Mexican financial technology start-up Konfio has raised $8 million from Accion Frontier Inclusion Fund, saying it would use the proceeds to strengthen operation and adopt best corporate practices.
For Accion – managed by Quona Capital, QED Investors, Kaszek Ventures, and Jaguar Ventures –this is their first investment in the Mexican fintech market.
Founded by David Arana, Konfio lends small businesses with loans up to $8,000, working through an online process and a propriety algorithm that measures creditworthiness. The startup says most of its customers are those who are creditworthy but historically underserved by traditional banking.
During its first two years of operations, more than 200,000 businesses across Mexico approached Konfio to apply for a loan. Konfio, based in Mexico City, says it is on its way to extend its service to thousands more businesses across the North American country.
By leveraging technology and big data analytics, Konfio complements traditional financial analysis and streamlines the loan application process, providing convenience and affordability to customers. Another startup called Conekta, an online payments app, is competing with Konfio to explore the Mexican market.
The financial technology, also known as fintech, is one of the fastest growing sectors in Mexico. According to a conservative estimation, the sector is worth about ten billion dollars.
Although small businesses represent 95 percent of businesses in Mexico and are the backbone of the national economy, they have not been a priority for large financial institutions. Therefore, foreign venture capital firms are finding fintech firms like Konfio a good bet.
“We are very interested in harnessing the potential of this industry. Konfío is our first investment in Mexico, and we are very pleased to be part of their development,” said Bill Cilluffo, partner at QED Investors.
These days even the Mexican government appears to be stimulating fintech industry. Its General Law on Government Accounting (GLGA) requires government agencies to implement technology systems for producing transaction records in real time.