DEUNA, a Mexico-based one-click checkout commerce startup, is officially joining Latin America’s nearly $100 billion e-commerce sector with $30 million in Series A funding after largely staying under the radar since being founded in late 2020.
Co-founders Roberto Enrique Kafati Santos and Jose Maria Serrano started the company after a career at McKinsey leading digital payments for Kafati Santos and at delivery company JOKR for Serrano. They also recently brought on Jose Jorge Molina, who was previously chief marketing officer for Bitso, to join the founding team to lead marketing.
“People were looking for help digitizing their businesses, and as we started looking into this, realized that brands needed help selling online,” Kafati Santos told TechCrunch. “At the time, we didn’t understand the opportunity to do an e-commerce platform, but the decision was obvious, and we have done payments ever since. We helped several brands last year and have now increased our sales five times.”
E-commerce is a hot market in Latin America, with the founders estimating it will grow 30% each year. However, they say the market continues to be plagued by three challenges: customer acceptance, conversion and fraud.
That’s why they say they are building a “Commerce 3.0” that will tackle all three of those. DEUNA provides a payments infrastructure that integrates with major payment providers and alternative payment methods and provides merchants access to more than 3 million users. In addition, merchants can use the tools to handle payment orchestration, payment processing, fraud prevention and lifecycle management based on actionable user real-time analytics.
In particular, to combat acceptance, DEUNA will offer multiple payment methods, which Kafati Santos believes will also help solve the problem of conversion, where some 70% of customers abandon their cart at checkout. The company has been able to increase acceptance rates by 40% and prove out about three times higher conversion rates, he said.
In Latin America, that is often due to about half of customers not having their payment method of choice approved. On top of that, those whose payment is approved, one in 20 payments are fraudulent, for example, a payment made with a stolen credit card, he added. That’s why DEUNA is building its own fraud tech with custom rules for merchants that cuts down on payment fraud and denials.
With a rather large e-commerce market, a lot of one-click competitors have entered, mainly driven by the consumer buying behavior shift that took place over the past two years. We recently saw Sleek raise $1.7 million to get started in a space that is dominated by companies like Ownit, Bolt, Checkout.com, OurPass and Rapyd, which have collectively raised more than $3 billion in investments within the past 18 months. During that time, Colombia-based Addi said it was getting into the one-click space after taking in a $75 million extension to its Series B.
Kafati Santos said DEUNA has been able to differentiate itself from many of the players in that it is solving the whole acceptance-conversion-fraud triangle, whereas others are just going after pieces of it.
Over the past two years, Kafati Santos and Serrano had bootstrapped the business for the most part, with the exception of a $7 million seed round in October 2021. They have grown revenue 120 times in the last year and brought on clients, including KFC, Pappos and Dunkin’ Donuts.
This new investment of $30 million was led by Activant Capital, with participation from Valor Capital, Abstract Ventures, Acrew Capital, Upload Ventures and a group of individual founder investors from companies including Plaid, Kavak, Jeeves, Xepelin, iFood and R2. The company raised a total of $37 million.
The founders plan to use the new capital to expand its presence in Mexico, Colombia, Ecuador and Chile, product development, go-to-market, adding employees to its team of 90 and entering new countries, like Brazil, in the coming months.
David Yang, partner at Activant Capital, said his firm has invested in a number of fintech companies and believes DEUNA is doing something unique.
“Raising a $30M Series A is hard in any market, but with their backdrop, we had high conviction in what they are doing,” Yang said. “This is a big market opportunity, in some ways more compelling than the U.S. DEUNA’s approach is also holistic rather than just pieces of the market. The team, and the vision they had with Jose (Molina) joining, has had strong execution to date.”