Tagline
Tienda Pago is a lender that provides small Mom and Pop stores with short-term (1 week) working capital loans.
Pitch us on your solution
The small business segment is chronically financially underserved, and there is significant potential to support Tienda Pago's growth. The financial needs of small merchants are typically broader than just credit. In the future, a model such as Tienda Pago's could be leveraged to offer a wider range of payment services, and offer nonfinancial services to its merchants. Transaction and repayment data could be leveraged to offer additional, longer term credit for merchants and be leveraged for other services. Our visions stems from enhancing the financial ecosystem and our capabilities to create one for small business owners and their clients, where they can leverage from one app to manage all their payments and use our app to not only become part of the financial ecosystem, but through that recieve a lower interest rate on loans and in the process become financially literate, which in turn improves their economic and social wealth.
What is the problem you are solving?
TiendaPago provides a short (1 week) small credit finance line (average of $450) to small retailers in the traditional channel. The small retailers can only use the credit line to buy inventory from the Fast Moving Consumer Goods companies that TiendaPago has an agreement (eg Coca Cola, ABInBev, Pepsico, Gloria, Movistar) with. The credit lines are managed using the cell phone of both small retailers and delivery personnel. The innovative model benefits both Fast Moving Consumer companies and small retailers by increasing sales, allowing for cashless transactions and providing a formal credit to stores that do not have access to banking services. Although there are other current entities that provide funding to SMEs, in TiendaPagos model, the transactions are tied to the convenience store's sales, thus reducing client and counterparty risk.
Who are you serving?
Our organization empowers small business store owners which are traditionally excluded from the digital and financial marketplaces. In fact through our data gathering we have determined that close to 60% of our end clients are women and that our end users benefit from the use of our loans to increase close to 20% of their monthly revenues. This essentially helps store owners improve their economic and social wealth through improved revenues and acess to the financial ecosystem. Small Mom and Pop store owners have traditionallly been excluded from financial spaces, due to the fact that traditional banks are unwilling to uncur on the risk and effort to give that sector financing given the low margins and high risk involved.
What is your solution?
TiendaPago's business model relies largely on its partnership with larger commercial goods distributors in order to leverage from their client base. In essence TiendaPago provides the lending to the distributors clients in order to boost sales and become more efficient (benefitting from cashless transactions). Our solution is to bring those services to our end customers in an efficient and customer friendly way in which Mom and Pop stores benefit from the use of credit to boost sales. Once we achieve scale through our affiliation of Mom and Pop stores, from there we expect to continually build our partnerships and create a financial ecosystem in which our end users use our app to conduct all their financial needs and payments.
Select only the most relevant.
Where is your solution team headquartered?
Mexico City, CDMX, MexicoOur solution's stage of development:
PilotDescribe what makes your solution innovative.
We currently do not have competitors that offer the same inventory based lending that we know of in Latam. There are other small business store lending services but our direct inventory based lending ensures that our end user only uses the loans for inventory building and reduces our credit risk.
Describe the core technology that your solution utilizes.
We leverage on our existing app to onboard and monitor our clients payment history and our internal collectability. Our app whatsapp and text alternatives allow us to onboard our clients in an efficient manner. Our strategic alliances allow us to compile data from our clients sales and product consuptions to determine which clients are ideal to recieve financing. In addition our business intelligence team compiles constant information from our clients through the app as well as physical visits to cater to their business needs. Our app is still in the final stages of being phases out (the app exists but we are still refining tools such as the use of a bot and text as well as whatsapp mechanisms to onboard and solve our clients questions regarding our products) Our plans consists of finalizing the roll our of the app with in 6 months, allowing us to conduct most of our business through it. Further implementation will allow the client to conduct most of their payment needs through our app (eg make our app the clients preferred and go to payments platform where they can conduct their clients and their own payment needs, where the client can pay their electric or water bill or any item whether it be soap of a can of coca cola through our network)
How many people are you currently serving with your solution? How many will you be serving in one year? How about in five years?
We currently finance a recurring store universe of 20k in Mexico and Peru, in which normally a family of five depend on the continued revenue generation of those stores. As mentioned, our benefit to those entrepeneurs comes in the form of increased sales and inclusion to the financial network, which in turn helps them access services that are not traditionally available. We measure our penetration and store use on a daily basis, with business intelligence tools in order to improve our unit economics and efficiency in order to serve our end customer in a cheap and efficient way.
What are your goals within the next year and within the next five years?
We have a broad range of business and operatinal metrics we use to measure sucess including: Affiliation Speed (how many new stores it lends to every month), Loan Rotation (or its number of transactions per month per store), and Stores transacting. In this sense, future profitability depends on how effectively it can retain its existing clients after every transaction. Since 2013, TiendaPago has seen levels of 20% retention vs levels close to 45% today. Our top goals will focus on refining our app to improve collections, brand building and reach national coverage in Mexico and Peru.
What are the barriers that currently exist for you to accomplish your goals for the next year and for the next five years?
Our internal risks come in the form of encouraging our existing clients to use their available credit lines, given that these normally expire within one week. In essence our product works like a revolving line of credit which is we encourage our end user to use in a recurring fashion. Risks also include collectabilty which we are currently perfecting through the use of technology. Our branding is also an are of improvement, given that our end users need to feel safe and that our brand can cater to their ongoing needs and that using loans is benefitial to their overall standing (financial literacy).
How many people work on your solution team?
50 employees
Why are you and your team best-placed to deliver this solution?
TiendPago is based in Mexico city (its primary headquarters) with secondary offices in Peru based on the fact we have ongoing operations in both countries. In our market research we have found that Mexico and Peru offer great markets to serve Mom and Pop stores based on geographic and cultural structures that allow for MOm and Pop ecosystems to thrive. Mexico has the largest amount of Mom and Pop stores in Latam, in which close to 80% are underserved. In our alliance with large beverage and retail companies we can leverage from their existing infrastructure and provide Mom and Pop stores with the optionality to increase their inventory rotation which they traditionally are unable to if they rely solely on their current existing demand.
What is your business model?
We have recieved 8 million dollars in our series A round (with partners such as Accion, Kaszek Ventures, and QED) and currently in talks to recieve and additonal 5 million through debt financing with well known development entities (including OPIC, Triodos and Alphamundi) which further enhance the business communities trust in our business model and our long term stability which are evidenced by our continued growth. We expect to reach breakeven levels in our Peru operations by the end of the year and by 2Q19 in Mexico.
Why are you applying to Solve?
We expect to reinvest Solve's prize funding into our operations which will contribute to our previously mentioned goals which include leveraging our growth to improve our brand, national coverage of our store reach, as well as refining our app which will help us improve our collections, client service and make our onboarding and monitoring services more efficient.
What types of connections and partnerships would be most catalytic for your solution?
With what organizations would you like to partner, and how would you like to partner with them?
We are always looking to partner with all types of technology or FMCGs that we believe will contribute to expanding our capabilities and iterate new or expanded models to what we currently have.
If you would like to apply for the AI Innovations Prize, describe how you and your team will utilize the prize to advance your solution. If you are not already using AI in your solution, explain why it is necessary for your solution to be successful and how you plan to incorporate it.
The price would go directly to growing our data gathering and tech capabilites as we plan to grow and expand our business model to where we can create a market place for small "Mom and Pop" stores. The money would also be allocated to grow our international footprint as we continue to bring our innovative idea no new markets and thus increase our financial inclusion footprint.
If you would like to apply for the GM Prize on Community-Driven Innovation, describe how you and your team will utilize the prize to advance your solution.
The price would go directly to growing our data gathering and tech capabilites as we plan to grow and expand our business model to where we can create a market place for small "Mom and Pop" stores. The money would also be allocated to grow our international footprint as we continue to bring our innovative idea no new markets and thus increase our financial inclusion footprint.
If you would like to apply for the Innovation for Women Prize, describe how you and your team will utilize the prize to advance your solution.
The price would go directly to growing our data gathering and tech capabilites as we plan to grow and expand our business model to where we can create a market place for small "Mom and Pop" stores. Our women footprint comes directly in the form of transacting in countries where women owned businesses are more prevalent, which include economies such as brazil and Peru where we plan to expand our reach.
If you would like to apply for the Prize for Innovation in Refugee Inclusion, describe how you and your team will utilize the prize to advance your solution.
The price would go directly to growing our data gathering and tech capabilites as we plan to grow and expand our business model to where we can create a market place for small "Mom and Pop" stores. The money would also be allocated to grow our international footprint as we continue to bring our innovative idea no new markets and thus increase our financial inclusion footprint.
If you would like to apply for the Innospark Ventures Prize, describe how you and your team will utilize the prize to advance your solution. If your solution utilizes data, describe how you will ensure that the data is sourced, maintained, and used ethically and responsibly.
The price would go directly to growing our data gathering and tech capabilites as we plan to grow and expand our business model to where we can create a market place for small "Mom and Pop" stores. The money would also be allocated to grow our international footprint as we continue to bring our innovative idea no new markets and thus increase our financial inclusion footprint.
If you would like to apply for the Morgridge Family Foundation Community-Driven Innovation Prize, describe how you and your team will utilize the prize to advance your solution.
The price would go directly to growing our data gathering and tech capabilites as we plan to grow and expand our business model to where we can create a market place for small "Mom and Pop" stores. The money would also be allocated to grow our international footprint as we continue to bring our innovative idea no new markets and thus increase our financial inclusion footprint.
If you would like to apply for the Everytown for Gun Safety Prize, describe how you and your team will utilize the prize to advance your solution. If your solution utilizes data, describe how you will ensure that the data is sourced, maintained, and used ethically and responsibly.
The price would go directly to growing our data gathering and tech capabilites as we plan to grow and expand our business model to where we can create a market place for small "Mom and Pop" stores. The money would also be allocated to grow our international footprint as we continue to bring our innovative idea no new markets and thus increase our financial inclusion footprint.
Solution Team
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PS
Pablo San Jose Corporate Finance Manager, TiendaPago
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Our Solution
TiendaPago