Interview: Colombia Fintech Startups Alegra and Bankity to Compete for Funding at Finnosummit in Miami Next Week

Later this month in Miami, a group of 10 Latin American fintech startups will gather in Miami to compete. Two companies, Alegra and Bankity, are from Colombia and will be vying against peers from Mexico, Brazil, Argentina, and Chile for the $50,000 USD prize.

Photo: Andres Fontao, co-founder of Finnovista and organizer of the Finnosummit conference. (Credit: Finnovista)

The competition is part of Visa’s Everywhere Initiative and will be taking place within Finnovista’s larger Finnosummit on November 9 in Florida’s largest city. And while the cash award will surely benefit the winner, the real opportunity is for the top startup is the chance to collaborate with Visa on “the future of payments,” according to the organizers.

To find out more about the event, the finalists, and the startup world in Colombia, we recently spoke with Andres Fontao, co-founder of Finnovista and organizer of the Finnosummit conference. Among other insights, he highlights a recent Finnovista study that showed Colombia, with 84, to be the country in the region with the third most fintech startups after Mexico and Brazil.

Jared Wade: What is Finnosummit and why are you bringing together so many fintech startups from the region?

Andres Fontao: Over the past four years, Finnosummit has become the largest gathering of fintech leaders from Latin America. The conference features Latin America’s most prominent financial institutions, fintech startups, investors, and policy influencers.

The Inter-American Development Bank currently counts over 700 fintech startups in the region, and three out of five were created in the last three years. This rapidly evolving space desperately needed a common meeting point, and that’s why we organized Finnosummit. At these conferences we’re tackling some of Latin America’s biggest banking issues like how to regulate fintech and how to better reach the unbanked and underbanked, which the publication Latin Trade has written affects nearly 400 Million people in the region.

Jared Wade: I know that Bankity and Alegra, two fintech startups from Colombia, are among the finalists for the ultimate prize in the competition. Can you tell me a little about each company and why they are considered to be some the best in the region?

Andres Fontao: Finnosummit was thrilled to partner with Visa to host the final round of their “Everywhere Initiative,” and 10 great startups were chosen to come to Miami to present. Two of these were Colombian companies, which is excellent.

“Colombia ranks third in terms of the number of fintech startups with 84. Argentina has 72 and Chile has 65. The market leader, Mexico, with 238 fintech startups, just overtook Brazil, which has 230, in July.” – Andres Fontao

Bankity offers the first intelligent banking card in Latin America. It’s tackling a big problem because Colombia is one of the countries in the region which uses bank cards the least. Bank card adoption and formalization of the economy in this region is a worthy challenge.

Alegra, founded by Santiago Villegas and Jorge Soto, is also great because it aims to help small business owners with tedious tasks like invoicing and reporting with its cloud-based accounting software.

Jared Wade: Do you see more venture capital coming into the fintech industry in Latin America? And in terms of startup accelerators and incubators, is fintech now the leading area of interest in the region?

Andres Fontao: No doubt about it, fintech is the sector attracting the largest amount of VC investment in the region. According to LAVCA, in 2016 fintech was the largest IT sector attracting VC investment in the region, representing 25% of all IT deals. Fintech investments are on the rise in Latin America, growing 31%, in terms of dollars, and 81%, in terms of deal count, in 2016.

In terms of accelerators, we’ve seen the launch of a few fintech-specific programs over the past few years. But unlike other verticals so far in the region, the interest in launching fintech programs is driven by industry players who want support and collaborative startup-driven innovation in the industry. An example is Startupbootcamp Fintech in Mexico City, which is backed by a consortium of industry players such as Visa, HSBC, BanRegio, and Fiinlab, as well as Mexican VC firm Ignia, among other industry players.

Jared Wade: How does the space in Colombia compare to the markets for regional peers like Brazil, Mexico, Argentina, and Chile? What differentiates Colombia?

Andres Fontao: According to a recent report by my company Finnovista and the Inter-American Development Bank, Colombia ranks third in terms of the number of fintech startups with 84. Argentina has 72 and Chile has 65. The market leader Mexico, with 238 fintech startups, just overtook Brazil, which has 230, in July. So as I said before, the market keeps growing at a pretty rapid pace.

Jared Wade: Aside from the Colombian finalists at Finnosummit, are there any specific startups — or just traditional banks undergoing digital transformation — that stand out in Colombia as success stories or models to follow?

“Fintech investments are on the rise in Latin America, growing 31%, in terms of dollars, and 81%, in terms of deal count, in 2016.” – Andres Fontao

Andres Fontao: Grupo Sura stands out on the industry side having invested in some fintech startups from across the region, as does Colpatria through the regional initiatives that are being spearheaded from Toronto and have local implications in Colombia.

On the startup side, there is a lot happening with some interesting fundraises having been announced recently such as ComparaMejor and Mesfix. It will be interesting to see how they put the capital to use and if they can scale and grow their businesses.

Aflore and Tpaga are two startups that are focused on executing and capitalizing on a huge market opportunity in Colombia and across Latin America.

Jared Wade: I know there has been a lot of talk about fintech regulations in Latin America over the past few years. How is this affecting the adoption in the region? And is government involvement generally helping or curbing the rate of digital transformation in the financial services world in Latin America?

Andres Fontao: Regulation is needed and generally accepted by all stakeholders in the ecosystem. The challenge is making it startup friendly so that the cost of being regulated does not become too onerous for an early stage startup.

Mexico is on the verge of approving a fintech regulation which will be the first of its kind in the region, and hopefully once approved — assuming its startup friendly — others will follow.