Fynsa
In March 2022, Fynsa AGF will launch the new "Venture Debt Latam" Fund, which aims to raise US$50,000,000 with the objective of investing in assets located in different Latin American countries, starting with Mexico, Colombia, Peru, and Chile, with an expected annual return of 8% in dollars.
Recently, there has been a lot of talk about topics such as venture capital, startups, Fintechs, unicorns, venture debt, among other terms that can be heard every day among people and in the globalized world in which we live, but what is venture debt really?
When startups, emerging companies with great growth potential, seek financing, they do so in two ways: the first is through equity or direct investment, which, through angel investors, Series A or other mechanisms, obtains money in exchange for a stake in the company. The second way is through debt, which could be provided by traditional banks, but due to the risk of the guarantees involved and the stage these companies are at, banks are unable to meet the total demand for loans to startups, creating a business opportunity, which we will call Venture Debt.
In other words, venture debt consists of providing access to financing for these companies that are in the early stages of development and have growth potential. This financing is provided through the acquisition of assets originating from these companies, which allows them to have the resources to continue providing financing to individuals and/or SMEs.
At FYNSA, we are pioneers in this strategy, having launched the Venture Debt fund in early 2021 in partnership with Fintech MIGRANTE. Today, the fund has assets of more than $25 million in over 12,000 loans, providing financing to immigrants who are outside the financial system (they do not have access to credit), giving them opportunities to continue their personal development in Chile.
In recent years, there has been a boom in the venture capital industry in Latin America, where in 2021 alone, more than $14.8 billion was invested in venture capital firms, representing a 30-fold increase over the amount invested in 2017.
In terms of success stories, these have also grown in line with the increase in investment, which shows that by providing greater sources of financing for these "ideas," they are given more tools and opportunities to develop them and achieve success. In the region alone, there are more than 40 unicorns, 18 of which were created in 2021.
This new FYNSA Venture Debt Latam Fund presents itself as an attractive and contingent investment opportunity, taking advantage of the current momentum in the venture capital industry, the boom in new ventures, and FYNSA's experience as pioneers in venture debt funds. providing access to an alternative that offers good risk-adjusted returns, allows for portfolio diversification, and provides opportunities to potential future innovative companies in the current economic ecosystem.
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