Now that the pandemic is over, the economy is flourishing for companies. Although the vast majority of businesses has seen its sales increase, the Fintech in Colombia, Invest Latam, has managed to grow fast.
Very fast.
With sales doubling monthly, many might ask: What is behind such high growth? What does InvestLatam do?
Invest Latam: the Fintech in Colombia for alternative investments
The investment platform started in 2019 offering alternative investments: lending directly to SMEs in exchange for a return. This role was traditionally fulfilled by the Banks. By removing this intermediary, people can now access higher returns and in turn act as bankers themselves. With rates ranging from 15% to 25% per annum, the investments offer high returns compared to government bonds or pension funds. Our current market is in much need of higher returns in such flat environment. In a market much static, many are seeking higher returns for their portfolio investment.
Considering that the minimum amount is US$1,000 to start lending at Invest Latam, the entry barrier is welcoming for many. As a result, the platform has had substantial growth for the past few months and today has more than 4,000 active investors.
Since the end of the pandemic, the Fintech of alternative investments has not stopped growing, attracting more and more people in search of high returns. What is behind such success?
The transformation during the pandemic
During the pandemic, Invest Latam made several transformations on the technology side and on investment safety to allow for a rapid growth in their operation:
1. More than 1 collateral required
Each investment now requires at least 2 guarantees to ensure the complete return of the capital invested and thus minimizing the risk of default. These guarantees range from personal guarantee, client guarantee, real estate or institutional guarantor. It’s important to mention that the risk of credit default still does exist in every investment. Having additional guarantees reduce such risk for investors but are not a 100% guarantee that the full amount will be recovered. Hence each investment much be assesed from a company and a guarantee risk perspective. Invest Latam does measure such risks in its credit assessment and a full report can be found online.
2. Increase information providers
Invest Latam grew its API system to more providers to incorporate more data points to analyse each debtor applicant. Today, more than 500 entries of data are analysed before starting a financial study. Many believe wrongly that the financial study is the main part of a credit assessment. Yet, regarding SMEs, you need to take into account other data such as the credit report, identity authenticity, judicial history, news, social media, network and so much more. These data are also of a major relevance prior to provide a corporate loan. Invest Latam has deployed multiple sources of data to get a 360 degrees picture of all its debtors.
More than 70% of loan applications fail to comply with our requirement prior to start the financial analysis. Hence we take really seriously this non-financial data analysis.
Invest Latam CEO, Vanessa Breuer
3. Automate the documentation
To ensure the authenticity of the documentation provided, Invest Latam connects directly with sources of information such as the Tax Government Entity or the Chambers of Commerce, among others, to minimize the risk of document fraud. These automated information collections allow the platform to classify instantly and safely the debtors. While banks and other fintechs have lenghty application process for debtors, Invest Latam is the first to recognize to decrease such time consuming process to allow for a shorter selling cycle. This in turns, enables the platform to accelerate its sales while making a difference for its debtors.
4. Institutional guarantor: Afiancol
Afiancol and Invest Latam joined forces to secure various investments found on the platform. How does Afiancol work? As an institutional co-guarantor, Afiancol pays 80% of the investment capital after 4 months of arrears. If we compare Afiancol with the FNG (National Guarantee Fund), being a government guarantor, this one takes up to 4 years to pay the capital. Therefore, Afiancol is an added value for investors that can regain their capital sooner without the stress of a long court process.
Given these actions taken, Invest Latam‘s sales have doubled monthly in 2022 and we estimate that this trend will continue as many are still attracted by the high returns with a good safety prospect. Fintech companies in Colombia are here to stay for investors seeking high growth for their portfolio.
