Introducing R2

A company redefining the financial infrastructure for SMBs in Latin America

We are excited to introduce R2, a company on a mission to provide the 40+ million small businesses in Latin America with access to frictionless capital. Over the last year, we’ve created the infrastructure that empowers technology companies such as payment processors, point of sales systems, marketplaces, and e-commerce platforms to seamlessly offer capital to their merchants. By powering the financial arm of some of the region’s most iconic platforms, we’ve grown our portfolio 42% on a monthly basis — more than 50x since January 2021.

As founders from Central America, we understand firsthand the positive impact small businesses have in terms of job creation and economic security. We’ve also witnessed our families search for capital to grow their businesses during both good and hard times. Too often, small businesses can’t invest, and therefore grow, because it’s really difficult to access capital. Today, these small businesses face a $1.2 trillion dollar credit gap in Latin America.

Turns out this is largely a data problem: How do you assess the risk profile of small businesses that typically don’t have financial information on hand? And if they do have it, is it granular enough to tell you much about their future performance?

Even though the onset of the pandemic made it more difficult on small businesses as banks pulled back from financing this segment, a crucial shift happened: cash transactions fell by 35%. Overnight, millions of small businesses in the region were forced to buy and sell digitally in order to survive.

We started R2 at the height of the pandemic as we witnessed this explosion of data across the platforms they use to buy and sell — rich data for underwriting the small businesses overlooked by banks. Indeed, at R2 we believe small businesses shouldn’t have to go to a bank to obtain the financial resources they need. Instead, those financial resources should be readily available within the tools and platforms they use everyday to conduct their businesses.

This is precisely what we do at R2. We enable payment processors, marketplaces, and e-commerce platforms to offer capital. Technology platforms are a much more natural and comfortable place for small businesses to receive financial services. But offering capital, which deceivingly looks like a feature from afar, requires a very 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. With R2, platforms can now offer capital to their merchants risk-free and cost efficiently, while maintaining control of the experience with white-labeled components available through our APIs.

That’s why over the past year we’ve enabled some of the region’s largest platforms, such as Rappi and Clip, to finance thousands of resilient businesses across Mexico, Colombia, and Ecuador. To fuel our mission, we’ve raised $5.9M in seed financing, led by General Catalyst, and with participation from investors such as Y Combinator, 166 2nd, Soma Capital, and Emles Venture Partners, among others. Lastly, to build on our vision, we’ve assembled a distributed team of engineers, data scientists, and credit experts with previous experience in companies such as Google, Mercado Libre, Uber, J.P. Morgan, McKinsey, Ualá, and Xapo.

We’re emboldened by our initial growth from current partners — but we’re just getting started. Over the next decade, we foresee an explosion of verticalized software companies serving small businesses in Latin America, much like we’re seeing in other parts of the world. These niche platforms, which cater to specific business segments, are often more agile and even better suited to work with R2. We’re excited to partner with these emerging platforms to redefine the financial infrastructure for small businesses in the region.