Chile-based Lending startup Kredito raises $4M in pre-seed

Fintech startups are booming throughout Latin America. Consumer and SMB finance founders are providing access to credit, eating away at traditional banking margins and reinventing the regional industry. Joining the mission to reshape SMB and lending is Chile-based Kredito who this week announced a $4 million pre-seed round.

“What we see is that in our sector people have a bank account but don’t have access to credit,” said Sebastian Robles, co-founder and CEO of Kredito. Robles explained that in Chile, when you open a business bank account, you don’t get a credit or debit card attached to it, so entrepreneurs usually have to use their personal cards.

“Ninety percent of our customers don’t have access to credit with their bank (but they have a bank account) and thanks to the power of AI they can have access to working capital for the first time,” added Robles.

By using an AI algorithm to underwrite the loans in real time, Kredito does all the heavy lifting and then connects the SMBs with a traditional bank that loans out the money.

“We use proprietary algorithms and alternative data to evaluate credit risk more inclusively than traditional banks,” the company said in a statement. This approach speeds up the process of getting a loan, which traditionally has taken weeks or months to complete.

While in beta, the company used data from more than 10,000 SMBs to train their AI models.

Kredito makes money by serving as lead generation for the traditional banks and charging them a small percentage for each loan they bring in.

In addition to its loan service, Kredito is also developing a debit card product that will be available in the next couple of months. Like other fintechs in the region, the company’s strategy is to launch individual financial products one at a time without having to apply to be a full bank.

Source: LAVCA Industry Data

“Being a bank is too expensive, so we use pieces of the ecosystem instead,” Robles told TechCrunch.

Kredito launched in March of this year and today the company has more than 2,000 active SMBs on the platform.

In addition to offering new products, the company is very focused on offering optimal customer service, which is an area that traditional banks are lacking.

“To open a bank account for our startup was more painful than raising our angel funds, and despite having $4 million in the bank, I still don’t have a line of credit for Kredito,” Robles said.

Investors in the round include a private VC fund from Maurice Khamis and Family, Link Capital Partners, partners from Patio Group, Karim Fajardin and other family offices focused on VC and fintech. (TechCrunch)

World’s Oranges and Coffee at Risk in Brazil

Brazil, the world’s biggest exporter of coffee, sugar and orange juice, just had a rainy season that brought hardly any rain.

Soils are parched and river levels are low in the nation’s Center-South region, a powerhouse of agricultural output. The drought is so severe that farmers are worried they’ll run out of the water reserves that help keep crops alive over the next several months, the country’s dry season.

Mauricio Pinheiro, 59, started irrigating his arabica-coffee crops in March, two months earlier than normal, after his 53-hectare (131-acre) plantation got less than half of the rain it needed. He’s using so much water for the plants that there isn’t enough left for his home. In order to keep the showers and faucets running, he’s had to search for another well.

“My irrigation reservoir is drying up now — that usually happens in August,” said Pinheiro, who lives in Pedregulho in the Alta Mogiana region, in Sao Paulo state. “I’m really concerned about running out of water in the coming months.”

The prospect of withering orange trees and coffee plants is coming at a time when agricultural crops are rallying to multiyear highs, which has fanned fears of food inflation. Higher food costs may exacerbate hunger, a problem around the globe that the Covid-19 pandemic has made more acute. Coffee and raw-sugar contracts on the ICE Futures exchange in New York have already touched four-year highs.

If even irrigated areas can’t get enough water, Brazil’s coffee and orange output may decline for a second year in a row. Brazil’s current orange crop shrunk 31% from the previous season, the most in 33 years, and production of arabica coffee, the high-end kind used by chains like Starbucks Corp., is also dropping sharply.

Rainfall was disastrously low for many areas in Sao Paulo and Minas Gerais from January to April, said John Corbett, Chief Executive Officer at aWhere Inc. The worst hit areas received less than half of normal precipitation, at a critical time when coffee plants need moisture for the beans to grow. It is also a period when the soil stores water to cope with the dry season.

That came on top of adverse drier-than-normal conditions in some parts last year, notably in Sao Paulo and Parana, said Paul Markert, meteorologist for Maxar Technologies Inc. in Maryland.

While a dry spell is typical for this time of year in Brazil, it’s expected to last longer than usual, adding to concerns. Regular rains will return to the region between October and November, instead of September, said Celso Oliveira, a meteorologist at Somar Meteorologia.

The Bloomberg Green newsletter is your guide to the latest in climate news, zero-emission tech and green finance. About 30% of Brazil’s orange crop and 15% of arabica coffee fields are irrigated.

“The levels of rivers and lakes has been very concerning,” said Regis Ricco, director at Minas Gerais-based RR Consultoria Rural.

Francisco Sergio de Assis, a coffee grower in Monte Carmelo, a municipality in the Cerrado region of Minas Gerais, started irrigating his fields a month early, and doesn’t think his water reservoirs will last if it doesn’t rain by September.

The situation is becoming critical for orange groves. Emerson Fachini, an orange farmer who cultivates 45 hectares in Palestina municipality in Sao Paulo state, said he’s had irrigation systems turned on for most of the time since January.

“Water reservoirs are drying up, depleted just ahead of the dry season,” Gilberto Tozatti, of Sao Paulo-based GCONCI-Group Citrus Consulting, said by phone. “The situation is affecting most of Sao Paulo state and still harming next season’s crop.”

Tech continues to shake up Latin America real estate

Houm, the Chilean proptech firm, has just raised an 8 million dollars seed round, led by Y Combinator, Goodwater Ventures, OneVC, Vast VC, Liquid2, and Myelin. Tech pundits like Elad Gil, a Silicon Valley growth legend, Eric Wu, Opendoor CEO, Austen Allred, Lambda School founder, and John Kobs, Apartment list CEO and founder.

Houm started in 2018 in Chile, with the idea of the founders Benjamín Labra (CEO) and Nicolás Knockaert (COO) to disrupt the real estate industry, transforming a bureaucratic, informal and difficult process in the industry lacking technology and innovation. They saw an opportunity that could help real estate in the Latam region, and eventually, the world.

After Chile, they started their operations in Colombia in mid 2020 and their most recent opening was Mexico in January 2021.

With the latest raise Houm plans to become the main digital broker platform and service of the region, allowing people to rent, buy, sell and manage properties, maximizing their profitability through fast and 100% online processes, affordable prices, and safety guarantee on their rent payments. “In fact, 90% of our properties are leased in 30 days or less and our freelance force, the Houmers, allow us to show properties every 8 minutes everyday.”

“One of the benefits our landlords most appreciate is that we pay the rent every month on the fifth, despite whether the tenant has paid or not. We can afford to do this because we have insurance that allows the landlord to be relaxed, not worried, and we handle any eviction lawsuit,” says Benjamín Labra, CEO and cofounder.

Source: Statista, release date Feb 2020

Houm has 2 digit number growth and accounting with more than $300 million USD in asset management. Besides their business expanding internationally, their team has already 200 people and their freelance force of more than 200 Houmers.

Boiler Plate: Houm is an end-to-end solution that helps landlords to rent and sell their properties. It offers an online, fast and secure service that allows them to make the process up to 10 times faster, thanks to technology along with their Houmers, freelancers who use their own Houm app. (PRNewswire)

Uruguay Wood Exports Seen Headed for Record on Asia Demand

Uruguay’s wood exports could hit a record this year with Asian countries buying more wood at higher prices as the global recovery takes hold, according to one of the country’s biggest forestry companies.

Agroempresa Forestal exported about 160,000 cubic meters of Uruguayan pine and eucalyptus logs this year through mid-May, Director Francisco Bonino said in an interview. The company, which manages about $880 million in forestry assets in Uruguay, Chile and Brazil, could ship a similar amount from the country later in the year if Asian demand remains firm, he said.

“Today the price of a pine log in China is 40% above last year and maybe 50% to 60% more than two years ago,” Bonino said. “In the case of eucalyptus it’s probably around 10% higher than last year.”

India and China are steady buyers of pine logs for their construction industries. At the same time, China and Southeast Asian nations such as Vietnam are importing more eucalyptus to make plywood and furniture for the U.S. and Europe.

Source: export promotion agency Uruguay XXI  Note: *2021 data corresponds to January-April

China’s decision last year to ban log imports from several Australian states has also benefited Uruguay, whose wood exports almost doubled to more than $185 million in the four months ending April. China is paying as much as $160 per cubic meter for Uruguayan pine logs and as much as $200 per cubic meter for eucalyptus, said Bonino, who said prices might pull back later in the year.

Bonino said the Covid-19 outbreak sweeping through India and higher shipping costs, which have tripled in the last year, are potential headwinds.

Still, a bullish long-term outlook for wood has prompted Bonino to revive mothballed plans to create a timberland fund that would raise an undisclosed amount of money to buy or develop forestry projects in the region. Bonino is no stranger to tapping institutional investors, having sponsored four publicly listed timberland trusts that raised $640 million on Uruguay’s capital markets in the last decade.

“We want to do the fundraising during 2021,” he said. “Assets aren’t worth what they could be worth. We think it’s a good time to enter Latin America, picking the right countries and assets.” (Bloomberg)

Advertising for Latin American brands are pursuing more diversity in campaigns

  • Many consumers in Latin America are no longer content to let brands sit on the sidelines of tough conversations.
  • Given the significant role advertising plays in shaping society, companies that embrace a social cause should stick to brand values.

According to Insider Intelligence, Latin America internet users don’t feel represented in digital video ads they see. The population comprises of immigrants from Europe, Asia-Pacific, and the Middle East, as well as indigenous Amerindian populations and African groups descended from slaves. It is also one of the most unequal regions in the world in terms of wealth and income, according to the Economic Commission for Latin America and the Caribbean (ECLAC), a United Nations regional commission to encourage economic cooperation.

Despite Latin America breaking from its colonial past with Spain and Portugal roughly 200 years ago, its advertising industry is still troubled by a notable lack of diversity and representation.

“While brands have made a concerted effort to increase their representation of various racial and ethnic backgrounds and to break away from the traditional portrayal of gender roles in marketing materials, a large percentage of consumers still do not feel represented in advertising,” said Matteo Ceurvels, eMarketer director of Latin America research at Insider Intelligence, and author of our recent report.

About seven in 10 (70.2%) adult internet users in Latin America said they did not feel represented in the majority of digital video ads they saw, according to a March 2021 survey conducted by EMI Research Solutions for Penthera.

As consumers in Latin America become more attuned to brand purpose and messaging, it is increasingly important that companies accurately portray the local communities they target—while also fully embracing diversity in their marketing campaigns. This was a belief shared by more than three-quarters (78%) of internet users in Latin America ages 18 to 74 surveyed in July 2019 by YouGov for Getty Images.

Source: Penthera, “Latin America Video Streaming Behavior Survey: Q1 2021” conducted by EMI Research Solutions, March 25, 2021

Latin American ecommerce giant Mercado Libre is one example of a regional company that has embraced diversity in its marketing materials. The company’s July 2020 video ad, titled “Libre de ser quien soy” (or “Free to Be Who I Am” in English), reflected on how its diverse employees are empowered to bring their whole selves to work to drive innovation at the company.

In an official statement, Mercado Libre said, “We continue to promote equal opportunities because we believe that diversity is the foundation of innovation [for our users], and that differences both enrich and drive growth.” (InsiderIntelligence)

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