infrastructure, platforms can embed a one-click financing option at checkout, allowing buyers to make a purchase they would have otherwise postponed. This product in particular is tailored for marketplaces and e-commerce platforms that sell primarily to other businesses, which has been proven to increase order frequency and customer loyalty.

With an established presence already across Mexico, Colombia and Ecuador, R2 is on a path to rapid expansion across the region. R2 is confident that growth will scale in tandem with the progress they look to propel across the region, redefining the financial infrastructure in Latin America.

About R2:

Founded in 2020, R2 enables payment processors, POS systems and marketplaces to provide financing to small & medium businesses in Latin America. Via its API, R2 provides its embedded lending infrastructure to technology platforms so that they provide capital to merchants without taking on any risk. R2 works with some of Latin America's leading companies, such as Rappi, Clip and Kushki, among others. They are backed by General Catalyst, Y Combinator, 166 2nd, among others.

To learn more about R2, visit https://www.r2capital.co/.

Contact:
Roger Larach, Co-Founder & CEO
[email protected]

SOURCE R2