Goldman Sachs Group is giving a $100 million loan to Konfio, marking the first time the lender’s structured finance, investment and lending business has provided a credit facility to a Latin American FinTech.
Konfio, a Mexico-based alternative small business lender with plans to launch a new program in the country aimed at strengthening local SMBs’ finances, will use the money to lend about $250 million in the next 12 months, according to David Arana, the company’s CEO and founder. He added that there are plans to eventually use guarantees or collateral so that the Konfio will be able to provide bigger loans than its average of $20,000.
“We came across Goldman at several Latin America FinTech events, and we started conversations,” Arana said in an interview, according to Bloomberg. “I think they’re the right partners to help us continue to make an impact.”
Konfio analyzes credit behavior and other data to give companies an immediate response, as well as disburse loans in as little as 24 hours. In addition, its interest rates are half those charged by traditional banks, said Arana. Konfio’s technology is also able to keep non-performing loans under control, with the company’s delinquency rate at 4.8 percent in 2018, compared with 5.4 percent for the banking industry.
“I lived through the subprime crisis,” said Arana, who worked at Deutsche Bank AG in New York from 2006 to 2013. “In an era of abundant data, we were supposed to be able to make better decisions, but I was actually seeing the opposite — access to finance was shrinking. So I saw an opportunity.”
Launched in 2014, Konfio raised $43 million in equity and $260 million in debt. It also has access to credit from Bank of Nova Scotia. Investors have included Jaguar Ventures, Kaszek Ventures, QED Investors, Accion Frontier, International Finance Corp., Vostok Emerging Finance, and Victory Park Capital Advisors.
Just last week it was announced that Facebook and Konfio were teaming up to co-develop the Aula Morada program, a series of events designed to provide informative support for small businesses across Mexico. Targeting about 8,000 businesses, the events will take place in various cities with both Facebook and Konfio offering conferences and workshops to educate and support entrepreneurs and small business owners.