He Raised $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.

In this interview, David talks about his experiences witnessing financial hardships during childhood and co-founding Digitt, a transformative fintech startup. His perseverance, adaptability, and deep commitment to improving the financial lives of others are commendable.

David’s grit and innovative spirit are even more impressively showcased when building and scaling a company in an unfamiliar industry.

Listen to the full podcast episode and review the transcript here.

The Roots of an Entrepreneurial Spirit

Growing up in a middle-class family, David’s childhood was marked by joy and financial difficulties. His father’s bankruptcy when he was just 10 years old became a defining moment that influenced his worldview.

Observing his parents’ struggles with debt instilled in David a profound understanding of the financial challenges many face and inspired his mission to transform how people navigate financial systems. These experiences helped shape the person and founder he is today.

Despite these challenges, David’s parents made sacrifices to ensure he attended private schools and university, exposing him to peers from affluent backgrounds. Instead of fostering resentment, this environment fueled his ambition.

“Seeing what was possible,” David reflects, “showed me that even in a country like Mexico, with its political and social difficulties, building a successful business is attainable.” As successful people surrounded him, he identified patterns they demonstrated, finding inspiration in them.

David encountered a “very interesting level of wealth,” the large market, and the myriad available opportunities. That’s when he decided he wanted to be an entrepreneur.

From Corporate Foundations to Entrepreneurial Risks–Adactivo

David started working during his second year of college, not out of passion but necessity. He remembers balancing work while doing his bachelor’s degree at university. That’s how he supported his family and gained valuable experience.

After earning his degree, David began his career with a full-time job at IBM. However, the corporate world wasn’t his calling. “Corporate work is not for me,” he recalls, leading to his decision to leap into entrepreneurship.

David’s first two ventures, however, were lessons rather than successes. He remembers being invited to co-found Adactivo in the out-of-home advertising space. Despite the promise of a burgeoning advertising market, he quickly realized the importance of passion in entrepreneurship.

“You shouldn’t start a company you’re not passionate about,” David advises. The lack of alignment with his interests and values led to the venture’s failure. He felt like advertising was not the right industry for him.

Lessons Learned When Building PagoSafe

David’s second company was PagoSafe, a fraud prevention startup. This venture addressed credit and debit card fraud, a problem he had experienced firsthand. While closer to his interest in fintech, the market constraints in Mexico made scaling impossible.

Mexico has a smaller number of just 50 banks compared to the US, where there are thousands of banks, credit unions, and now fintech companies. The market and opportunity size did not allow for venture scaling.

Not all 50 Mexican banks issued consumer or retail cards, which limited the space. When interacting with the banks, David realized that it made more sense for the banks to build the product in-house.

They had their own authorization processes, flows, and fraud prevention tools. Customers could turn the cards on and off and use certain parameters defined inside each bank and its mobile applications.

“You need to target a market large enough for venture scale and also target the right market,” David learned–a lesson that would influence his future decisions. He quit the company and the path he was following and switched directions.

The challenges of David’s earlier ventures set the stage for Digitt, a fintech company redefining consumer lending in Mexico.

Building Digitt: A Revolutionary Solution

After PagoSafe, David struggled for a year and a half with no income. The idea for Digitt emerged from David’s personal struggles with credit card debt, where he faced exorbitant interest rates as high as 70%.

David listened to an episode on the Dealmakers Podcast with Renaud Laplanche, founder of LendingClub and Upgrade. In the episode, Renauld talked about the inspiration behind building LendingClub. He was paying 18% on his credit card and only getting 2% on his savings account.

Drawing inspiration from Renauld and determined to address a similar inequity, David envisioned a company offering low or fair rates while remaining profitable. He teamed with Manuel Alvarez, but they lacked experience in the financial sector, which became both a challenge and an advantage.

Unburdened by traditional industry practices, David and Manuel Álvarez reverse-engineered the lending model and built a profitable, successful, and sustainable business, Digitt.

“If we had known what it would take, we might have never started,” David admits. Their naivety forced them to innovate, creating efficient systems and operational infrastructure and leveraging technology to reduce costs.

At Digitt, they also built a suitable underwriting model and customer acquisition avenues to offer economical rates while building a successful business. These savings were passed on to consumers through lower interest rates.

David and his co-founder sought guidance from industry veterans to compensate for their lack of expertise. They connected with senior figures from companies like LendingClub and SoFi through relentless networking.

David and Manuel secured early investment and advisory support from SoFi’s former president and CFO. The duo also spent time learning by reading and researching.

Digitt’s Business Model

Digitt specializes in credit card debt refinancing for prime and near-prime consumers in Mexico. These individuals have stable incomes, good credit scores, formal jobs, and a formal education.

They have demonstrated willingness and ability to pay but are burdened by high interest rates, ranging from 70% to 150%. Digitt offers them loans at significantly lower rates—often half what traditional banks charge.

The company generates revenue through interest while providing tangible financial relief to its customers. David explains that they launched Digitt in 2019 with minimal resources and operated manually in its early days.

“We met our first 82 customers in person, printed physical contracts, and manually processed everything,” David recounts. This hands-on approach not only validated the market need but also built a foundation of trust with early adopters.

Raising Funding for Digitt

Digitt operated on a shoestring budget for nearly three years, relying on a $1M angel investment and bootstrap funding. This constraint fostered a culture of automation, efficiency, and innovation. They didn’t hire many people or invest in growth but focused on creativity.

Since David and Manuel had zero industry experience, they weren’t aware of venture capital funding. Between 2019 and 2022, the duo used available resources to fund loan insurance and the portfolio to build a track record.

By 2022, armed with a $4M seed round from investors like Clocktower Ventures, Gilgamesh, New Stack Ventures, and FJ Labs, Digitt scaled rapidly, growing its business tenfold while maintaining strong financial fundamentals.

David reveals they have maintained low loss rates and healthy customer acquisition costs. Next, Digitt secured a $50M debt facility from Treville (formerly CoVenture) to fuel further growth. Unlike equity financing, which emphasizes vision, debt financing focuses on operational performance.

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The last milestone demonstrated the robustness of Digitt’s lending model and enabled the company to expand its portfolio, leveraging automation while maintaining low loss rates and healthy acquisition costs. These strategies helped the company accelerate rapidly.

Raising Debt Funding for Digitt

Talking about his fundraising successes, David explains that they demonstrated a good product from the lending perspective. Debt investors typically have a different mindset when funding companies than venture capitalists.

Entrepreneurs must sell their vision and how big the opportunity is. Debt investors ask questions that must be answered like:

• What has the company built?
• What’s the product portfolio performance?
• How will you acquire customers?
• What are the characteristics of those customers?

These investors are risk-averse, and their goal is to eliminate risk in every possible way. They want to limit the downside of their investment because their upside is capped. The upside is the interest rate and the fees they charge for the investment.

Debt investors are unlike venture capital money, in which the upside is uncapped, but the downside is also going to zero. During the first few initial calls, investors get to know the business. Next, they dive deep into understanding the numbers, performance of a portfolio, and financials.

This is why the process of going from the first conversation to getting a term sheet is longer. Even after the term sheet is drawn up, they undergo a very detailed, complex, and deep due diligence and structuring process. For Digitt, this process lasted from October to January.

David proudly reveals that Digitt has successfully attracted capital market investors, getting nine different term sheets, which is phenomenal. They also had the leverage to negotiate terms and ended up with an excellent deal.

However, David and Manuel had to navigate the five-month lag between signing the term sheet and drawing funds for the first time.

Digitt’s Future

With a mission to democratize fair lending practices in Mexico, Digitt is not just a business but a catalyst for financial empowerment. David’s vision is a world where, due to Digitt’s success, scale, and influence, financial products work in favor of people and not banks.

He envisions a future where fair interest rates and responsible and predictable financing are the norms, and banking institutions can be trusted to look out for their customers’ best interests while also being profitable.

By addressing systemic inequities in the banking sector, David García Aceves is creating a legacy that bridges financial gaps and inspires the next generation of entrepreneurs.

Through resilience, humility, and a relentless pursuit of innovation, his story reminds us that even the most challenging journeys can lead to extraordinary destinations.

Listen to the full podcast episode to know more, including:

• 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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