Fintech startup Grupago raises $4.3m seed round to revolutionize SMB credit access in Latin America

Fintech startup Grupago raises $4.3m seed round to revolutionize SMB credit access in Latin America

Published: 14-03-2024 10:25:00 | By: Pie Kamau | hits: 2114 | Tags:

Grupago, a fintech startup pioneering digital microcredit for small businesses (SMBs) in Latin America, announced it has secured $4.3 million in seed financing. The investment is led by Deciens Capital and joined by Precursor Ventures, Clocktower Ventures and Twine Ventures, among other venture funds. They were also joined by a number of super-angels across the United States and Mexico, including Zac Bookman (CEO, OpenGov), Oso Trava (Cracks Fund), Pepe Shabot (CEO, ION Mexico) and Paul Sawaya (co-founder, Human Interest).

Uri Pomerantz, Founder and CEO, Grupago: ''Latin America has been experiencing a true renaissance in its financial services infrastructure and offerings. Our approach builds on cutting-edge AI and non-traditional data sources while applying group lending techniques first developed by Nobel-prize winning research pioneered by Muhammad Yunus in Bangladesh. Our vision is to focus on one of the most important, yet simultaneously overlooked, market segments – micro-SMBs – to ensure these entrepreneurs can quickly and easily access low-cost capital, in a fully digital experience, that helps their businesses thrive.''

Grupago launched its micro-credit business in October 2023 with the goal of filling a crucial gap in Latin America’s small business market: providing credit to millions of small business owners across Latin America. The LatAm SMB market is massive – with SMBs accounting for 90% of businesses and generating nearly a third of GDP – but experts estimate up to 87% of their credit needs are unmet.

This gap is even more pronounced for the informal micro-businesses Grupago targets. Fintechs have been unable to overcome the challenges of reaching, underwriting and collections for this segment, while traditional lenders rely on expensive brick-and-mortar infrastructure, driving up loan costs and limiting reach.

Grupago has been able to overcome these obstacles and effectively serve micro-SMBs by bringing together three key innovations – AI-driven underwriting, group collateral and community distribution – into a unique, fully digitalized offering. Specifically:

  • AI-driven underwriting: Grupago harnesses the power of AI, including non-traditional data sources, to underwrite small loans. Over time, it systematically expands credit limits as customers demonstrate successful repayment histories.
  • Group collateral: Borrowers join together as part of lending groups and co-sign for each other’s loans. When a payment is missed, other members are responsible for repayment. This approach allows Grupago to profitably collateralize an otherwise uncollateralized customer segment, as well as build much more robust underwriting data than individual loans.
  • Community distribution: Grupago acquires community leaders online, who then build lending groups in their local communities. This allows the company to reach rural and otherwise hard-to-reach customers via its unique and cost-effective online-to-offline acquisition approach.

 

Grupago is currently active in Mexico and seeks to scale across Latin America over time. Its first focus is on a group loan product focused on women entrepreneurs.

Daniel Kimerling, Founder and Managing Partner, Deciens Capital: ''Grupago and its founder Uri are emblematic of the types of innovators Deciens dreams of working with. Not only are Uri and his team working to expand financial access to underserved communities – a value we hold near and dear – they are also deeply curious and tirelessly collaborative, which allows us to be their partner in building their game-changing solutions.''

www.deciens.com