Portal Finance is an invoice-backed finance company that streamlines access to capital for small- and medium-sized businesses in Latin America from its offices in Chile and Colombia. The startup recently announced a US$200M partnership with one of Latin America’s largest financial services institution, BTG Pactual, to provide more loans to small businesses through an innovative take on factor-based financing.
Currently, supply chain financing and factoring are the only alternative financing options that 90% of small- and medium- sized enterprises around the world are able to access, and interest rates are typically 20% – 50% per year. Portal Finance analyzes the invoices small businesses send to the companies they supply and works with factoring firms – the usual lenders of last resort – to provide lower interest rates on those loans by providing them with more information about the company.
This unique approach to critical financing is what attracted Magma Partners to invest in Portal Finance after they won a fintech competition by the firm in 2017. Portal Finance recently raised US$1.6M in a seed round led by Magma Partners.
“We believe that Latin America is a global leader in the factoring industry and the most developed market,” said Nathan Lustig, Managing Partner at Magma Partners, “and as the industry matures, new technology like Portal Finance’s will be needed in more developed markets, such as the United States.”
Portal Finance’s products have grown from just helping factoring companies lower their loan risk, to helping large corporations manage payments to their suppliers, to finally reaching large finance operations to set up a lending operation. BTG Pactual ran a US$5M pilot in Chile with Portal Finance last year, and recently expanded their partnership to US$200M to provide more loans to small businesses in the region.
“To build Portal Finance we had to connect a lot of dots and establish trust among many industry players, primarily the alternative assets team at BTG with whom we had a shared vision. By securing this milestone partnership with BTG Pactual, we can scale and execute our vision of transforming how SMEs finance their working capital needs across the region,” said Diego Caicedo, CEO of Portal Finance.
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