David García Aceves On Raising $60 Million In Equity And Debt To Build A Financial App Helping Prime Customers In LatAm Eliminate Debt And Improve Their Finances

David García Aceves, born and raised in Guadalajara, Mexico, embodies resilience and innovation. His story traces his journey through building two companies that didn’t quite work out before creating a new rocket ship, drawing valuable lessons from his failures.

David’s latest venture, Digitt, has raised funding from top-tier investors like Clocktower Ventures, Gilgamesh, New Stack Ventures, FJ Labs, and Treville.

In this episode, you will learn:

• David’s challenging upbringing shaped his determination to improve financial systems and inspire his entrepreneurial journey.
• His first failed startup taught him the importance of pursuing ventures aligned with personal interests and values.
• Identifying a scalable market is crucial; David’s second startup pivoted after discovering the limited potential of the fraud prevention space in Mexico.
• With no prior experience in finance, David’s fresh perspective enabled Digitt to reimagine credit solutions in Mexico.
• Limited resources forced Digitt to develop an automated, lean, scalable operation before raising significant venture capital.
• Meeting early customers in person and iterating on underwriting processes helped Digitt achieve sustainable, venture-level growth.
• Digitt’s journey highlights the importance of combining equity funding with debt facilities to scale lending businesses effectively.

 

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About David García Aceves:

David García Aceves, based in Guadalajara, Jal., MX, is currently a Co-founder and CEO at Digitt México. He brings experience from previous roles at Irradiate More, Universidad Panamericana, PagoSafe, and Adactivo.

David García Aceves holds a 2014 – 2014 Diplomatura in Introduction to Business Administration (Programa IDE) @ IPADE Business School and has a robust skill set that includes Trabajo en equipo and more.

Connect with David García Aceves:

• LinkedIn
• RocketReach
• X
• ContactOut

Read the Full Transcription of the Interview:

Alejandro Cremades: Hello, everyone, and welcome to The Deal Maker Show. So today we have a fantastic founder that that has a really inspiring journey, actually. you know We’re going to be talking about his journey of going. you know He actually started two companies that didn’t work out so well before he ended up um really leading and riding the rocket ship that he’s on now, you know which was a result of all the a craziness that he was seeing when building his previous two companies.

Alejandro Cremades: And he wanted to put an end to that. And again, we’re going to be talking about the building, the scaling, ah really creating something in an industry that you have no idea about, which is really spectacular. But again, I don’t want to make you wait any longer. And without further ado, let’s welcome our guest today, David Garca Ateves. Welcome to the show.

David García Aceves: Thank you, Alejandro. Thank you for having me. Very excited to to be here.

Alejandro Cremades: So born and raised in Guadalajara, Mexico. Give us a walk through memory lane. How was life growing up for you?

David García Aceves: I would say, first of all, it was great. I feel I had a very happy childhood and and very fortunate. um I grew up here. I was born and raised, as I said, here in Guadalajara in a middle class family in in Mexico. And I grew up about ah around some financial difficulties. difficulties My father went bankrupt when I was 10 years old, approximately.

David García Aceves: So I grew up around some financial difficulties and and money constraints. um And that ended up inspiring my my journey as a founder because I’m now on a mission to solve or improve the financial relationship ah that people have. So that was a little bit of it.

Alejandro Cremades: I know that in your case, you had the opportunity of um you know seeing some financial hurdles that that you were experiencing your your parents say go through and you know getting into debt and and things like that that really made you who you are today. So I’m sure that was not easy.

David García Aceves: Yeah, I mean, it was it was not easy, as you said. There were a lot of constraints around growing up. There worse there there was no extra money. I saw my parents struggle with debt quite a lot. um But as you said, that I think that that formed me as as a person and influenced me as a person and now as a founder.

David García Aceves: You know this very good, but ah resilience, it’s an essential characteristic of every successful family because it’s not easy, it’s never easy. And I think I built up that resilience as I was growing up around some difficulties. And now, looking backwards, I’m very happy and thankful that I grew up that way, um seeing all of my parents’ sacrifices and um At the same time, i also my parents sacrificed a lot so that I could stay in private schools, private university. So even though I had those constraints, I was also seeing other people, classmates, friends that came from successful business families. And I saw that was what was possible through entrepreneur entrepreneurship and and I wanted to aim for that. So that was a bit of what influenced me and resulted in me starting a company.

Alejandro Cremades: So let’s talk about that too, because um you know being surrounded by so successful people in in Mexico, right in in it’s amazing when you go to one of those universities or when you go to one of those schools as well, like the people that have money, I mean, it’s crazy money.

Alejandro Cremades: So how was that for you to be able to see some patterns on some people that were having success and what you were seeing that was working and what you were getting inspired by?

David García Aceves: yeah

Alejandro Cremades: What what what were you seeing like being surrounded by that you know also level of wealth?

David García Aceves: Yeah, I mean it was very interesting because I think when when you’re saying that like some people get um I would say like They feel bad that they’re not in the same situation and they can even be angry or whatever. But in my case, i for me, it was just seeing what was possible. like Seeing that in a country like Mexico, with all of ah political difficulties and social difficulties, it’s still possible to build successful businesses.

David García Aceves: And it’s still possible to build them the right way. And and as you said, you can get to a very um interesting level of wealth, ah but also impact. have It’s a large market. There are very large opportunities. So for me, it was most about seeing what was possible and and trying to aim for that.

Alejandro Cremades: It sounds like you wanted to be an entrepreneur, you know, early on. I mean, you had made a decision, you know, I guess when you were a kid and and you wanted to really, you know, take it to another level, especially financially. Now, in your case, after you graduated from university, you decided to go to work for IBM. So why IBM instead of like getting going, you know, with your entrepreneurial journey right away?

David García Aceves: Yeah, actually, I mean, that’s a great question. um It was a matter of, I needed to have a job also for, it was more like like a financial decision. I needed to get to start working from very early early on on my on my, doing my bachelor’s degree. So I started working since I was I think in the second year of of college. I had to work in different ah companies and then I think I was like a year and a half before graduation. I got this full-time job at IBM um and then I continued for the next couple of years after graduating. ah But this was mostly a financial decision. I needed to help my parents pay some of the tuition fee of ah of my university. so

David García Aceves: That’s why I started working for IBM, and then I found it to be an interesting school in in in many ways. um So i stay I stayed there for a couple of years until I um i thought like I cannot continue down this path. The corporate work is not for me, and that’s when I decided to make the jump and and and left IBM. yeah

Alejandro Cremades: but So you did a couple of companies before, you know, really writing the rocket ship of digit. And they, unfortunately, as they say, you know, you either succeed or you learn. So with those two companies, what happened?

David García Aceves: yeah

David García Aceves: Well, the first one was a short stint. Actually, that was not my idea. I was invited to co-found a company in the advertising space, like out out-of-home advertising space.

David García Aceves: um and The main lesson for for that one from from that one was that you shouldn’t start a company you’re not passionate about. I really don’t like out-of-home advertising. I don’t like seeing billboards on the streets. and I was trying to build something in that space and I was definitely not passionate about building that company.

David García Aceves: and um Precisely for for many reasons, they were not the right partners. It was not the right industry for me. There were many reasons um which I think that that cost that company not to succeed. um But above all, what I learned is that you should only start a company that you’re really passionate about.

David García Aceves: building. And then the second company was in the fraud prevention space for ah credit cards and debit cards. So that was getting closer to to FinTech, which I was really interested in. And I had a fraud on my on my credit card as I was as i was trying to build the other company. And I started thinking about like how fraud prevention worked and trying to build something in that space. But then in that case, what we learned was that market and the opportunity didn’t allow for venture scale. There were very there are very few banks in Mexico, like compared to the US in which you have thousands of banks and credit unions and now FinTech companies. In Mexico, you only have about 50 banks.

David García Aceves: Out of 50 banks, not all of them issue um consumer cards or retail cards. So the space was very, very small. And as I was talking to banks and getting closer to banks to sell that product, I noticed that it made a lot more sense for banks to build that product, for operation products themselves. Each of them had had their own authorization processes and flows. and so we decided to stop building that company. And that’s what ended up happening. Every bank now has their own fraud prevention tools. like You can turn your car your card on and off, and you have some parameters that you can define inside each of banks each of the bank’s mobile apps. um So the second lesson was that I wanted to build something in a space that was large enough to allow for for venture scale, and you need to target the right market.

David García Aceves: And you need to be honest about it. When you find that the market is not there and it’s not large enough, you need to be humble enough to stop the p that you’re the path that you’re following and and switch directions.

Alejandro Cremades: But what about also switching directions into a segment that you have absolutely no background, no no knowledge about?

David García Aceves: Yeah, I mean, like that’s what ended up happening with with Digit. As I was building these two companies, I thought I had saved enough money to allow me for six months or or nine months of not having a formal salary or or or stable income. But I spent all of my savings building these two companies. It took longer than I had originally planned.

David García Aceves: It was like about a year and a half that I had no income whatsoever. So I spent all of my savings and ended up trapped in credit card debt. um and I was paying a 70% interest rate to my VBA card. It’s funny because I listened to your episode with Renola Planche.

David García Aceves: from Lending Club and Upgrade. And he mentioned that what inspired the creation of Lending Club back then was that he saw that he was being charged 18% on his credit card and and was only getting like 2% on his savings account.

David García Aceves: In the case of Mexico, you get 0% on your savings account or checking account, but you’re being charged 70, 90, 100, 150% on your credit card. So it’s even more absurd than it is in the US or other developed markets. But I was paying the 70% interest rate that made it virtually impossible to pay it off.

David García Aceves: um i was I had a great, great, great score. I had an impeccable payment record. I had shown willingness and ability to pay, but I was still paying those type of of rates. So I started questioning but that why that was happening in Mexico and really decided to do something about it now through Digit, which is a company that is is is’ now taking off and it’s going down the right path.

David García Aceves: um And as you said, we had we had no previous industry experience. We had never built a company in finance, banking, lending. We had no previous jobs related to the industry. And that was both pretty good, ah but also has some hats and challenges. It was pretty good because I think if we were industry insiders, we had never thought about building a company in which it was possible to offer fair rates to consumers and at the same time build a profitable and sustainable business.

David García Aceves: um So that, let’s say, um I would say we were probably even naive back then, like but but that forced us to start with the low or fair interest rates and then reverse engineer the business so that it was a profitable and successful and sustainable business down the road. So we had to build, like using technology, build all of the operational infrastructure so that We were so efficient that we could translate those savings to consumers, build the right underwriting model, build the right customer acquisition avenues, everything we need to build so that fur rates were possible while building a successful business. On the other hand, we also needed to get that industry experience and knowledge somewhere.

David García Aceves: So that forced us to knock on many doors, talk to many people with that industry experience. That that that led to amazing conversations with like very senior people senior people from Lending Club, for example, very senior people from SoFi. The former president and c of CFO of SoFi ended up investing and at the company very early on, and I became a great advisor to the company.

David García Aceves: And so we knocked on every door that we could. and We also learned a lot by doing. We also learned a lot by reading and doing research. um But I think it was key for us not to have industry experience for for this specific company.

Alejandro Cremades: Well, probably, if you would have known what it would have taken, you would have been like, no way, we’re starting something like that, no? So I guess, that David, David, a question that comes to mind here, you know, so that the people that are listening, you know, really get it, you know, as well is Digit.

David García Aceves: yeah um yeah

Alejandro Cremades: What’s the business model? How do you guys make money?

David García Aceves: Yeah, so, Digit does credit card debt refinancing for prime and near-prime consumers in in Mexico. So, for customers that have shown this willingness and ability to pay, have good credit scores, formal jobs, formal education, predictable income streams, ah but are paying very high interest rates, as I said, 70 to 150%.

David García Aceves: We offer them a loan at a lower rate, much lower rate, typically at least about half of what they are paying to the bank. And we make money on that loan that we issue. So the main revenue stream or most super revenue stream for the now is interest revenue.

Alejandro Cremades: So then you were talking about it earlier, the raising capital. How much capital have you guys raised to date and what has been the journey to of going through raising the money?

David García Aceves: Yeah, that’s a great question. We have raised about $6 million dollars in equity money, in in venture capital money. um The path was interesting. um Going back to not having industry experience or startup experience, we were not, let’s say, you aware of a venture capital industry when we started the company. We were not building the company for VCs. We had a mission that we wanted to see realized, and that’s where we started the company. So from, I would say,

David García Aceves: 2019, when we started the company and launched it to 2022, we raised virtually no money. but We raised like ah a million dollars in um mostly angel money.

David García Aceves: from from a few renowned angel investors and then some friends and family and stuff like that. We used most of that money for like to fund the loan insurance, to fund the portfolio, to build some track record. ah So we basically bootstrapped the company from 2019 to 2022. That forced us to build a very efficient business, very automated business, because we had no access resources to hire a lot of people and probably even invest in growth. So we had to be very creative during those first three or four years. And then in 2022, we raised almost a $4 million seed round um from the likes of Clock Tower, Gilgamesh, FJ Labs, and Newstack Ventures, ESBC.

David García Aceves: and a few good engine investors as well. um And then that’s why the company when the company really took off. We’ve grown the business by more than 10x since we closed the seed round. um And we’ve grown the business by 10x while at the same time keeping very, very strong economics, very low loss rates, ah very healthy customer acquisition costs, et cetera.

David García Aceves: um So that’s what the what the journey has been um in in in terms of equity equity money. And then on the debt financing side, also a very important part of the business. We recently closed a $50 million dollars debt facility with CoVenture. Well, now called Treville, they recently switched names, but um we raised a $50 million dollars debt facility with with them.

Alejandro Cremades: So you were talking about the journey too. In terms of the journey with Digit, at what point do you guys realize, hey, I think that we’re into something here. I think that this could be this could be exciting.

David García Aceves: i mean we I think there were like different moments in which we thought we were on to something. ah First of all, very early on, we it was just me and my co-founder Manuel. ah We had no technology, we had no money, we had no investors, whatever. And we just built a website with a loan application built in it.

David García Aceves: But we had no technology in any way. And so we were literally printing a physical contract and going to each of our first ah customers’ houses ah to sign the contract, then went back to the office and manually did everything. And meeting those 82 customers in person and talking to them definitely led to seeing like, hey, there’s something here. There’s a need in the market. And there’s an interesting business to be built um around this model. And then I think um then we’re between and 2022, there were moments in which we were growing the business fast and we and we that that basically validated that there was ah an opportunity in the market. But then we made mistakes around underwriting and collections and stuff like that. and

David García Aceves: that made us notice that that we were not in the right direction in many ways. And so we learned from those mistakes, fixed them. And then I think it was around late 2021 or mid 2021 in which we found, or we got to a stage in which we noticed that we were able to grow the business very fast, adventure speed.

David García Aceves: But with very sustainable and and very strong fundamentals. like We could grow the business very rapidly by keeping a very low loss rate. We could grow the business rapidly by keeping a very healthy customer acquisition cost, um a very efficient operation. We could automate most of it. And I think that’s when when we add the confidence to step on the pedal and really accelerate the the growth of the business.

Alejandro Cremades: So talking about the acceleration of the business too, we were talking about the earlier about the equity raise, but also to accelerate a business like this, you need the debt you know side of things. And you guys got the 50 million debt facility. So how that say what what is typically the um the process of of being able to close something like that?

David García Aceves: Well, first of all, I think you need to have a very good product from a lending perspective. debt investors are mostly it’s very You need to have a very different mindset than when raising VC money. VC money, you need to also sell the vision a lot and sell the how big the opportunity is. In the case of Fed investors, they only care about What actually has been built like what’s the performance of your portfolio? How will you acquire customers? What are the characteristics of those customers? So they are a very different type of investor in which they their main um

David García Aceves: goal is to eliminate risk in every possible way. They’re not risk takers, so they need to limit the downside of their investment because their upside is capped. The upside for that investors is the interest rate and probably a few fees that they charge you, but their upside is capped, unlike the venture capital money in which the upside is uncapped field, but the downside is also going to zero. Then investors cannot go to zero, so they focus a lot on building everything required to to achieve that goal. So the process typically is um

David García Aceves: Having a few first initial calls so that they get to know the business, but then they go very deep into understanding the numbers, the performance of a portfolio, the financials. So the process from going to the first conversation to getting a term sheet is longer because they really, as I said, go very deep into the business and the numbers.

David García Aceves: And now after receiving the term sheet, it’s also very, it’s a very detailed, complex, deep due diligence process and structuring process. um So in our case, we started conversations around October last year.

David García Aceves: and and we signed the term sheet in January this year. So that’s that’s how we how we how long it took from getting to the initial conversations with term sheets. We were very successful in the way that we were very attracted to capital markets investors. So we got nine different term sheets. We had some leverage to negotiate the terms and end up with a very good deal. And then it took us about five months from signing the term sheet to being able to do the first draw and signing the all of the formal documents along agreement, the trust, the ESPB, et cetera. So it was a five month process to get the deal that that do the deal done and and actually being able to draw for the first time in June this year.

Alejandro Cremades: So obviously, when something you know ah like it is like raising money or hiring or customers, it always requires a vision. um So if you were to go to sleep tonight, David, and and you wake up to to a world where the vision of Digit is fully realized, what does that world look like?

David García Aceves: Yeah. Now, first first of all, Alejandro, I love this question about your um on your show um because I think entrepreneurship or or starting a company is all about precisely trying to have your vision of the world realized because you’re not happy with the status quo. And I think in our case, that vision would be a world in which as a result of digits, success, and and scale and influence, ah financial products in Latin America work in favor of people and not in favor of banks. um I think a world in which fair interest rates are are the are the norm.

David García Aceves: um Responsible and predictable financing is the norm, and financial institutions can be trusted ah to look to look at to look after the their customers’ best interest. so And of course, in this world, financial institutions are also profitable businesses, right? If not, that wouldn’t be possible for for long. So that’s what we’re trying to prove, that but both ah conditions like fair interest rates and successful financial institutions can coexist.

Alejandro Cremades: So let’s look now, um you know, towards, we’re looking towards the future. I want to look towards the past, Steve, because I mean, you had two companies that failed before this one, you know, where you’re succeeding. And if you had the opportunity of going back and and seeing that younger David that is coming out of IBM, thinking that it’s going to conquer the world, start a business, you know, make it happen, oh, you tell that younger self, oh, be that one piece of advice for launching a business and why, you know, given what you know now.

David García Aceves: Yeah, that’s a great question as well. I think the the most important one, I mean, there are many, but the most important one would be like, first of all, just to enjoy the ride. like Starting a company is very hard, but it’s absolutely fulfilling. So I would say I would have advise ah advise myself to enjoy the roller coaster that starting a company is without getting overhyped on the ups or over frustrated during the downs, I would say. It is a journey that requires a very balanced mindset in both situations. You cannot fall prey to your success when things are going very good and relaxed, but you can also not get beaten up and and let’s say,

David García Aceves: destroyed by the bad times that happen very often as well. So I would say that enjoy the ride and keep a balanced mindset during the ups and during the downs as well.

Alejandro Cremades: I love it. So David, for the people that are listening that would love to reach out and say hi, what is the best way for them to do so?

David García Aceves: I think probably, I’m not on social media, so probably LinkedIn.com and my email is David David at digit with a double t, D-I-G-I-T-T dot com.

Alejandro Cremades: Amazing. Well, easy enough. Well, David, thank you so much for being on the deal maker show today. It has been an absolute honor to have you with us.

David García Aceves: Thank you Alejandro, this was great, thank you for having me.

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