Colombia is already a Latin power of ‘tech’ ventures in the financial sector. Here are three that promise.
Those who use technology to innovate in the financial sector are taking it out of the stadium. The majority of banks today are advancing digital transformation processes. But the entrepreneurs who bring their ideas afloat are taking the most attention.
Investors, and even traditional financial institutions, go after them because they propose agility and experiences centered on the client. These same factors affect attracting thousands of users who find value.
The fintech ecosystem of Colombia is considered the third most important in the region. Only Mexico and Brazil surpass it, but Colombia’s grows more than these.
The Fintech report in Latin America of the IDB and Finnovista found that in 2018 Colombia had an increase of 76% in ventures of this type. He identified 148, while in the previous year there were only 84.
In the country, credit scoring, identity and fraud (450%), wealth management (300%), business finance management (111%) and loans (80%) have been increasing more.
All these startups already mark their ground while they advance with really huge steps. Money presents what three of them are doing in several cities.
Two of them, Sempli and Finsocial, have just passed the local selection panel of the Endeavor high-impact entrepreneurship network. And they are already preparing to go to the international selection panel that would allow them to be part of that important network.
Another, the newborn Addi, has the experience of its founder and the juicy seed stage investment that it received, and has created an expectation in the sector.
Felipe Llano and Esteban Velasco, co-founders of Sempli. From Sempli, Llano and Velasco offer loans to small and medium enterprises.
Sempli was consolidated, according to the Asociación Colombia Fintech, as one of the fintech that grew the most in 2018. It did this by financing small and medium-sized companies,
Several milestones locate the entrepreneurs paisas Felipe Llano and Esteban Velasco in the focus of attention. At the end of the day, they entered the IDB list of the Latin fintech that has received the most capital from investment funds, with a total of more than US $ 16 million.
With this leverage they have expanded their loan portfolio more than four times and today they operate in eight cities in the country.
They do not serve their customers in physical branches; They do their operations by digital means and start from the technology they have developed for the credit analysis process. It is called SempliScore, which with automated and semi-automated analytics defines a score to guide on the probabilities that the applicant of a loan will pay for it.
This system allows them to have a clean rate of infrastructure cost overruns, such as costs or hidden commissions. They work on a vocabulary of “effective rates”. They propose to facilitate access to resources in a more agile way than traditional banking.
Velasco and Llano met while working precisely in an investment fund. There they detected the difficulties faced by small businesses to obtain a loan that allows them to grow and face complex contexts.
In their model they can disburse credits in 72 hours, in amounts ranging from $ 30 million to $ 300 million and terms from 6 to 36 months.
It has been almost three years since the platform was released, and in that time they have disbursed more than $ 52,000 million in credits in more than 350 companies.
“We believe that in our segment fintech can coexist perfectly with traditional financial institutions. Of course, the digital birth can generate some fears in the traditional segment because we have the ability to carry out projects in absolutely fast times. And being leveraged in technology makes us different not only for our clients, but also for internal processes ” says Llano.
This is his third enterprise. In the two previous ones he found himself with failure and for that reason he became an employee.
But as the third is the loser, he found chemistry with Velasco, an experienced investment banking executive who had also failed in other attempts at entrepreneurship. Together they managed to move the project forward.
“You have to work with people smarter than you, make resignations, not point them at many things simultaneously. Four out of five companies in Colombia after five years do not exist and one of the main reasons is access to financing. Growing financially in a structured way helps avoid failure” Velasco told Dinero.
From Cali, in Bogotá
After spending 15 years abroad, the Cali Santiago Suarez returned late last year to “bring the country”.
He studied scholarship at the Yale University and from there he took off a prominent career as vice president of strategy for the North American fintech LendingClub, leader of the global innovation team of J.P. Morgan in New York and London, as well as partner of the Y Combinator of Silicon Valley.
Based in Bogotá, he joined the also Calemen Elmer Ortega and Daniel Vallejo to found Addi. It is a platform that allows its users to access credit points in a digital way, designed to process them in less than half an hour.
“We are giving them the possibility of obtaining credits of up to $ 10 million to finance their purchase in any of the establishments with which we are making alliances. For the client it is very convenient because with the ID card and the cell phone he can do the whole process even in just three minutes” explains Suárez.
Their differential is that they do not have a management fee, they do not charge insurance or technology or administration fees. And they handle rates from 19.99% up to 28.99% annual cash.
According to Addi, those who have a credit card would save between this model between $ 50,000 and $ 100,000 in interest in a year for purchases of around $ 1 million.
Of 17 employees who have, 10 are engineers. By collecting seed capital, Addi has attracted investments of US $ 4 million.
In that early round, it became the first Latin American company that has received support from Village Global, a new investment fund that includes Jeff Bezos, Bill Gates and Mark Zuckerberg. Village Global seeks the next generation of companies that will revolutionize the technology sector.
Addi also became the second Colombian company to obtain resources from Andreessen Horowitz, who has invested in Rappi, as well as Facebook, Instagram and Pinterest. They are also advised by the Brazilian investment fund Monashees.
According to Suárez, his plan for accelerated growth should take them in the first quarter of the year to the five main cities in the country, in 500 points of sale and at the end of the year to open markets such as Peru, Mexico and Brazil.
“We intend to cover a need that lies in the fact that if someone wants to finance a purchase in installments, they only have two options. One, being part of the 14% of Colombians that has a credit card, with high rates, confusing obligations and management fees. Or the other option: accessing slow, very expensive solutions. We believe in the power of technology to change this” said Suarez.
An investment of more than US $ 17.5 million received from the private equity fund Kandeo included Finsocial in the list of the Latin American fintech that received the most capital in the last year, prepared by the IDB and the Finnovista firm.
Resident in the Atlantic capital together with his family, in 2012 the Antioqueño Santiago Botero opened the company with 15 employees. By 2022, it expects to have about 1,200.
He was not born as a fintech, but is in the transition to be, by offering credits instantly from his platform. Botero and his team developed Finsonet, a system licensed to a bank that allows to offer credits with disbursements in less than 24 hours and reach in any area of the country.
This non-banking financial institution specifically cares for pensioners and teachers in the public sector due to the low volatility in the payment of their payroll.
Your offer is based on payroll loans. It operates under an independent asset management model operated by autonomous equity where all loans are identified and serviced individually.
They have worked on streamlining the approval and disbursement of loans for people who are banked and unbanked.
This year they aspire to place $ 360,000 million; that is, $ 1,000 million per day, with approximately 360 vendors. Botero revealed to Dinero that they are close to having at least two securitizations and another injection of capital from an international fund for US $ 100 million.
Nowadays they have presence in 21 cities of the country, with 23 offices and more than 18,000 clients. Also an equity of $ 70,000 million, with a managed portfolio of more than $ 300,000 million and monthly placements of $ 20,000 million.
“Our manifesto is that when a client comes it is because he needs the money for yesterday and not for today. That’s why we work a lot on agility” says Botero.
With more than 15 years of experience in originating and managing the consumer credit portfolio, Botero relied on its capabilities to offer drafts. However, he says that undertaking in this sector has been “very difficult” because of the “barriers to entry” imposed by traditional banking.
“If you start to grow they see you as a competition, which for me is a vision error. Finsocial for banks that do not fund it, it is competition, but for the funds it is an important ally. We also help them reduce the cost of origination close to zero and the risk in half and their profitability is very similar to what they have today because they have to compete with Finsocial with rate and I do it with service and speed” Says Botero.
All these entrepreneurs are willing to revolutionize the Colombian financial sector
Fintechs are increasingly demonstrating the success and sustainability of their business models. And they are becoming the protagonists of ascending rounds of financing.
Only in the first half of 2018, the fintechacapararon US $ 57.900 million in investments worldwide. And they came within six months to the total amount of resources attracted by these companies in the previous year, which was US $ 62,500 million, according to the firm CB Insights.
It will not be surprising if Colombian entrepreneurs manage to overcome the investment levels they attracted in the previous year. Precisely for all the roads that have opened and for the growing importance of the fintech in the whole world.