Speaker A
The good thing about these transactions that is cross border and the regulation between ports is international.
Ignacio Elías Arambarri discusses Finanex's mission to close the $160B financing gap for Latin American agricultural exporters.
Key Takeaways
- There is a significant financing gap in agricultural exports due to banks' operational inefficiencies, not risk avoidance.
- Finanex uses cross-border data and technology to provide liquidity to underserved SMEs and farmers.
- The market for financing smaller transactions is largely overlooked by large funds focusing on bigger deals.
- Innovative fintech solutions can bridge large gaps in global trade finance, especially in emerging markets.
- A young, agile team can successfully disrupt legacy financial markets with limited capital and strong vision.
Summary
- Finanex addresses the $160 billion financing shortfall for small and medium agricultural exporters in Latin America.
- The company provides liquidity to SMEs and farmers who have good products and buyers but lack bank access due to operational inefficiencies.
- Cross-border trade financing is complex due to short transaction durations and banks' limited capacity to underwrite such deals.
- Finanex leverages publicly available port data to underwrite loans without needing local presence in each country.
- The global trade funding gap is estimated at $2.5 trillion, with Finanex focusing on the agricultural export sector.
- Unlike other sectors, the financing gap here is due to banks' operational inefficiency, not risk aversion.
- Founded in 2022, Finanex has financed over $160 million across 1,500 transactions, deploying about $500,000 daily.
- The company operates with a young, lean team in a legacy market, demonstrating rapid growth and innovation.
- Ignacio’s background spans from Argentinian farming to city banking, fueling his passion to solve this financing challenge.
- The podcast episode explores the structural credit issues and opportunities in global agricultural trade finance.
Full Transcript — Download SRT & Markdown
Speaker A
So we can underwrite loans from Peru, from Paraguay, from anywhere.
Speaker A
Without having local presence, and also the data that you can collect between ports is available to the public.
Speaker A
In Finance, we'd like to solve that problem by providing liquidity to SMEs and farmers that they do sell a good product, they do have good buyers, but they don't have access to banks because banks they don't understand, they don't have the capacity to finance the transaction or the trade.
Speaker B
Let's talk about the opportunities in the market.
Speaker B
The little cracks that you're looking at and you're saying, this is something people don't see yet.
Speaker A
There is a market that nobody is looking at.
Speaker A
Is financing starting when and until the buyer pays for that.
Speaker A
Usually those transactions are financed by large funds, whose minimum ticket is like, but nobody does those transactions in the lower market.
Speaker B
Hello and welcome to Broken at the Edges, the podcast where we dig into the cracks of the credit world.
Speaker B
The structural problem, the overlooked corners, and how the supply chain of credit works behind the scene.
Speaker B
I am Tomer Bariach, the CEO of Textile, and today we have a special guest co-hosting with me, Fede.
Speaker C
Glad to be here. Thanks for the invite, Tomer.
Speaker B
Fede is the managing partner of Tribeca Capital, an entity close to the heart of Textile.
Speaker B
Happy to have you. And today we are hosting with us, Ignacio.
Speaker B
Arambarri, he's the co-founder and CEO of Finanex, a Fintech that is tackling, I think, one of the most staggering gaps in the global finance, the 160 billion shortfall in financing for small and medium agricultural exporters across Latin America.
Speaker B
In this conversation, we'll try to understand what's the worth of grains, seed, understand why is it so expensive to finance those gaps, because at the end of the day, food should be a human right.
Speaker B
And more than everything, we would like to understand what is Ignacio's story that how he went from an Argentinian farm to City Banks, building a company that dispersed over 120 million, if I remember correctly.
Speaker A
We're a little bit higher.
Speaker B
How much are we at now?
Speaker A
160.
Speaker B
160 million.
Speaker B
So I'm very excited about that. So, without further ado, Ignacio, can you please introduce yourself?
Speaker A
Well, thank you, Tomer, for the opportunity to show what we are doing in Finanex. So Finanex, as you said, tackles a very big problem, the massive trade funding gap that we have, according to the Asian Development Bank, we are talking about 2.5 trillion globally, right? That's a big, big problem.
Speaker A
But compared to other funding gaps, Federico may know about this a lot. This is a funding gap not because banks they don't want to take the risk, because of course, we are in emerging markets, a lot of sectors like energy, transportation, e-commerce, they have funding gaps because banks they want to take the risk, right? They are unbanked, the users or the SMEs, they don't have a lot of credit history, but in this particular problem, the funding gap is due to the inefficiency of banks.
Speaker A
Not because they don't like the risk, again. It's because they don't have the operational capacity to underwrite cross-border transactions that are very short in duration.
Speaker A
And also the data that you can collect between ports is available to the public.
Speaker A
In Finance, we'd like to solve that problem by providing liquidity to SMEs and farmers that they do sell a good product, they do have good buyers, but they don't have access to banks because banks they don't understand, they don't have the capacity to finance the transaction or the trade.
Speaker A
So that's the problem that we tackle in Finanex.
Speaker A
We started in 2022 with very limited capital, I was still paying my MBA loans, and I put everything, I was living in Mexico, I don't even have a car, and I was starting to finance the exports of beef to China.
Speaker A
And my wife was saying, hey, what, we're putting all our our savings to finance containers that who's going to pay us in China? I mean, we had a like a interesting conversation, and so far we cannot complain, we have received many, a lot of support from different investors, partners, and so far as you said, we we closed transactions for more than 160 million.
Speaker A
And that's equivalent to 1,500 transactions, and we deploy probably half a million per day, and the operational team is led by two people that are 27 and 20 years old.
Speaker A
So we are a very, I would say, young team in a legacy market, very big, and we we, yeah, we're growing.
Speaker A
So I will pause here to see if you have any other questions.
Speaker A
But I can continue forever talking about Finanex.
Speaker A
So.
Speaker B
Building a successful company is always related to some personal obsession.
Topics:Finanexagricultural financetrade financeSME financingLatin Americacross-border loansfintechagricultural exporterstrade funding gapsupply chain finance
