Luis Rubén Chávez, founder and CEO of Zenfi, says shopper finance in Mexico and throughout Latin America “is principally damaged.”
“Achieving primary financial well being in Mexico for round 50 to 60 million folks is admittedly laborious,” he instructed TechCrunch. “Two out of three Mexicans have a subprime credit score rating with principally no instruments to enhance.”
Financial expertise has exploded in Mexico and Latin America over the past couple of years, pushed by startups and venture capitalists, in half as a result of founders like Chávez, whose background is in shopper financing, suppose there has to be a better approach to assist folks get financing with out charging over a 100% annual share price on bank card and private prices. To put that in perspective, an average APR in the U.S. is around 19%.
So seven years in the past, Chávez began constructing the free tremendous app Zenfi, a financial well being platform that he describes as “if Credit Karma, SoFi, Marcus and Copilot Money had a child, it might be us.”
A high characteristic of the platform is what he touts because the lowest rate of interest in Mexico, a median of 19% APR. Zenfi additionally provides free credit score monitoring and integrates with open banking. It additionally plugs into the nation’s tax system in order that customers can entry tax returns and submitting instruments.
One of the most recent options is a private finance supervisor. App customers reply some questions, enter their financial information sources and get long-term private financial planning, Chávez stated.
Seven years after creating Zenfi, the corporate has greater than 3 million customers, many who use the platform to consolidate and repay their debt from one other financial institution, he added. It has distributed over $100 million in loans, has a 3.4% default price and $10 million in annual recurring income generated from rates of interest, small charges related to credit score rating checks and commissions from the funding merchandise.
Not solely has the corporate been ready to present profitability with that enterprise mannequin, but it surely additionally achieved that having beforehand raised lower than $3 million.
Having reached profitability is how Chávez stated the corporate is in a position to take a new spherical of funding, this time $8.5 million in new capital led through Magma Partners. Cometa, Redwood Ventures, Polígono, Conny & Co. and an AngelList syndicate led by Peter Livingston participated as nicely.
Chávez intends to deploy the new funds into dozens of options in the pipeline, together with debit and credit score merchandise. He can also be eyeing three international locations in Latin America the place he feels Zenfi’s enterprise mannequin will do nicely. In addition, Chávez will rent extra folks to add to Zenfi’s 60-person crew.
“Right now, we’ve the most important fintech lending licenses and private mortgage firm in Mexico and a benchmark for quantity and portfolio high quality,” he added. “We are attempting to make a dent in the Mexican financial system and wish to go from $100 million in loans to $2 billion, so we’ll construct the interior capabilities across the crew and infrastructure.”