Gerry Giacomán Colyer worked in startups, management consultants and family business before realising one consistency. Managing company spending was difficult.
He and his business partner, Diego Ivan Garcia, spent hours billing for fees, struggling with various IT systems, seeing staff handled a large amount of paperwork. There was no sophisticated process that was sophisticated enough for a rapidly growing company to work across Latin American borders.
“It was clear that it wasn’t just a growth startup,” says Giacomán Colyer.
Fintech groups have emerged across Latin America, with market leader Brazil set an example of regulation, leading to the successes that countries such as Mexico, Colombia and Argentina are trying to emulate.
Carlos Costa, a partner at venture capital firm Valor Capital, invests in over 100 companies, but the country in the region moves at different speeds, but still moves in the same direction.
The next wave will “become a mixture of confusion and financial inclusion,” he says. “That’s what excites us so much. Even in Brazil, it’s still early on that Mexico is a step behind. But that’s how value creation happens.”
Clara, Business Payments Group Giacomán Colyer, García was founded five years ago and uses a software system that allows managers to issue corporate credit cards, generate invoices and view transactions immediately.
In its first year, it had 26 employees and revenue of $102,000. By 2023, the group had 340 employees in Mexico, Brazil and Colombia earned $28.3 million, making it the second fastest growing company in the United States, according to a list of 300 companies compiled by the Financial Times with Data Research Company Statista. Brazil’s Inter & Co and Sicoob Crezip and Colomb Quantum Royalty Banking are also on the list.
Clara became Mexico’s ninth startup, raising funds at valuations of over $1 billion and joined other companies such as “Unicorn,” Plata, Stories and Clips.
However, the business environment is challenging. The law was passed in 2018, which was then considered groundbreaking because it provided a regulatory framework for fintech startups, but failed to meet the hype it created.
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Although regulations at the time have not been updated in seven years, conservative and underresourced regulators are struggling to keep up with the rapidly moving sector.
“They understand the challenge,” says Alvaro Vertis, head of Latin America for the Washington-based advisory consultant DGA Group. “They want to help the sector evolve, but at the same time, they are trying to manage and drive full speed cars.”
Many industries in Mexico are highly concentrated, including banks where three institutions own half of the assets of the system. Small businesses struggle to gain credibility, but even successful founders often say it’s difficult to sell their business.
Vértiz said the number of unicorns indicates that funding is no longer a limit on growth, but adds that the country has problems that span “the whole economy.” Mexico, for example, had no significant new listings on stock exchanges for several years. In fact, domestic companies such as Aeromexico have registered to move to the US.
Government data shows that while more than a third of Mexicans have no bank accounts, the possibility of bringing fintech people into the financial system has shown slower progress over the past decade.
Many Mexicans experienced economic crises in the 1980s and 1990s, and are now distrustful of banks, and have historically charged high fees for basic services. More than half of the economy is informal. One of the biggest retailers says that three-thirds of transactions are cash.
The founder of digital bank Plata wants to make a difference. A group of former Russian Bank executives, now known as T-Bank, left Moscow after the 2022 invasion of Ukraine, preferred Mexico’s potential as a sophisticated economy with room to grow.
“We came in and felt we could make something completely different, better, faster and more distinctive,” says Neri Tollardo, an Italian-born co-founder.
He believes the recent shift to fintech deposits will help solve some financial inclusion problems that blame the expensive and slow legal system that makes debt collection difficult.
“You can start giving everyone a reason to throw away their cash and use digital banking online,” he says. It wasn’t two years ago when “all these players were limited to credit cards or credit products.”
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Many fintech companies are asking Mexico to update its 2018 law. But the new law “needs to be more flexible and open,” says DGA’s Vértiz.
“We’re really at this inflection point, where we’re ultimately looking at fintech that can provide all the relevant products to make a difference,” Tollardo says.
Meanwhile, Giacomán Colyer says he is focusing on long-term trends at the time of market volatility unleashed by the threat of tariffs from the Trump administration.
“There’s been a lot of work over the last decade or so,” he says of Mexico’s fintech sector. “Evolution is happening. It’s a question of how quickly it can happen.”
