Goldman Sach’s (GS) recent move into the more entrepreneurial side of Mexico via a credit line of up to $100 million to a four-year old fintech firm (Creditjusto) that specializes in making 3-year loans to small businesses is yet another aspect of our Rise of the New Middle Class. Advances in both technology and in finance are enabling individuals and small companies in emerging markets to access resources that had been previously completely unobtainable. This is allowing for access to the tools of wealth creation across a wider range of society, providing a tailwind for our Rise of the New Middle-Class Investing theme.
According to a recent WSJ article,
The bulk of lending by Mexican banks targets large corporations, home mortgages and consumers, according to the Bank of Mexico. More than 80% of Mexican small businesses rely primarily on supplier financing, not bank credit, Banxico said.
This is changing however, fueling the fires of innovation and entrepreneurship in countries in which such growth was limited.
A host of new online lending platforms and supply-chain financing services have popped up in recent years in Mexico to help fill the void, said Andres Fontao, a co-founder and managing partner of Finnovista, a firm that advises fintech startups.
As companies like Creditjusto expand, offering needed capital to fund growth, so will Mexico’s Middle Class. As the Wall Street Journal points out,
Goldman’s involvement is a reminder of how small fintech companies are challenging and reshaping the banking industry, especially in developing markets like Latin America.