In Colombia, digital applications of all kinds were used extensively with the advent of the COVID-19 pandemic to counter mandatory quarantines, while governments injected subsidies to cope with the shutdown of the economy.
Camilo Zia, CEO of the Pronus firm, stressed that the above generated inflation and increased interest rates by central banks to counter this phenomenon.
For this reason, according to the expert, it is necessary to design strategies to keep the businesses on their feet and maintain the money flow. However, he stressed that some areas fintech They can be hit harder.
Xie explained that during the pandemic, since money was so cheap due to low-rate policies to stimulate the economy, risk appetite was high. In addition, retained for expert fintech Fund credits, loans have become more expensive by up to 40%.
In this sense, “these businesses get tighter, that is, they get tougher and this rate scenario will probably make it necessary to reconsider some businesses so that they remain an object of investor funding.”
In addition, Zee identified a series of strategies “that will help companies find capital more easily.” fintech In this challenging context that we are experiencing.”
The first has to do with the business model, “as it must be robust, specific, in which it is very detailed as to what capital is being invested. Investments may be made for technology or physical aspects, infrastructure, operational cost expenditure (Opex) should be included, although capex (capital) is also required.
Also, another important point is that the time horizon designed for consolidation fintech “It should be long enough that there is no need for repeated rounds. If earlier capital rounds were raised for 12 months, which is known as runway, now it is necessary to do it for 24 and 36 months , Because since the capital market is tightening, it is recommended to hold resources for two or three years.
The executive added that sometimes “it’s even easier to get $100 million than $100,000, because investors unfortunately don’t like to invest in such small ticket projects because of the lack of due diligence to study these projects.” Cost is important and critical and that is the reason why they try to invest maximum possible tickets. Lengthening those investment rounds can help in getting bigger tickets.
Finally, he added that “we should avoid B2C, which is an acronym in English business to consumer. It is a business model in which a company sells directly to the end consumer for a period of time.
During the pandemic there were many B2C businesses that raised a lot of capital and grew, which kept them alive and will keep them based on those rounds. According to Zee, “a little more focus on B2B is recommended” (business to Businessi.e. sale from one company to another).
executive says what’s important to a fintech It should be innovative, have good data and a solid monetization model. It takes into account what income is going to be generated from that data. In addition, you need to look at a strategy that allows you to scale not only in the market in which the company operates. fintechBut in other geographies, among others.