Luis Rubén Chávez, founder and CEO of zenfisays that consumer finance in Mexico and throughout Latin America “is basically bankrupt.”
“Achieving basic financial health in Mexico for around 50 to 60 million people is really difficult,” he told TechCrunch. “Two out of three Mexicans have a subprime credit score and basically have no tools to improve.”
Fintech has exploded in Mexico and Latin America in recent years, fueled by startups and venture capitalists, in part because founders like Chávez, whose background is in consumer finance, think there has to be an easier way. to help people get financing. without charging more than 100% APR on credit card and personal costs. To put that in perspective, a Average APR in the US is around 19%.
So seven years ago, Chávez began building the free super app Zenfi, a financial health platform that he describes as “if Credit Karma, SoFi, Marcus and Copilot Money had a child, it would be us.”
One of the main features of the platform is what it promotes as the lowest interest rate in Mexico, an average of 19% APR. Zenfi also offers free credit monitoring and integrates with open banking. It also connects to the country’s tax system so users can access tax returns and filing tools.
One of the newer features is a personal finance manager. Users of the app answer a few questions, enter their financial data sources and get long-term personal financial planning, Chavez said.
Seven years after creating Zenfi, the company has more than 3 million users, many of whom use the platform to consolidate and pay off their debt with another bank, he added. It has distributed more than $100 million in loans, has a 3.4% delinquency rate, and $10 million in annual recurring revenue generated from interest rates, small fees associated with credit score checks, and commissions from loan products. investment.
The company has not only been able to show profitability with that business model, but has also done so having previously raised less than $3 million.
Having reached profitability is how Chávez said the company can take on a new round of financing, this time $8.5 million in new capital led through Magma Partners. Comet, Redwood Ventures, Polígono, Conny & Co. and an AngelList syndicate led by Peter Livingston also participated.
Chávez intends to roll out the new funds in dozens of features in the pipeline, including debit and credit products. He is also eyeing three countries in Latin America where he believes Zenfi’s business model will work well. In addition, Chávez will hire more people to add to Zenfi’s 60-person team.
“Right now, we have the largest personal loan and fintech license company in Mexico and a benchmark in portfolio volume and quality,” he added. “We are trying to make a dent in the Mexican financial system and we want to go from $100 million in loans to $2 billion, so we will build internal capabilities around equipment and infrastructure.”
