Wed. Oct 27th, 2021


In the six years since the launch of Credijusto, a Mexican fintech small business lender, David Poritz and Allan Apoj have generated more than 250 percent annual revenue growth and managed to turn Covid-19 into an opportunity.

But when the co-CEOs decided to go mainstream by buying a bank, even one of their biggest supporters got a breather.

Hernán Kazah, co-founder of the largest venture capital firm in Latin America, Kaszek, feared that the acquisition of Banco Finterra could lose the duo’s focus. Or as he puts it: “When David and Allan said they were buying a bank, I thought they were crazy.”

Poritz, a 32-year-old American anthropologist who became an entrepreneur with a master’s degree in public policy from the University of Oxford, smiles at the irony: “Fintechs was created to disrupt the banking sector,” he says. And yet, in June, Credijusto spent an undisclosed amount under $ 50 million to become a bank itself.

For them, it was their core belief that, after successfully challenging the solid financial venture from the outside, they could now change it from the inside.

Like Credijusto, Finterra focuses on the nearly 5 million small and medium-sized enterprises that make up half of Mexico’s gross domestic product and employ 70 percent of the workers, but struggle to gain access to credit. But Credijusto’s unique selling point is the way it increases electronic invoices, taxes and other data to give customers loans within hours.

Kazah was worried that the price tag would be too high “and there could be surprises under the rug”, but Poritz and Apoj held on. They have started evaluating whether they want to apply for a bank charter to take their business to the next level.

However, this can take years. When Finterra went on sale in 2019, “we chose to buy rather than build a new bank – it’s faster and we’ve seen a lot of similarity”, says Apoj (31), a Mexican graduate in economics who cuts his teeth as an entrepreneur during a year out of college.

The goal now is ‘to have the speed and flexibility of a fintech service with the cost that a bank can offer’, Apoj adds. Currently, their lowest interest rate is 7.5 percent and with Finterra, “we can now be financially competitive with any major bank”.

In addition, with a combined asset of $ 300 million, “it [acquisition] doubles our size. . . This positions us for a lot of growth, ”he says.

Mexico has 51 banks, but only a handful give up most of the country’s loans. Even successful entrepreneurs like Poritz and Apoj, whose Credijusto’s revenue grew more than 250 percent each year from the start of the business in 2015 to 2019, were denied personal credit cards – something that Apoj said was ‘symptomatic’ of a financial system. where it is so difficult to access services ”.

Market concentration has a funding gap according to the World Bank, the International Finance Corporation and the SME Finance Forum for more than $ 160 billion for SMEs.

“The SME segment has really been left behind,” says Poritz. ‘We want to build the first true digital banking solution for SMEs.

Credijusto has already issued loans of $ 500 million to $ 600 million and aims to double the combined customer base of the two companies to 12,000 by the end of this year, with a special focus on the agricultural sector, which is poorly served by banks.

Within two weeks of acquiring Finterra, the combined entity to be named launched a credit card in partnership with American Express, which buys services for up to five months and now pays and offers integrated digital financial planning tools to undertake small business operations. businesses brisk and cheaper.

The couple, who met at Brown University in the US in 2008 – in Apoj’s first week – are not ashamed to take risks. Amid the Covid-19 pandemic, they started a revolving line of credit with a mortgage, which was a lifeline for restaurants. President Andrés Manuel López Obrador small businesses offered loans worth a little over $ 1,000 but little other pandemic help.

Credijusto also entered into an agreement Uber Eats to become the exclusive financial partner of the delivery service in Latin America, allowing businesses on Uber Eats’ platform to access quick loans.

“Covid helped prove our business model in a very unexpected way,” says Poritz. “We were able to navigate Covid very well and validate our business in a much shorter amount of time.” Even during the pandemic, revenues grew by an “incredibly respectful” 30% and Apoj says that installment loans “were not as bad as they could have been”.

It was music to the ears of A-list venture capitalists and funds — including Goldman Sachs, Credit Suisse, Point72 Ventures, New Residential Investment Corp., QED Investors and John Mack, as well as Kaszek — which poured about $ 400 million into debt and equity.

“Capital on its own does not make a business successful, but institutional capital in Mexico is a great distinction that has enabled us to grow in scope,” says Poritz.

Mexico has long lagged behind other Latin American countries in terms of unicorn ventures worth more than $ 1 billion. But since October last year, it has amassed three, and Credijusto has set itself the goal of joining them – something the duo see as their success in building what Poritz calls a ‘high-growth business’. a big impact ‘that really solves a big pain point’. .

Three questions to David Poritz and Allan Apoj

Poritz

Who is your leader hero?

Josef Mittlemann, a successful developer, learned leadership from Brown. We were regularly on 90 minute bike rides. He was a very important leadership coach at a very important time, just when I was studying in college.

What is the most important leadership lesson you have learned?

If you communicate clearly and manage expectations, 90 percent of friction and conflict can be avoided.

What would you do if you did not work at Credijusto?

I would have split my time between academia and the nonprofit world.

Apos

Who is your leader hero?

Barack Obama defends his health care plans and says it is important not to let the perfect be the enemy of the good. Many people in technology are purists – striving for perfection often slows down innovation.

What is the most important leadership lesson you have learned?

If you do not like something, say it very quickly. I learned that sometimes you have to pull the plug.

What would you do if you did not work at Credijusto?

I would have gone to law school – that’s the best access to business. I always wanted to work in finance

Apoj, which is responsible for technology and in-house operations while Poritz manages investor relations and finance, sees international expansion already on the horizon, with lending to small businesses further in North America’s integrated supply chains in the US and Canada, as a major driver of growth.

Being friends as well as business partners was a bonus. “If you’re in the trenches of a new business, you should do it with someone you enjoy,” says Poritz. “But to say we always agree is not the case.”

One disagreement actually held the company back for more than a year, he says. ‘I made a little tactical mistake. Allan wanted to create a multi-product enterprise from the start. “I thought we should be focused on a small number of products,” says Poritz. “I was too conservative.”

Apoj, in turn, regrets that he did not pull the trigger a few unsuitable rents earlier, something he says was eventually taken two years from the technical development of the business. But the couple were half-twenty and inexperienced, and ‘we were not confident in making the decisions in the early days’.

As a result, the pair evolved into what they call ‘hypercommunicators’. “We’re really open to staff,” says Poritz.

Both men worked for Credijusto in other business ventures. Poritz founded Equitable Origin, a non-profit organization that focuses on indigenous rights, and remains its president. While at Brown, Apoj took a year to design a healthier dumping solution for a tender in Ecuador. He eventually lost, but remembers it as a ‘wonderful experience’.

Now the aim is to ‘The neobank for SMEs ”, says Poritz.

Or as Apoj puts it: “There are still tons to build.”

jude.webber@ft.com



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