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Mexico's Payments Startup Clip Secures $100 Million Investment
Mexico’s innovative payments startup, Clip, has successfully raised $100 million from Morgan Stanley Tactical Value alongside another significant West Coast investor. This fresh influx of capital is aimed at fuelling further growth within Mexico, according to Clip's Founder and Chief Executive Officer, Adolfo Babatz.
Valuation and Investment Details
While the exact terms of this latest financial round remain undisclosed, it preserves Clip's valuation at approximately $2 billion. The second investor, although unnamed, was described by Babatz as one of the largest and most experienced mutual fund managers on the West Coast. Founded in 2012, Clip offers a range of payment solutions both digitally and via point-of-sale devices, along with financial services, lending products, and merchant-oriented software and APIs.
Business Prospects and Profitability
Currently, payments account for over 85% of Clip’s business, an area that Babatz revealed is profitable. He emphasized the company's strategy to either deepen or broaden its business reach based on current needs, stating that even within the payments sector, substantial growth opportunities still exist. Prior to partnering with Clip, around 85% of the company's merchants only accepted cash. Babatz estimates that there are potentially a trillion dollars in transactions awaiting digital processing, noting the enduring prevalence of cash in Mexico. Clip overall is edging towards profitability and has recently benefited from its historically frugal spending habits, which initially hampered growth during 2020 and 2021 but are now advantageous.
Previous Funding and Expansion Plans
Clip's previous funding round in June 2021 saw it raise $250 million from SoftBank Group Corp’s Latin American fund and Viking Global Investors LP. The company, currently employing about 800 people, plans to expand its workforce by approximately 150 employees over the next few years.
Venture Investments and Future Opportunities
In the wake of Latin America's dismal 2022 for startup investments, largely due to high US interest rates, Clip stands out as an exception. Babatz remarks that despite the challenging investment landscape, there are still significant funds available for promising companies demonstrating progress and consistency. He expressed optimism about Clip’s role in providing good news to the broader tech community in Mexico and Latin America.
IPO Prospects and Strategic Observations
As IPO opportunities in the US begin to re-emerge, Clip's future plans for a public offering will heavily depend on the US macroeconomic environment. Babatz indicated that the company would be closely monitoring other emerging market companies in the coming months, although he refrained from disclosing specific IPO plans. Morgan Stanley Tactical Value, representing the bank’s non-control private investment arm, will now hold an observer seat on Clip's board, solidifying its involvement in the company’s strategic decisions.
This latest investment round underscores Clip's robust positioning in the fintech sector, as it continues to enhance its offerings and expand its reach within Mexico and potentially beyond.
