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A $200M partnership for the invoice financing industry in Latin America

invoice financing latin america
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Invoice-backed finance company Portal Finance signs a $200 million partnership with one of the largest investment banks in Latin America, BTG Pactual.

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 $3 trillion per year industry.

invoice financing latin america
Diego Caicedo

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.

“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,” said Diego Caicedo, CEO of Portal Finance, in a statement.

“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,” he added.

Portal Finance raises $1.6M Led by Magma Partners

The partnership comes just as Portal Finance announced that it had raised $1.6 million in a seed investment round led by the US-Latin America venture capital fund, Magma Partners.

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.

Read More: Sino-Latin America Accelerator launches to bolster LatAm, China entrepreneurship

invoice financing latin america
Nathan Lustig

“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

“As the industry matures, new technology like Portal Finance’s will be needed in more developed markets, such as the United States,” he added.

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.

The company 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.

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Tim Hinchliffe
Tim Hinchliffe is a veteran journalist whose passions include writing about how technology impacts society and Artificial Intelligence. He prefers writing in-depth, interesting features that people actually want to read. Previously, he worked as a reporter for the Ghanaian Chronicle in West Africa, and Colombia Reports in South America. tim@sociable.co