Most small businesses don’t fail because the founders are lazy or the ideas are bad. They fail because money moves at the wrong speed.
Imagine running a perfectly healthy business, customers want what you sell, employees show up every day, orders keep coming in. Then a large client tells you, “We’ll pay you in 60 or 90 days.” Your employees, your rent, and your suppliers, they still want to get paid this month. That timing mismatch is where growth quietly dies.
This is the world Nicolás Villa knows well. Before becoming CEO of Platam, he lived it as a founder. His first company waited years for something as basic as a corporate credit card. Banks looked at his personal credit and shrugged at the company’s, even though the business itself was healthier on paper. That contradiction became the seed of Platam.
The credit paradox no one talks about
Zoom out and you see a strange picture across Latin America. On one side, institutional capital is piling up, funds actively looking for places to deploy money. On the other, small and mid-sized businesses are starved of working capital. Not because they’re reckless, but because the system was never built for them.
Traditional banks aren’t evil here, they’re just structurally broken for this problem. The cost of underwriting, servicing, and recovering small loans often exceeds the value of the loan itself. So banks do the rational thing, they move upmarket and leave everyone else behind.
The result is a massive financing gap and millions of companies stuck in survival mode, not because demand is missing, but because cash flow is.
Why embedded finance changes the game
Platam’s insight is simple and quietly radical. Don’t sell credit to small businesses. Embed it directly into the places where they already work.
Instead of asking an MSME to apply for a loan, Platam integrates financing into supply chains and buyer networks. When a business uploads an invoice or places an order with a supplier, the option to access working capital is already there. No new dashboard. No cold outreach. No pretending financial statements tell the whole story.
Credit stops being a product and starts becoming infrastructure.
This shift does two powerful things at once. It lowers customer acquisition costs to near zero, and it replaces unreliable self-reported data with real transactional behavior. Who you buy from, who buys from you, how often, and at what scale, tells a far more honest story than a spreadsheet designed to minimize taxes.
The hardest decision isn’t yes or no
One of the most counterintuitive lessons Nicolás shares is that lending decisions aren’t binary. The real risk isn’t deciding whether to lend, it’s deciding how much.
Give too little, and the credit gets misused or doesn’t move the needle. Give too much, and you amplify risk faster than the business can absorb it. SMEs aren’t static entities, they fluctuate with seasons, contracts, and demand spikes. A great December can be followed by a brutal January.
Platam’s systems are built to move with that reality, constantly adjusting credit lines as businesses change, not freezing them in time like traditional lenders do.
Growth can lie to you
There’s a moment in nearly every startup’s life when growth feels like validation. Platam hit that moment too, and paid for it later.
Pushing volume without respecting credit discipline led to pain downstream. Defaults don’t show up immediately, they arrive months later, quietly undoing today’s good news. The lesson was clear, revenue without risk control is just deferred regret.
That scar now shapes how the company scales, with partnerships, data, and patience doing more work than brute-force expansion.
Building bridges, not chasing hype
What Platam is really building isn’t just a lending business. It’s a bridge between idle capital and real economic activity. One side speaks the language of institutional investors. The other speaks in invoices, inventory, and payroll. The magic happens in the middle.
And once you build a bridge, something interesting happens. You realize you can sell pieces of it. Credit scoring systems, onboarding flows, compliance tools, all of it becomes reusable infrastructure for markets that look very different on the surface but share the same underlying problem.
Latin America is just the starting point.
The quiet revolution
Fintech headlines love consumer apps and flashy interfaces. Platam is doing something less visible and far more important. It’s changing how money moves for businesses that never get podcasts, press releases, or venture hype.
Nicolás started as a founder waiting to get paid. Now he’s making sure others don’t have to.
Sometimes the biggest innovations don’t create new behavior. They remove the friction that never should’ve been there in the first place.
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Chapters:
00:01 – Why Small Businesses Fail
02:10 – Founder Origin Story
04:30 – Experiencing the SME Credit Gap
07:00 – The Idea Behind Platam
09:20 – What Platam Does
12:00 – Supply Chain Finance Explained
15:10 – The Latin America Credit Paradox
18:30 – Why Banks Can’t Serve SMEs
21:40 – Embedded Finance and Risk
25:10 – Credit Size vs Credit Approval
28:20 – Lessons from Chasing Growth
31:30 – Partnerships as Distribution
34:20 – The Future of Platam
37:30 – Closing Reflections
Transcript
Brian Bell (00:01:02): Hey, everyone, welcome back to the Ignite podcast. Today, we’re thrilled to have Nicholas Villa on the mic. He’s the CEO of Platam, a Colombian fintech rethinking how SMEs access credit and a serial entrepreneur who spent years building innovation infrastructure across Latin America.
Nicolás Villa (00:01:17): Thanks for coming on, Nicholas. Thanks for having me here. It’s my first podcast in English, so yeah, it’s going to be hard. You need to give me some time to lose my tongue, but I’m happy to be here and it’s going to be a great time. Great to catch up.
Brian Bell (00:01:30): So I’d love to start with your origin story. What’s your background?
Nicolás Villa (00:01:33): So my background, been into entrepreneurship for about six to seven years. I started my first company when I was 27. I actually started it as a consulting company in innovation and transformation for big organizations. That was really good venture. It wasn’t a big company, but we had an acqui-hire because we built a company, we built a platform for open innovation around Latin America. And I got to work as a consultant in Open Innovation for the biggest companies in Latin America, like Huawei, Kizer, Inditex. So that was a great experience. After the act we hired, I lived in Mexico for a while. Coming back to Colombia, my co-founder had been, I think, like proving the concept of Platam for about one year and a half, getting money and getting the money back. That was something very important for him, obviously, as a financial expert. He said, okay, we need someone to go to the company. Let’s bring Nicolas. We’ll meet each other by chance. That was how I got into the company. When I started the company, he didn’t have sales team. There were like three people organically selling. They were actually growing. That was a surprise. The first time I saw it, it was something very surprising against Constance. Because you actually push consultancy services on the company, right? Like you really need to sell those. And something like a credit is the other way around. The company is selling themselves for you to give them credit. So that was one of the biggest prizes when I arrived to the company and happy problems that I had is like, there is a lot of demand for this product. Something that I didn’t have in my previous companies.
Brian Bell (00:03:18): Yeah, what was the aha moment for you when you realized that SMEs, small to medium enterprises in Latin America, were massively underserved by traditional finance?
Nicolás Villa (00:03:27): Well, I have lived this as an SMC. This wasn’t my first company. I also found a company in Mexico. And obviously, the first thing that a young entrepreneur says when they are looking to get some funds is, okay, I’m going to venture capital. And then you say, okay, am I building a venture-backed company or not? If you’re building a venture scalable business. Is it scalable for venture capital or not? If it is not, then your doors are closed, mostly closed to raise capital as debt or credit or even investment. So I leave that. For example, I always say my first company, I had my first credit card for the company like three years after it started. And it was a loan application for a credit card. And they gave me like $2,000 credit line. And my personal credit, like my personal credit, like it was like 10 times that. And I was like, it’s impossible. Like if you look at my numbers as Nicholas Villa and the numbers of the company, the numbers of the company are much better and it wasn’t attractive for tax. So I lived that. I lived how companies were going to pay me, like big companies were going to pay me 60 days, 90 days after. And I needed to pay my employees at the end of the month. So when I arrived and I met Rodrigo building this, I was like, this is genius. I wish I knew a solution like this one before because that was a real pain. I couldn’t grow. And of course, when I started thinking about being the CEO of this company, I started my research and I knew building companies, of course, was difficult. And I knew from before data that was pretty impressive and it’s like only 30% of companies in Colombia survive after five years. And that was sad, of course, but then I knew investigating about this huge problem is like 92% of companies don’t grow. So if you are building an entrepreneur, a company, if you are into this entrepreneur adventure, which is pretty, pretty hard, your chances are you’re not going to grow. Like 92% of companies don’t grow. And the number one cause of this problem is lack of access to working capital.
Brian Bell (00:05:49): So you built a bunch of stuff before Platam, worked through lots of different companies. How did your path background influence how you’re kind of building Platam now? And maybe we could back up and tell the audience what Platam, what it is, how it works, and how they all tie together.
Nicolás Villa (00:06:04): Perfect. So we are reimagining how companies or how MSMEs access to working capital, to credit. We built, and what’s growing is embedded finance company. So we embed directly where that MSMEs are. are actually working, whether it’s buying or selling, and we give credit to their clients and suppliers. So whenever a company is selling to a big company, the big company usually says, I’m going to pay you 60 days. And the first thing that we do is we partnered with that big company. That big company is going to continue to pay in 60 days. But now that big company, because of the partnership that it’s made with that time on the ERP, where there’s a supplier portal where you’re uploading your bill. your invoice, it’s going to say, okay, do you want to advance this payment? Do you want to have the money before 60 days? Or are you able to wait? And most companies are not able to wait. So what we do is we advance that payment over a small fee. That’s the first fee. The other partnership that we make is we partner with suppliers, suppliers that sell to thousands of small MSMEs. Those can be beauty salons, hardware stores. in mom and pop shops, whatever. Those stores, those micro businesses usually didn’t have the cash in hand to buy from your supplier. So what we do is we open a line of credit inside the sales channel of that supplier so that the MSAB can buy. It’s mostly a BNPL B2B solution. And that has been incredibly helpful for companies to get credit where they buy or where they sell. And we have been growing consistently 20% month over month in our portfolio. And it has been something amazing because private funds in Colombia and regional private funds are deploying money using our rails. So what we are actually building is not only a traditional lending company, it’s a company where capital can flow through those MSPs.
Brian Bell (00:08:21): That’s where the word embedded comes from because it’s embedded in supplier networks and you’re leveraging these commercial ecosystems rather than going direct. So it’s almost like a channel first kind of model. because you’re you’re going to suppliers and saying hey could you increase your order size if you had some credit you could offer to some of your buyers and the answer is probably typically yes we probably could they’re they’re cash constrained they have to buy inventory or whatever the supplies are and then go sell them or add value to them and sell them and so now they can use credit to help that cash flow conversion cycle in their business which which Greece is the whole market, right? And then you describe something else, which is really interesting. You actually bring, you’re creating a financial vehicle for people to have these, you know, supply and inventory backed, you know, financial streams of income, right? So I can go put money to work on your platform to generate a return. And you actually can package that up as securities and sell it to investors. Is that right?
Nicolás Villa (00:09:17): You need to have a couple of millions to put company on it.
Brian Bell (00:09:21): Yeah. So they’re institutional investors.
Nicolás Villa (00:09:24): Yeah, institutional investors.
Brian Bell (00:09:25): Yeah. And what’s the yield look like?
Nicolás Villa (00:09:27): We started working with friends and family. At the beginning, like friends and family gave you money and they were, okay, go ahead and allocate that money into MSMEs and see if it works. If we actually get the money back and we just started like having good returns and a good default rate and a good interest rate. And that’s what we like open... like touch the doors of these big institutional investors in which like paycheck funds. And it’s like, okay, you want to lend money to MSMEs to buy their supplies or to advance invoice payments? Yeah. I do want to do that. And I want to do it with $5 million. I need to start big. I’m a fund that has to match 100, 200, maybe $500 million with a team of five. So don’t sell me 1,000 to 1,000 invoices because I’m going to get lost. And this is going to be incredibly difficult. Sell me the whole package. Sell me a package of $1 million that I can use and I can really do that.
Brian Bell (00:10:30): What’s the kind of yield to maturity and what’s the typical maturities? Because if it’s supplier-based financing, these are typically like, you know, net 90 kind of things, right? Yeah. Almost behaves like a commercial paper money market, right? Yeah. Where money’s flowing in and out. And what’s that yield typically for your investors look like?
Nicolás Villa (00:10:47): In Colombia, it’s going to be difficult to say, but yeah, in Colombia, it’s going to be around 20 to 25% a year.
Brian Bell (00:10:55): Wow. So this is, you know, and that’s backed by literal supplies of inventory the suppliers are selling into these buyers, into these networks. And so you can get a really nice, you know, 20 to 25%. return on money. So I bet you got investors lined up. You probably have more investor demand than you can fulfill.
Nicolás Villa (00:11:12): We do. We do. Like access to credit in Colombia and Latin America is pretty hard. There’s a financial gap of $1.2 trillion. For banks to lend to MSMEs is incredibly difficult, not only because they are slow and they don’t have the technology to do it, but also because the law makes it harder to do because you have to make provisions against the risk you’re taking. Yeah, the law is making you that giving a loan that it’s a small amount is harder for you and it’s more expensive than to give a higher loan. A recent study shows that, for example, a loan for a commercial, like a traditional bank in Colombia, if the loan costs less than $500,000, it costs to the bank $500. So it’s a relationship between the loan $500 and the cost $500. And so you have to... give it away for more than 100% a year yield or interest a year if you want to do it and don’t lose money. So what we do is we kind of get all the money even from banks because banks also want to deploy money into the segment that we’re working and we give them the yields that they’re looking for against the risk that they are taking, of course. But for the public to have a relationship between the interest rates in Colombia against the interest rates in the United States, kind of 20% here can be 10% there in the United States. So if you want to make a relationship that’s real in the United States, it’s around 10%. Yeah.
Brian Bell (00:12:54): What’s exciting about the business, and for the audience, full disclosure, Team Ignite’s an investor, is the inherent network effects in the business, right? You have this supplier network on one side, then you have this buyer network on another side, and then you have the investor network on another side. So it’s almost like this three-sided network. And you guys are kind of sitting in the middle and it just gets stronger the more you do it, right? Like you’re probably seeing that already in some of the, you know, word of mouth and consistent growth that you guys are experiencing. One thing that you glossed over, you just kind of threw it out there that I want to tease out for the audience is the trillion dollar credit gap in LATAM. Maybe you can explain what that is.
Nicolás Villa (00:13:33): Yeah. So let’s start with the gap. And the gap is one of the most interesting things because before, like after the gap, there is paddocks and there’s tons of money to be deployed in the higher cap. And when you talk to these funds, it’s like funds are lining up to deploy money using our rails. But when you get to those funds, I have 20 million, I have 50 million. Like there are not being deployed and not creating yields. And I need to deploy that money. I need to invest that money. And on the other side of the paradox, there is the 1.2 trillion finance gap in Latin America. And the finance gaps... It’s actually because there is no breach, like putting those two together, like the excess of money.
Brian Bell (00:14:19): Before Platam, there was just no platform putting it all out there. You described like the banks can’t do these microloans. Their cost to serve is too high. And it takes a platform with modern tech stack and AI to basically orchestrate this market, right?
Nicolás Villa (00:14:33): Yeah. So what we started building is we started doing it with our money. And then after one year of doing it with your money, you said like, you go to his funds and I’m doing, it’s working well. I have good default rate. My portfolio at risk is at good stage. I can do it for you. Use our rails. And we have AI doing the recovery for us. We have AI selling for us. We have the commercial chains or the supply chains that work for us without closing one-by-one those MSMEs. Traditional lenders, and it’s almost impossible to do it, but traditional lenders try to do it in Instagram and offer credit in Instagram. You have to offer credit with really high interest because the cost of acquisition is high. So what we do is we have, with these partnerships and with these outskirts, we have reduced the cost of acquisition and we have built the technology for those private funds to deploy money into the financial gap of Colombia. And whenever we talk with private funds and even with anchors or partners like distributors or buyer companies. It’s like, are you doing this in Peru? Are you doing this in Ecuador? Are you doing this in Guatemala? It is like, we will get there. We need to get it perfectly working here in Colombia. There is a lot to grow here, but yet the need, it’s all in the region and the needs it’s in India. You can see it in all these regions, right?
Brian Bell (00:16:05): Yeah. How do you manage the risk in the portfolio?
Nicolás Villa (00:16:09): So there’s a lot of technology and really investigation on this side. The first thing is it is really hard to understand companies, to understand MSMEs. So if you say to me, I have this company that is selling $100 million, can you understand that company? It’s pretty easy to me to understand. Can you send me the financial statements? I’m going to read them in 10 minutes, maybe 20 minutes, 30 minutes to look at the investigation. And then have a proper risk assessment or a proper enough risk assessment to do. And the company is not going to change a lot in time. But whenever I get to MSMEs, the financial information that I’m going to get for financial statements and for other credit score system is not going to show the reality of the company. Why? Because these companies manage as much cash as they can. They want to reduce income because they want not to pay high taxes. They are going to put as much cost inside the company, don’t cost kids school, whatever is working at my house, whatever cost I can put in the company to pay lower taxes, I will do it. So whenever you look at that information, something like, well, you’re going to see information. So what you’re going to see in paper is not going to show you the reality of the company. So what we have built is a credit scoring system. that uses the data of the supply chain where the company is working to break this information symmetry and to have more information to rebuild the reality of the company. And when you have that and you understand the industry, you’re going to have transactional data. You have voice recordings with scoring systems, video recordings with scoring systems. You’re going to have the traditional data that the banks are also looking at. You can build, like the model can build, the DPNL of the company, like the real people. And when you have the P&L, the company, you can decide which credit line you can give. What we have seen is it is not really hard to say I’m going to lend to this company or not. Like the decision itself is not the hardest. The amount is the hardest part. Yeah, I can sell. I can, like Brian has a good company. I’m going to give credit to them. And okay, so Brian’s going to look at the $1,000. This doesn’t do anything. It’s like the credit card that I told you at the beginning. So I’m going to use this credit card to buy the television for my home. And that’s it. it’s not going to be a great line for my business because you need $10,000, right? So the difficult decision is not whether to give them the credit or not, it’s the size of the line of the credit.
Brian Bell (00:18:57): Yeah, that’s the variable factor there, right? Because if they do a million a year, you know, you may not want to give them a million of credit, right? You know, there’s some factor there depending on the credit score, you know, and then you have to kind of calibrate that over time. Like, because as you increase the amount, you’re increasing your risk, basically. And so you’re kind of trying to balance the reality of their business and how creditworthy it is with how much you give them. That’s challenging. We talked a little bit about your partnerships and distribution, but let’s talk about your metrics, operating rhythms. What are you kind of watching closely? I would imagine default rates, but what else?
Nicolás Villa (00:19:34): So what we do is our income comes or our gross income comes from, we allocate the money in an interest yield and we sell that invoice or we set that debt for another yield. So we allocate that 30%, we sell that 20%, that gives it 10%. And that’s where our gross income comes from. So we measure a lot. how it’s in the middle, like our gross income. That’s something that we are measuring a lot. Retention is something that we are like putting our eye on today. We’ve seen like we have opened a lot of lines and there is a considerable percentage of MSADs that haven’t used that line the first time. So what we’re seeing is that we have spent some money in opening those lines and not 100% of the companies are using lines. So we are going to get that number to 90%. We need to get it up because there is a lot of cost. There is some cost at the beginning to open the line. What we have seen in Surprising whenever they use it the first time, 90% of companies use it the second time. So there is a lot of retention after the first time. So we need to get it into the first time.
Brian Bell (00:20:56): Yeah. So you talked a little bit about expansion. There’s adjacent Latin American countries. What do you think the first one you’ll go to first out of all those countries available to you and kind of what’s your roadmap for the company over the next year or two?
Nicolás Villa (00:21:10): So our thoughts are not going into the sexiest countries. So it’s possible that we don’t go into Mexico and Brazil at the beginning.
Brian Bell (00:21:20): Yeah, kind of work your way up to that level because those are much bigger economies, right?
Nicolás Villa (00:21:24): Bigger economies, not also bigger economies, but there is a lot of credit offer already in those markets. But when you go into Guatemala, there is a really interesting financing gap there. When you go into Ecuador, there is a really interesting financing gap. And you take a look at the financing ecosystem and the startup ecosystem and the fintech ecosystem, and it’s pretty empty. So there is almost no competition doing this.
Brian Bell (00:21:49): Yeah. But the funds, these financial funds are there.
Nicolás Villa (00:21:52): So you have the money inside the country and you have the problem inside the country and there is no bridge between that. So what we have seen is there is a lot of countries that have the same conditions as Colombia in which you’re going to find almost zero competition.
Brian Bell (00:22:06): And what’s your roadmap for the next year or two?
Nicolás Villa (00:22:08): So we’re now at $10 million portfolio. I think what we met, we were something like 0.2 million portfolio. the last time or when we signed our deal. So that’s from in six months from 3.2 to 10 million portfolio.
Brian Bell (00:22:24): Wow, that’s really great growth.
Nicolás Villa (00:22:26): Yeah. Yeah. So it’s by three in six months. And we probably keep that up.
Brian Bell (00:22:30): You’ll be 10x year over year. I mean, that’s that’s the holy grail right now is, you know, if you can get the 10x year over year growth, it’s you’re on track to get a big Series A.
Nicolás Villa (00:22:39): So I think we’re going to grow, yeah, we’re going to grow between five to seven, hopefully 10 by next year. But our goal is getting to a $50 million portfolio, $50 million portfolio. What we are measuring right now, it’s more focused on the lower revenue line and the upper revenue line. So we need to get our lower revenue line to $3 million and then launch in a new country.
Brian Bell (00:23:07): What are some of the biggest structural regulatory capital challenges you see ahead as you continue your expansion?
Nicolás Villa (00:23:15): So first, in Colombia, and maybe you know, but there is like a top interest rate that you can charge.
Brian Bell (00:23:22): They cap it at the central bank or the government caps it?
Nicolás Villa (00:23:26): Yeah, so it’s something that has been incredibly criticized here in Colombia. There’s a big discussion. There is not political strength.
Brian Bell (00:23:34): You’re not really letting the markets work when you do that, right? You get deadweight loss in economics when you cap things.
Brian Bell (00:23:41): That’s right.
Nicolás Villa (00:23:41): And you get, you get illegals to do it.
Brian Bell (00:23:43): So that’s why people start doing that under the table, which is worse.
Nicolás Villa (00:23:47): Yeah. Yeah. So you don’t only do it higher than the legal rate, but you do it with illegal practices afterwards so that they are not really gentle or legal when they want to get their money back. So yeah, I always say it’s like, put a cap price on milk and companies like that’s your companies are going to sell. Okay. I’m not going to sell. in like hard to access regions of Colombia. This is more expensive to access there. So you create an illegal market in those regions. So yeah, but for example, that’s a big myth in Colombia because there is a lot of ways to legally to legally don’t be stopped by this cap on the interest rate. The first one is discount rates are not under the cap. So I can say, okay, I’m going to lend you $100 and I’m going to deposit into your account $50. That’s a discount, it’s legal, and I can charge you 50% upfront if you are willing to accept it. It’s like the capital is going to, the market itself is going to regulate it to the to the discount that works. A lot of regulatory affairs around lending caps that not only include Colombia, but also other countries in the region that can also investment vehicles are not as easy to create as other things or others maybe don’t even know what investment vehicle is. but you need to create some investment vehicles with regulators so that those private funds can put $50 million and then that you can deploy that $50 million. And this investment vehicle that it’s regulated by traditional institutions. It gets you like six months only to open one to negotiate. And then it’s all the institution, traditional one, a slow one, managing that one. And then you need to kind of build the infrastructure not only the credit infrastructure inside your platform, but the ecosystem infrastructure to connect this point to the other. And that’s where the value of Platam is. There is a beautiful technology in the middle, but there are also partnerships with those private funds. There are the investment vehicles that are not easy to build. And that whole system is the one that allows you to break the paradox of the financial crisis in the region.
Brian Bell (00:26:19): Yeah. What about long-term as you look out five or 10 years? What new products, markets, data, AI systems are you excited to build?
Nicolás Villa (00:26:27): So such a solution for us is the next step here. Not only a solution where you sell the whole bridge, But a solution where you kind of sell parts of the bridge that you’re building. And for example, our credit scoring is getting better and better every day. And of course, we have more data around that. We have a system that conciliates. But yeah, whenever we get a payment, we know where that payment comes from. And that’s something that companies... Yeah, it’s a KYC AML.
Brian Bell (00:26:59): Know your customer.
Nicolás Villa (00:27:00): The KYC. We have an awesome platform for that too. For example... we were designing something for like really traditional companies in which they can do the onboarding only by voice. And those small parts of the software is something that you can sell even for other uses, not only for lending. So I think our long-term view is you build bridge, then you kind of break the software in parts and you start selling the software in parts. That can happen sooner than we thought because, for example, we’re talking with a company in Guatemala that wants the software, the whole software to be used inside the company. And they have the financial institution in the company, in the group, in the corporate group, and they have the suppliers that need the credit. It depends on what the market’s building, but we’re going to build this bridge, this missing bridge for as many countries as we find in the region, probably getting to Brazil and Mexico at the end of three to five years. And then there is also, and we have found this need in developed countries, Spain, for example. So we have also companies who have talked to us. This will be beautiful. Restaurants don’t have credit in Spain. And that’s one of the biggest industries there is. So it’s just a matter of finding two partners, the money and the supply chain to deploy that money. So it’s not that hard.
Brian Bell (00:28:32): So Platam can go planet wide.
Brian Bell (00:28:34): It’s kind of in the name.
Nicolás Villa (00:28:35): That’s another way to say that.
Brian Bell (00:28:37): Yeah. Platam goes planet wide.
Brian Bell (00:28:39): Yeah. Because there’s other markets that you could just basically take your platform and pretty quickly adapt it. You know, you’d have to figure out some of the accounting and tax and, you know, language translation, but you could apply it to Africa and India and Southeast Asia and everywhere. But, you know, start with Latam.
Nicolás Villa (00:28:56): Yeah, it’s going pretty fast. So like, yeah, change of language is going to be easier every day.
Brian Bell (00:29:02): Yeah, we could have done this interview in Spanish and there’s AI that will translate you and make you sound. I think Google has that now. It just makes you sound like you’re speaking English. That will have been easier. Yeah, it would have been easier. Yeah. Maybe next time we’ll do that. Well, that’s impressive though. I mean, I can’t, I couldn’t do a podcast in Spanish. So there you go. Let’s wrap up with some final questions. What’s a belief that you used to hold about SME finance that you now believe is false?
Nicolás Villa (00:29:26): It’s a good question. So I used to believe that there wasn’t a big task on maintaining the credit score. So whenever you open a line of credit and then, and then And then how long do you have to wait to do that credit score again?
Brian Bell (00:29:42): Yeah, kind of the credit score drift.
Nicolás Villa (00:29:46): The credit score drift.
Brian Bell (00:29:47): Yeah.
Nicolás Villa (00:29:48): And what we have seen is MSMEs move fast. Move as fast as startups. Like maybe they’re not growing 20% month over month, but they are doing it 3%. Wonderful. And they can have a December that is amazing that they can have a January zero. And you need to understand those flows and you need to understand how to move your credit line against them. So the biggest one is there is a need to understand the company in every, like pretty often. There is a period when you need to do it pretty often and you need to grow also with the company. not only to stop the credit line or to lower the credit line, but to get higher credit lines. So if December is going, you need to stay with that company in December and you need to get higher credit lines of credit in December. to accompany that company, to stay with the company and to really take advantage of the role that they can have. And then January is going to be another month. You’re going to lower your risk, your credit limits, and you’re going to have another relationship like that relationship with the company. But yeah, you need to understand the company every day. That’s one of the biggest. It’s not one day that you understand and you understood the company. You need to really pay attention to the company every day.
Brian Bell (00:31:13): What’s the greatest operating leverage you’ve found in scaling so far?
Nicolás Villa (00:31:17): Do it with partnerships. So for us, it will be impossible to do it finding companies in Instagram. It will be too expensive. And whenever a company reach out to us and is like, I need credit. I need credit to go. And it happens a lot. It’s not a great answer that we can say, like, we cannot give you credit because you’re not buying from the suppliers that we are working with.
Brian Bell (00:31:41): Yeah, tell your supplier to go work with us.
Nicolás Villa (00:31:44): And that usually works. But it has to do the whole round to get to the partner to work with us so that we can give credit to the suppliers. For example, I was with a... In a webinar today, and we are doing it with, we’re working with construction companies. And they said, like, nobody’s giving us credit. Can you give us credit directly? And I was like, I already have, like, we already have, like, five partnerships in construction suppliers. So I started giving a list. So if you buy with this one, with this one in Colombia, and I have the regions mapped, you can buy with credit. And we’re like, that’s incredible.
Brian Bell (00:32:24): Given the current climate for fintech and Latin, what’s your biggest headwind and your biggest tailwind?
Nicolás Villa (00:32:30): So money, money, it’s our biggest leverage. I think debt money, like the paradox that I talk, usually talk, there’s a lot of money. And I usually have to stop having conversations with private funds that need to deploy more money. It’s like, I cannot have conversations. I have private funds that can go up to 100 million. So yeah, it’s not easy to open those conversations. But yeah, there is a lot of money that needs to be deployed.
Brian Bell (00:33:01): That’s the biggest tailwind. There’s lots of money available.
Nicolás Villa (00:33:03): Yeah, there’s a, and I think the hardest one has been like getting, getting fundraising. Just to be honest, it hasn’t been a good time. What we have shown is we can do it. We can do it, do it with going 20, 25%. And whenever what it has worked on that is we have. change the way we reach out to investors because we don’t need that money. So what we do to investors is like, you want to get into a business that is going 25, 25% month over month. We have this mission, we have this, but it’s not like crazy asking for the money and crazy looking for it. It’s more a relaxed position that we have achieved and that’s been working a lot.
Brian Bell (00:33:54): Yeah. Well, especially as you kind of hit critical mass and you only need to raise to go faster. You don’t need to raise to stay alive. It changes the dynamic, you know, a bit.
Nicolás Villa (00:34:03): It changes everything. Even your face when talking to an investor, right?
Brian Bell (00:34:08): Yes. I mean, same for me. Like I’m on, you know, fund three, right? So I’ve been stacking management fees and, you know, yeah, I got to raise another fund, but like, it’s not like dire, you know, it’s just raising so I can keep doing what I love doing. It’s not raising because I like need to raise or I’ll won’t have any money coming in. You know, it just changes the whole dynamic. I could totally relate to that.
Nicolás Villa (00:34:28): It changes the conversation from a whole perspective and they kind of see you with a different energy. They even ask for different information. So the conversation, yeah, the conversation is really different. And that’s something that really burned me at the beginning. And now I’m happy that we have arrived to this situation where I’m pretty easy going with every VC investor that I talk.
Brian Bell (00:34:51): I love that. What’s the most underrated data signal in lending in the SME space that you think others ignore?
Nicolás Villa (00:34:57): That’s also a good question. I think we’ll probably talk about cost of operation, like operational cost of every penny that you’re giving in a credit. I was thinking about conversations we have with VCEOs or funds and It’s really hard. It’s not often that somebody asks about our operation cost. So if we are winning 10% of every month, how much is your operation cost on that 30%? The people that know more about lending usually ask for that. How much of the lending cost is the operational cost?
Brian Bell (00:35:38): Yeah, there’s like servicing rights and operational costs and there’s kind of stuff built into that rate, right? I did mortgage-backed securities on Wall Street 20 years ago now. I kind of remember valuing all the different kind of slivers of rights and margins and yeah, it’s pretty interesting.
Nicolás Villa (00:35:56): And there is a lot of thought about operational costs, like which are fixed costs and which are flexible costs. So, for example, how much does it cost every payment that you receive? Is it... Is it in the future to create a payment solution to reduce those costs? Because, yeah, if a payment is receiving 1% of the 10%, it’s a big amount. Only to receive the payment, you know, like the payment, how difficult it is to match a payment with a client or the loan. How difficult or how big is your recovery team? Is it... and really be scalable, your recovery team? How many calls do they have to do? Do you have some leverage on the clients that you’re lending for them to put you first on the payment priorities? That’s also very important.
Brian Bell (00:36:49): What’s a really hard mistake you guys made early on and what did it teach you?
Nicolás Villa (00:36:53): I think you kind of, this is, we do off-balance lending in which we like kind of do it with other money, with other people’s money or with private funds. And we also do unbalanced lending. That unbalanced lending let us understand how lending works, which.
Brian Bell (00:37:10): On balance sheet, right?
Brian Bell (00:37:12): On balance sheet. Off your own balance sheet, yeah.
Nicolás Villa (00:37:13): When we do it with our money, we kind of, there is a double, incentive on that. You need to grow revenue, so you need to lend as fast as possible, but you also need to be aware of your default rates. So there is always two sides of every loan that you give. The commercial team is going to be happy, but then in three months, or six months the recovery team is not going to be that happy that you lent that money and that’s what they are usually like it’s not usually fast to to for a bank to give a credit because they have a credit risk assessment in the middle and that it’s not measured by revenue or it’s not measured and so so yeah I think one of the biggest mistakes that we make is we kind of got excited with the with the revenue and maybe we gave more loans or the credit scoring system got more relaxed because we wanted more revenue on that side. And then it keyed us back three months ago, like three months after.
Brian Bell (00:38:15): Yeah. Amazing. Well, I really enjoyed the conversation. I think anybody who’s interested in Latin American finance and fintech is going to learn a ton. I sure did. And I’m glad we’re on the cap table. Thanks so much for coming on.
Nicolás Villa (00:38:27): Brian, thank you. Thank you for the invitation and teaming night. You arrived at a great moment. I’m really grateful for that. And I’m sure you’re going to have more awesome companies like us in your cap table if you keep doing it like that. Thank you very much.
Nicolás Villa (00:38:41): Thanks, Nicholas.
