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Mexico's non-bank lenders, also known as "shadow banks," grew quickly during the pandemic, taking a large share (20%) of the private credit market. They provided vital financial lifelines to millions of small and medium-sized businesses, offering everything from unsecured loans to payroll solutions.
However in 2022, as interest rates increased and liquidity challenges surfaced, three major players defaulted within a single year, causing traditional banks and international investors to become hesitant about stepping in to fill the void. (Reuters).
In this climate of uncertainty, Syscap steps in to help.
Syscap is aiming to enhance access to private credit across LATAM by building a financial infrastructure and providing access to private credit through their unified platform. Syscap's mission is to make the process of accessing, underwriting, and investing in private credit more accessible, transparent, and efficient. Unlike traditional lenders, Syscap isn't a bank itself, but rather a platform designed to connect all parties involved in the private credit process, similar to DV01 in the United States, which was acquired by Fitch Solutions in 2022.
From FEMSA to Fintech: The Founders' Path to Syscap
The story of Syscap begins with a chance encounter. Two former colleagues, David Noel Ramírez and Alejandro O'Farrill, crossed paths again after their time working together at the beverage and retail giant FEMSA (Fomento Económico Mexicano, S.A.B. de C.V.). While both pursued separate ventures after FEMSA - Ramírez co-founding Concéntrico and O'Farrill gaining experience at Amazon and Nubank - Finally came back together to create Syscap.
Changing Direction to a Bigger Opportunity
The company initially started with a traditional approach, building a SaaS platform to help non-bank lenders manage their private debt sources. However, while selling this platform, the Syscap team discovered a much bigger opportunity. They recognized the challenges faced by businesses in accessing credit and by investors in finding funding opportunities.
We started seeing opportunities ahead of us that we believed were larger than the SaaS itself. We began connecting the dots through the different data structures we had with our clients using our SaaS product. - David Noel Ramirez, co founder of Syscap
Connecting Borrowers and Investors: Seizing this opportunity, Syscap identified a market of investors interested in private debt, specifically in funding the debt of lenders.
Founders
Syscap: A Straightforward Solution for Private Credit in Latin America
Syscap offers a suite of features designed to revolutionize the way financial institutions in Latin America manage and access private credit. Syscap’s platform aims to create a more transparent and efficient ecosystem for lenders, originators, and investors.
Here's a breakdown of Syscap's key offerings:
- Financing:
- Schedule a Demo: Syscap allows potential clients to easily schedule a demo to learn more about the platform's capabilities.
- Unlocking Private Credit Potential: Syscap's core mission is to empower institutions to leverage private credit opportunities throughout Latin America. They achieve this by building technological infrastructure and providing access to private credit through their platform.
- Connecting the Ecosystem: Syscap aims to bridge the gap between lenders, originators (those who create and sell debt), and investors. They facilitate a more transparent and efficient connection for all parties involved.
- Efficient Operations: Syscap helps streamline financial management for institutions through:
- Liquidity: Syscap facilitates access to short-term funding for unforeseen needs and potential opportunities.
- Digitization: Users can manage liabilities and assets in a simple and user-friendly digital format.
- Loyalty Building: The platform promotes transparency, which helps strengthen relationships between institutions and their funders.
- Data-Driven Decisions: Syscap provides valuable metrics and funding projections to support informed decision-making.
- Originate and Manage: Syscap simplifies the funding process for both originators and those seeking funding:
- Simplified Funding Operations: Originators can register lines and provisions of private and institutional debt within the platform. They can also manage payments, certificates, and reports in a central location.
- Centralized Control: Originators have complete control over balances, interests, and payments from their funders.
- Document Management: Syscap provides a centralized repository for all relevant documents associated with each funding arrangement.
- Automated Withholding Records: The platform automatically generates accurate tax commitments, simplifying compliance.
- Flexibility: Syscap caters to both financial and non-financial entities, ensuring best practices are followed regardless of the institution type.
Funding
2023, $2.3M (Seed) led by Wollef Ventures including Angel Ventures, 500 Global & Redwood Ventures.
2019, $60K (Angel Round)
Market Opportunity
Latin America's private credit market is exploding, with the asset class growing 74% in 2023. This rapid growth is driven by banks leaving a void in financing, which private credit funds are eager to fill. This surge in demand for alternative financing solutions points to continued growth opportunities for Syscap.
However, managing private credit in the region remains inefficient. Many non-bank lenders rely on outdated systems and manual processes, making it difficult to see financial data points of businesses clearly. Syscap's cloud-based platform tackles these issues head-on, offering a one-stop solution for all stakeholders.
Additionally, with over 100 non-banking financial institutions already utilizing Syscap in Mexico alone (TechCrunch), the platform is gaining traction in a key LATAM market. Syscap is set up to help both lenders and borrowers in this rapidly growing market.
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