Tienda Pago: Improved Inventory Management for LatAm Businesses

A win-win-win solution for LatAm retailers, distributors, and manufacturers

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There are roughly 27.5 million small and medium-sized businesses (SMBs) in the Latin America (LatAm) and Caribbean markets. An MIT report found that this SMB ecosystem — primarily bodegas (small grocery or convenience stores) — represents over 99% of companies and more than 70% of employment in the region.

However, the report also found that only 50% of these businesses are still active after five years, with lack of cash availability and inventory management as the primary causes of this high failure rate. Alumni Ventures portfolio company Tienda Pago aims to solve this massive, underserved market’s short-term inventory-financing needs. The company provides weekly inventory financing to tens of thousands of small retail stores in Mexico and Peru, with plans to expand across LatAm.

A Win-Win-Win Across the Supply Chain

Tienda Pago’s value proposition is a win-win-win scenario for retailers, distributors, and manufacturers with compelling economics for all participants. Stores can use the platform to buy high-turnover consumer products using credit to increase sales and margins. At the same time, Tienda Pago empowers distributors and traders with cashless transaction services to reduce inefficiencies and costs.

The key components of the Tienda Pago system include:

  1. Fast Signup: Easy online onboarding process with instant credit approval.
  2. Buy Now, Pay Weekly: Shop owners can pay Tienda Pago weekly instead of funding orders at the point of purchase.
  3. Cashless Payments: Tienda Pago pays large consumer goods companies for their inventory using an electronic cashless transaction.

What We Liked About Tienda Pago

Low Loan Default Rate: The company is now processing over 45,000 loans monthly with an efficient payment collection process that keeps the loan default rate at <1%.

Major Brand Partnerships: Tienda Pago connects bodegas with notable consumer products companies like Coca-Cola, AT&T, ABinBev, Nestle, Grupo Modelo, Phillip Morris, and Heineken, among others.

Short-Term Working Capital: Having a pipeline for capital and inventory affords underserved businesses a creative, secure, and efficient way to diversify their product offerings, increase revenue, and build their credit history.

Experienced Executives: The Tienda Pago team benefits from strong industry experience, extensive market knowledge, and deep personal relationships. CEO Dan Cohen is an experienced entrepreneur originally from Venezuela. He co-founded Celistics, a logistics solutions provider for LatAm technology firms; and Movilway, a leading service network and electronic payments in LatAm.

How We Are Involved

Castor Ventures (for the MIT community) sponsored Alumni Ventures’ investment in Tienda Pago’s $12 million Series B led by Women’s World Banking (WWB) and IDC Ventures. Chestnut Street Ventures (for the Penn community) and AV’s Total Access Fund also participated in the round.

IDC Ventures and WWB are well-capitalized VCs with strong strategic relevance to the company. IDC has raised $400+ million to invest in tech startups, predominantly in Europe, the U.S., and LatAm. 

WWB invests in financial solutions, institutions, and policy environments in emerging markets, with a global reach of 53 partners in 32 countries, serving more than 30 million women clients. The firm’s mission-driven investment thesis aligns with Tienda Pago’s potential to extend financing to the underserved, with 65% of its customers (bodega owners) being women.

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Contact [email protected] for additional information. To see additional risk factors and investment considerations, visit av-funds.com/disclosures.