Led by Crédito Real, the Series A round forms part of the largest financing vehicle focused on the U.S. Latinx small business market
LOS ANGELES, Dec. 11, 2019 /PRNewswire/ -- Camino Financial, a data-driven fintech platform pioneering affordable small business loans to Latinx businesses, has closed an $8 million Series A round led by Mexico-based financial services company, Crédito Real (ticker: CREAL.MX).
A platform with a deep focus on lending to U.S.-based Latinx businesses, Camino Financial will use this equity capital to build its AI-driven business intelligence capabilities for the booming U.S. Latinx economy, the country's "New Mainstream Economy." According to the Latino Donor Collaborative, the U.S. Latinx economy generated $2.3 trillion in GDP in 2019, making it the 8th largest economy and the largest Hispanic economy in the world. Additionally, Latinx-owned businesses are currently growing at a rate that is more than double that of non-Latinx-owned businesses. Between 2012 and 2018, the number of Latinx-owned businesses in the U.S. increased by 40.2%, compared with 18.8% for all U.S. businesses, and yet many Latinx entrepreneurs have a difficult time getting funding for their business ventures.
"Data is power, we are excited to be using our platform to build the largest pool of application and performance data on underbanked U.S. Latinx businesses," said Sean Salas, CEO of Camino Financial. "Armed with this information, we can build machine-learning models to help make credit and other financial solutions more accessible to this 'New Mainstream Economy.' Ultimately, we see a future where Latinx businesses expect finance companies to have omnichannel capabilities, so we've designed our technology for simple integration into corporate distribution partners with entrenched networks in the Latinx market."
The Series A round comes on the heels of the September 2018 launch of a joint Crédito Real and Camino Financial credit facility focused on lending to U.S. Latinx businesses. Since inception, this credit facility has deployed more than $30 million in loans, while at the same time growing monthly loan originations at 419% year-over-year. The facility's growth is on track to surpass all other debt funds focused on the Latinx business market within the next 12 months. The debt commitment to Camino Financial is subject to covenants typical of this type of transaction and is structured with the flexibility to grow over time.
"For nearly 14 months, Crédito Real has worked with Camino Financial as a debt partner, actively monitoring loan portfolio growth and credit performance," said Luis Berrondo, M&A and Business Development Officer of Crédito Real. "This partnership has only strengthened our belief in the U.S. Latinx market, and as a result we made the decision to deepen our relationship with Camino Financial as an equity partner. We are confident this expanded relationship will enable Camino Financial to build upon the company's already-impressive, Latinx-focused financial solution platform."
Based in Mexico, Crédito Real has a large presence across Latin America and in the U.S., and as of 3Q19 has $2.2 billion loans outstanding on its balance sheet. Additionally, Crédito Real has raised over $780 million in debt financing in 2019.
In conjunction with this deal, $3 million in notes – led in financing by Mexico-based venture capital firm DILA Capital, alongside 10x Capital Management and other existing investors – will convert into equity.
About Camino Financial
Camino Financial is a data-driven financial technology platform pioneering affordable credit and financial products for U.S. Latinx businesses. The company uses proprietary artificial intelligence software to aggregate data and build machine learning models to drastically reduce financing costs for thin-file, cash-based microenterprises. First-time borrowers typically experience monthly payments 50% less than those of existing credit products in the market for the same loan size. Microloans range between $5,000 and $75,000, structured for upward mobility with a graduation scheme into lower rates and longer-term loans as borrowers make timely repayments. Camino Financial has designed an omnichannel experience through its online presence and corporate partnerships to build entrenched distribution networks in the U.S. Latinx market. The Company is headquartered in Los Angeles and operates another office in Mexico City.
About Crédito Real
Crédito Real is a leading specialty finance company in Mexico with a growing presence in the United States and in Central America. For over 26 years, Crédito Real has devoted itself to provide innovative financial solutions, tailored to the needs of the low- and middle-income segments of the population that are generally underserved by the traditional banking system. The company has built a solid, scalable, and well-diversified platform that includes the following main lines of business: payroll loans, small business loans, used car loans and consumer loans. Crédito Real shares are listed on the Mexican Stock Exchange under the ticker symbol and series "CREAL*".
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SOURCE Camino Financial