In order to safeguard sensible or confidential information, Arpegio does not publish complete Investment Memos. However, through these Deal Sheets we can share public information about portfolio companies and some of the reasoning behind our investment decisions.
Company: Marco Financial
HQ: Miami, FL
Investment Date: July 2021
Industry stage: Enablers & Facilitator / Transversal
Tech: Digital, Fin-tech
Geo: LatAm & expanding globally
Impact: Accessibility to financial instruments to an underserved market
Summary: Supply chain financing for small and medium export businesses in Latin America.
Small and medium-sized businesses in Latin America find it difficult to access financing to be able to export their goods to the United States and other geographies. Accessing capital in Latin America for small and not known businesses can be a hurdle. Traditional banks usually lend to big corporations or to people they know. Managers spend more time looking for capital than focusing on growing their business and the loan approval process is inefficient and can take too long.
Marco is focusing on building and using technology to better assess loan allocations. Enabling technology will allow companies to lower the amount of collateral usually requested by conventional banks. Marco will focus on the potential and future growth of the business to lower the risks of its loans. Marco is also focusing on reducing the loan origination process to one week and providing funding to existing customers within 24 hours.
Why we invested:
It is widely known that financing alternatives in Latin America are generally limited, expensive and slow. It’s a severe pain point felt especially by small and medium companies, which happen to account globally for 40% of international trade. It was also a personal experience to Peter, one of Marco’s founders, as en exporter from Uruguay, which we think has given the team a sense of urgency and a clear mission to contribute towards a solution.
At Arpegio we were able to confirm the demand for this product. First of all, through Gonzalo’s past experience at a supply chain financing company in Peru, where clients asked specifically for financing options for export invoices (which that company didn’t offer). But more recently, by helping connect Marco to our industry partners in the region, including small, medium and even large exporters, all excited for the potential of what Marco could do for them.
During those initial meetings in which we participated, Marco demonstrated flexibility, was quick to respond and was able to adapt to local formats and standards. The firm was also able to compete with local financing alternatives for larger companies with competitive rates and would significantly reduce internal administrative costs associated with each financing event.
Additionally, since October 2020 when we first met the founders, Marco has been able to show significant progress in each follow-up meeting. As a result, they have been able to raise about USD 100M in lending facility and have attracted strategic partners in the industry including other lenders, export associations, port operators and others that will help the company grow at a fast pace in the region and beyond.
In terms of the team, the founder have complementary skills and experience. Jacob led sales and business development teams in companies like Yelp, Groupon and Taboola, while Peter held various positions in his family’s business (which happened to be the largest exporter in Uruguay for over a decade) and founded companies of his own.
More importantly, both have been able to attract the right talent for the business, including industry veterans such as Fred Leder who has worked the last 20 years as a secured lending specialist, Barry Kastner who comes with more than 40 years experience in commercial finance and banking and Sabrina Teichman who was Managing Director at the US International Development Finance Corporation, to name a few.
Arpegio is investing in companies that strengthen Latin America’s food and agriculture industry, and Marco’s trade finance solution will serve as a valuable tool in a region that will account for 25% of global agricultural and fisheries exports by the end of the decade. The founders have big plans for the company and we should expect to see them offer a broader base of services and tools in the coming years, to help the industry maintain its competitiveness and global leadership position.