Credit in Latin America is notoriously hard to access. Just a few years ago, credit card rates in Brazil hit 450%, which has gone down to a still astounding 250% per year. In Chile, I’ve seen credit cards that charge 60-100% yearly interest. And that’s if you can even get a card in the first place. Yet people still use these predatory systems. Why? There are rarely any other options.
In the US, access to loans depends mainly on a single number: your FICO score. Your credit score is an aggregate of your spending and borrowing history, so it gives lenders a way to find out if you are a trustworthy customer. In general, the higher your score, the bigger (or more lenient) your line of credit. You can boost your score by managing credit wisely for long periods, such as always paying off a credit card on time, or lower your score by taking on more credit, not paying it off on time or carrying a high balance. While many people criticize the FICO score model, it is a relatively simple way for lenders to verify the creditworthiness of potential customers.
Consumers in the US have access to deep pools of capital at their fingertips. Home loans, credit cards, consumer credit and other forms of debt are readily available. Perhaps they are even too available, as we saw in the 2008 financial crisis or as we might be seeing now with bubbles in student loan debt.
Continue reading “Fixing Latin America’s Broken Lending Industry”
On September 20th, 2017, Hurricane Maria tore through Puerto Rico, leaving a permanent mark on the Caribbean island and its people. Most budding startups shut down operations for up to a few months as the nation recuperated. One company, BrainHi, doubled down after the hurricane, helping doctors and dentists treat more patients by automating the process of taking appointments through their AI technology.
I sat down with BrainHi co-founder and CEO, Emmanuel Oquendo to share his story of how BrainHi survived the hurricane to become the first Puerto Rican startup to get into YCombinator. I’m lucky to be able to work with Emmanuel and cofounder Israel Figueroa as we invested while they were in Parallel 18, Puerto Rico’s equity free accelerator. We discuss Emmanuel’s childhood in Puerto Rico, his desire to solve big problems from the island, and how to leverage his experience in Puerto Rico while pitching in Silicon Valley. Check out the rest of the episode for Emmanuel’s advice for startups who want to reach YC from Latin America and how he has grown BrainHi from Puerto Rico to the world.
Continue reading “Emmanuel Oquendo: How Brainhi Rebounded from Hurricane Maria to Become Puerto Rico’s First YCombinator Company, Ep 68”
Today we announced Magma Media, our next step forward to continue to support Magma portfolio companies and hopefully the ecosystem at large.
We were inspired by the Andreessen Horowitz model of providing top class services to portfolio companies. We’re starting with media because these strategies do work and are low risk/high reward for startups. Even an extremely lean, revenue focused business will benefit from basic content marketing and a social media strategy. Rightly or wrongly, first impressions make a difference.
We currently offer:
- Growth strategies: landing pages, analytics, ads
- Content marketing in English, Spanish, Portuguese and Chinese
- PR in English, Spanish, Portuguese and Chinese
- Podcast production
- Video production
- Social Media management
Continue reading “Introducing Magma Media: Magma Partners In-House Media Agency”
I’ve been in Latin America for a little over eight years, first going to Chile in 2010. I spent the first five in Santiago, Chile, first going through Start-Up Chile, starting Andes Property and then cofounding Magma Partners. Since 2015, I’ve split my time between Colombia, Mexico, Chile and the US, and have been able to spend time in Argentina, Brazil, Peru, Bolivia and more, as we expanded Magma Partners across the region. I’ve truly been a nomad. I haven’t spent more than 6 weeks in a row in any location since I started this odyssey.
During my 8 years in Latin America, I’ve learned about culture, doing business and the opportunities available to both local and foreign investors. I’ve been writing about Latin America since 2010 and having conversations with top entrepreneurs and investors on the Crossing Borders Podcast since 2017.
Crossing Borders: A Venture Capitalist’s Guide to Doing Business in Latin America is a way to share what I’ve learned, along with these amazing entrepreneurs’ stories. My goal is to help foreigners and locals interested in pursuing business in Latin America get a jump start on their research. I also want help the Latin American entrepreneurs covered in this book share their stories more broadly.
Continue reading “Crossing Borders: A Venture Capitalists Guide to Doing Business in Latin America”