Saturday, June 15, 2024

Portal Finance Signs US$200M Partnership with BTG Pactual, Raises US$1.6M To Fuel Its Invoice-Backed Finance Solutions in Latin America

Portal Finance, an invoice-backed finance company that streamlines access to capital for small- and medium-sized businesses in Latin America, raised US$1.6 million in a seed investment round led by the US-Latin America venture capital fund, Magma Partners. The company also secured a milestone partnership with BTG Pactual, one of the largest investment banks in Latin America, for an initial commitment of US$200 million. This landmark deal will help strengthen Portal Finance’s current operations and lay the groundwork for continued growth in Latin America.

The 2008 financial crisis caused formal, low-cost bank financing to dry up for companies all over the world. As a result, banks implemented new regulations, such as Basel III, to use as guidelines to determine risk. This has led supply chain finance and factoring to become a US$3 trillion per year industry.

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. Although invoices can be used as collateral, present default rates are below 1% per year. This disconnect and the many market inefficiencies are where Portal Finance focuses its efforts.

Portal Finance is transforming the invoice financing industry by providing a streamlined risk analysis system that evaluates and prices an invoice backed loan in under 10 minutes with much greater accuracy. Portal Finance’s process is highly-automated, reducing acquisition and overhead costs which can translate into SMEs receiving the critical financing they require for 30% – 40% cheaper on average. Funds are typically available in the bank within the following two hours, or 90% faster than current market alternatives.

Portal Finance partners with industry-leading corporations that have large supplier bases. Corporations streamline their accounts payable process from reception, conciliation, and payment. By using Portal Finance’s business intelligence and risk platform, they are able to better understand their suppliers, remove risk from their supply chains, and automate their accounts payable workflow.

“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.

Portal Finance was the winner of Magma Partners’ region-wide fintech competition and received pre-seed funding from the firm in 2017. Since receiving pre-seed investment, Portal Finance has scaled its operations significantly with a growing team of 60 people distributed across Colombia and Chile. Portal Finance developed a database consisting of more than 40,000 SMEs and is actively working with more than 1,000 SMEs as well as 50+ large companies as debtor partners. The new funding and partnership will help the company consolidate its operations in Chile and Colombia and continue its expansion across Latin America.

“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.”

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