WORKWEEK

Hey everyone! Ulises here; I’m an analyst for Vol. 1 Ventures, where I’ve been working on analyzing the Latin America tech ecosystem, including companies in the fintech and crypto space in the region. 

Andres Londoño is a Colombian economist with experience in finances and fiscal policy, co-founder and CFO of Monet, a Colombian digital platform that provides instant salary advances directly to employees leveraging open-banking technology, with the goal of improving their financial well-being. Founded in 2020 by Andres and his 5 co-founders, Monet was part of the Y Combinator Summer Batch of 2021, and has since raised ~3M USD in early-stage funding. Monet has reported over 100K app downloads and 170K loans during the past year, and is experiencing rapid growth with expectations of closing 2022 with an average 80K loans per month. 

Monet is tackling a long-standing issue in Colombia and Latin America, the fact that people struggle to live paycheck to paycheck, and providing an alternative to informal lenders with high interest rates, which were traditionally the only option for the majority of the population without solid credit scores. It’s very interesting to see companies building products that aim to solve real problems to which customers respond naturally, even in an adverse environment, such as the Colombian oligopolic and anti-innovation financial system and regulations. 

1. Tell us a little bit about Monet, how did it start and what problem were you trying to solve? MONET started as a conversation with friends. We all knew there was a space for financial innovation in Latam. A common friend and our first investor connected me to Freddy and Leo since we were all talking about the fintech ecosystem in the region. Then we spotted a pressing problem: most of the employees in Latam struggle to make it from paycheck to paycheck. The most common solution is going to informal lenders that can charge up to 1.000$ for a cash advance. We were convinced that technology can bring these costs down and then we started to build a collection and payment system that allows us to be the cheapest option in the market with a remarkable default. We are convinced that the road for financial inclusion is based on innovation and transferring operational efficiencies to lower prices for consumers. 

2. How was your experience going through YC as a LatAm focused startup? I did not take part in the YC experience directly but I did see how it benefited the company. After the program, we implement a lot of changes to transition from a startup to an established company. I see a lot of talent from the region being part of this program, such as Rappi, Frubana, and Tributi. Most of the companies in the region that have gone through the program have succeeded in becoming leading in their field.YC does help to organize the business for setting up a sustainable structure for growth. 

3. Can you give us some context around the Fintech and Banking ecosystem in Colombia? Colombia is yet to start a revolution in finance. We are amongst one of the most conservative countries when it comes to banking. Getting a banking license, or a permit to issue a digital savings solution is costly and time-consuming. Moreover, interest rates are capped and there is not a free and efficient interbank payment system. The regulation around crypto is also limited, only traditional banks are formally allowed to offer services to a reduced number of customers, precisely the framework cryptos are built against. Yet, innovation is unstoppable and in the end, the user has the last say. I see the potential of new companies offering cheaper and more efficient services that will poise regulation to adjust. 

4. What is the biggest challenge you have encountered while building Monet? In the beginning, Monet was meant to be a traditional salary-on-demand solution. We were aiming to partner with employers to offer our product to the final consumer. After a few weeks, it became clear that having the employer as a middleman was not sustainable or scalable. We were then faced with the challenge of going directly to consumers. Thanks to the incursion of open banking, and to the technology built by our partner Belvo we were able to become a B2C company. If it wasn’t for the breakthrough of that technology  in Colombia I don’t know what MONET would be doing now. 

5. What’s the main difference between Monet’s model and traditional salary-based lenders? The main difference is that we have a direct relationship with our consumers. Since we use open banking technology we do not need the employer a a middleman for providing cash advances. 

6. What are the future plans for Monet? Have you identified any significant trends that could drive your growth in the LatAm region? We are very exited about MONET’s future. We are looking forward to expand in Panama, Costa Rica, El Salvador, Guatemala and Mexico. We have also reached an alliance with Bancolombia and Nequi to offer a custom wallet and expanding regionally. 

7. What’s your opinion on the LatAm Fintech Boom? What are the main causes and challenges ahead?
In my opinion the main challenge for fintech in the region is regulatory. Many countries suffer from an oligopolic structure protected by regulations. There are some countries that have tried to innovate with outstanding results, like Brazil. The most successful Colombian fintech entrepreneur founded his company there, NuBank’s David Vélez. Yet, I am confident about the future of the region, there is a lot of talent and energy to challenge the market as it is. 8. What advice would you give to non-LatAm investors looking to invest in the region? Latin America is a market of 434 million inhabitants. Mobile internet is wide spread and many of the countries are lifting people from poverty rapidly. There will be an interesting market for companies bringing innovation. Also, valuations are lower than in North America, Europe or Asia. Thus, investors get more from their money. 

9. You mentioned you have a new project involving NFT’s, can you tell us a little bit about that?
I recently invested in AnfriLabs, the first play to earn game developed in Colombia. While play to earn is not a new concept, I am very excited about this particular project. The aim is to build a community through gaming and use this as a platform for financial education and the development of financial services based in the blockchain. The idea is to make finance fun and crypto easy to understand. Also, blockchain gives more ownership and transparency to users. My curiosity in crypto arose in 2012 when one of my good friends Fernando Sierra (RIP) launched a Blockchain center in Medellín. We both saw the technology asa  way to countering monopolies and bringing financial services to people. 

10. Finally, what do you think about the current economic downturn and its effect on the LatAm startup ecosystem?
This economic downturn will be a challenging one. At least during 2009 treasury bonds were a shelter asset. In the current situation the dollar is the only “commodity” holding value if you don’t take into account inflation. Yet, like the dot com crisis, this situation will show which companies have the most solid foundation and will burst the bubble of highly priced business models that are not sustainable. I think only the most innovative and sound business models will thrive.