One of the major challenges for small and medium businesses in Latam are high-interest rates for credits from local banks which makes it much more difficult for entrepreneurs to start and grow their businesses. So are there any solutions to tackle this problem in the region? The answer is yes and it’s RedCapital, a leading crowdlending platform for small business loans in Chile and Peru. Lenders obtain attractive returns while small and medium businesses get loans or invoice discounting at a fair rate.
We are proud that RedCapital is one of Seedstars’ portfolio companies and a finalist of the Seedstars World competition in 2018. The business has already processed nearly 4K financial transactions equal to 90M USD. Just recently, RedCapital raised $3M in investment from HCS Capital that will enable the company to grow their solution in Chile and Peru, and expand to other countries in Latin America.
We had a chance to discuss existing challenges for small and medium businesses in Latam with Gustavo Anania, CEO, and Founder of RedCapital. Gustavo shared how he and his team see their role in shaping the FinTech industry in Latam and helping small and medium-sized businesses to prosper.
Why does your company exist? What is your mission?
Our mission is to help SMEs to get better capital in order to grow. Small businesses have a little credit line in banks. So they have higher rates in other financial institutions. SMEs in Latin America struggle to grow because accessing credit continues to be a highly formalized and bureaucratic process. There is an SME credit gap of $250B in Latam with two million SMEs reported as being un-served or underserved. The average interest rate charged by banks to SMEs is generally higher in Latin American countries in comparison to other regions such as North America.
What sparked your interest in launching the business in the financial industry?
Because it makes sense, SMEs are the future. According to studies by the World Bank, the Inter-American Development Bank and the Economic Commission for Latin America and the Caribbean (ECLAC), SMEs account for over 90% of all enterprises in the region, generate about 63% of all jobs, and contribute between 35% and 40% in Latam's total GDP.
How would you describe your impact in the country? How does RedCapital help reach Sustainable Development Goals 2030?
Thanks to technological developments, we are helping SMEs get better rates. SMEs request money on redcapital.cl or redcapital.pe, and investors can choose the loans or the invoices that they would like to invest in. Our clients have already received 100 million USD through our platform. I believe that our business is successful because we solve the problem that traditional industries can’t address. We are changing the conservative financial industry. Platforms like RedCapital allow small and medium-sized businesses to have more information and select the best financial solutions.
What are some of the obstacles that you faced on your way and how did you deal with them?
I think the major obstacle was getting people to trust us. We needed to explain very well our solution and, of course, wait some time for the customers to like us and start promoting our brand.
Tell us about your team: how many people are working right now in the company?
Today, we are more than 30 people. One key factor to our success is that we enjoy helping SMEs. We love to work at RedCapital. Another reason is that the founders have different backgrounds and skill sets, so we complement each other. Raúl Mellis Ibaceta (27 years old), has experience in software development and B2B platforms, while Felipe Zanberk Walter (35 years old) has a sound knowledge of risk and loans. As for myself (45 years old), I hold an MBA degree. I was a customer service manager in a major retailer in South America, and I also worked in digital transformations.
What advice would you give to the startups that apply to the Seedstars World competition?
Seedstars World is a great competition. You can learn so much by taking part in it and from other participating startups. You need to be prepared with a lot of information and also be ready to hear and learn.
Where do you stand right now in terms of your goals and what are your plans for the near future?
Today, we are one of the biggest crowdfunding and crowdlending platforms in Latin America. We closed our first investment round this year. Our solution has a great success in Chile and Peru, and now we are getting ready to go to Mexico, and then to Colombia or USA.
How would you describe the investment environment for startups in Chile right now? How has it changed over the past couple of years?
The environment is changing every year. A couple of years ago entrepreneurs were the crazy ones. Today, everybody is talking about startups and FinTech. I think companies like Corneshop also help startups think big.
What’s your vision of Fintech in Chile? What is the role of RedCapital in shaping the industry?
Traditional financial institutions have not yet realized the importance of FinTech. Step-by-step, they are trying to change and start to believe that we are not a competitor to them. I think we need to work together to get a better solution for customers. We are growing over 100% a year, while the country's growth rate is 3% per year. Also, we are working to help the government to develop a new FinTech law that promotes innovation in the region.
Are you willing to enrich your network with valuable connections, learn, and meet change-makers from all over the region? Then don't miss your chance and get your ticket to the global Seedstars Summit 2020 taking place on the 3rd of April in Lausanne, Switzerland!