Diego Caicedo On Raising $100 Million To Build A Scalable Credit System For Companies Of All Sizes

Diego Caicedo is now championing his third industry in Latin America. He not only took his latest startup through an acquisition, but also bought it back, and raised $100M in capital in the process. The venture, KLYM, has attracted funding from top-tier investors like JP Morgan Chase and International Finance Corporation.

In this episode, you will learn:

• Financing and pitching the buyback of your own company
• How KLYM is helping SMEs with the credit they need
• His top advice when starting a business

SUBSCRIBE ON:

For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash. 

Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here).

Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.

About Diego Caicedo:

Diego Caicedo is an innate entrepreneur. Ever since he was 16, he started to develop pieces of software to support SMEs in the creation of their websites.

Diego has experience in the export and mining sector. As an employer, he had more than 200 employees before 2008. During this period, he realized that the financial conditions for the SMEs were very strict, which is the reason why he decided to do something about it.

Diego founded Portal Finance in order to offer solutions to small businesses that needed financial liquidity, and subsequently, besides Andres Abumohor, they founded Omni, the leading enterprise in Latin America’s labor capital.

From there, he has worked to expand the scope of the company, establishing in 2020 the union between Omni and Greensill, which enables the mission of making fairer finance in the region. Now, Diego works as the Head of Grensill Latam.

Connect with Diego Caicedo:

• Crunchbase
• LinkedIn
• TheOrg
• Zoominfo

Read the Full Transcription of the Interview:

Alejandro: All righty hello everyone and welcome to the deal maker show. So we have today a very exciting founder. We’re going to be talking about you know executing in Latin America building scaling financing all of the good stuff that we like to hear building also selling.

Diego Caicedo: Yes.

Alejandro: Rebuying your company I think that is pretty unique. You know the story of this funder so again without further ado. Let’s welcome our guest today diego kaedo welcome to the show.

Diego Caicedo: I mean handlero Thanks for having me this is gonna be super excitinging. Been a huge fan. So really excited to be here.

Alejandro: Thank you so hey so originally born in Columbia so give us a walk through memory lane. How was life growing up there.

Diego Caicedo: So I had very I grew up in like 2 stages. So I’m very young in a small town five hundred Kilometers South named pobayan lot of history and tradition you remember a lot of that conservative nature of latin america at its best. And then then moving to the us when I was 4 and then growing up in San Francisco at the other side of the coin at the most liberal event. Great part of the world at a super exciting time. Um, so the 90 s a lot was happening just the energy everything it was great growing up there ah then at the end of the 90 s my dad decided that it was time for him to retire and retire back home where he grew up so after 40 years in the United States he said it’s time to go back to Columbia this is getting yanked out of the everything you knew suburban lifestyle back to small town like it was such a cultural shock. It was ah till this day we laugh about it at home. But had the chance of really experimenting both both sides a small town life in Columbia Super close to the family. Everybody was family. My friends. Everybody were families of families together and really when it came the time to go to university.

Diego Caicedo: Um, it was hard leaving that and going back to the us like it was we you grow accustomed to the warmth to having everybody around and everything and I decided to stick around in Columbia so I went to betata university um, fun going living on your own. 15 years old my parents I still don’t understand how they did that but shipped me off and really enjoyed my university life until like I was an a semester or I was a year out from graduation. I was the lo major in economy with all the eness that comes from being a university student. Um and my dad and his friends in the us were at that time end their retirement days and said you know what we should set up something to support colombian coffee growers because like. At this moment. The third wave of coffee and specialty coffee was starting to become a thing in the us they said no, we should start getting donations set up a foundation and do these type of things and I found like from a very my way of looking at life it was they were producing something of huge value. They just didn’t have the commercial axis then we needed to build a bridge so we started building a company that was focused around really the first vertically integrated coffee producer in the region at that moment. So we bought from small farmers in Latin America packaged it up.

Diego Caicedo: Roasted it sent it to supermarkets in the us and we started to build something really incredible. That’s also when I learned the harsh reality of the commodities world when weather doesn’t help you and you have too much water or too little of it. Then all your business gets jeopardized and after a great couple of years. We basically had to run off the business because half of the colombian coffee crops were decimated by Venia so that was really harce. But.

Alejandro: No.

Diego Caicedo: Great and Mba great learnings many things to learn from that and then trying to figure out what you want to do with your life so it was a exciting period.

Alejandro: So before you before you try before you try to do or or figure out what you wanted to do after I mean what was that biggest lesson that you got from that experience.

Diego Caicedo: So I think it was there. There is no constraints to what you can do so like to most of the time when we’re raised or where we are growing up in Latin america there’s always this glass ceiling that everybody talks about but very few people actually understand what that means and it’s look you have to aspire but’s like changing the world or changing a business from latin america is not going to be You’re not going to think and I was met with. A completely different mindset in the us like san francisco my dad’s friends and everybody that supported me during that stage it was there is no limit to what you can do like the world is changed by the guys that want to change it as long as you want to do it. There is absolutely no limit and I think that’s the biggest takeaway I got from working with world-class entrepreneurs that had built incredible things and years before decades before in california and it was like. Race is not an issue language is not an issue There are no issues. It’s just the mental and you put on your own issue limits. So and I think that was one of the best learnings I got from that experience that moment I decided to see if I wanted to go back to university I was only a year out for my.

Alejandro: So then what happened next.

Diego Caicedo: I’m like okay so this entrepreneur thing didn’t work so I went back sat down in the classroom and after two weeks I said no like after doing what I was doing going back and sitting down in university it made no sense. Um, so I said I have to find a job I have to find somebody that wants to hire me while I want to figure out what to do with my life and I had learned how to raise money how to how to structure financings and also how to go to very inhospitable places around the country. And at that moment there was a mining boom in Columbia and a whole bunch of people wanted to go and buy mining projects I’m like never I don’t know what a mining project is I don’t know about geology but I know how to get my way around the country I’m a quick learner. And I started to learn a lot about everything that it was the mining industry expiration ma a and that industry and everything um and we had a lot of ah fun story so we discovered and partnered up with one of the ah texan that had been in the in the in Colombia since. Postwar 85 year old original cowboy and the guy was like coming on. He had built a great portfolio property but he needed somebody to help him structure out and help him sell those properties to mining companies. So he hired me we got along great and spent many years working there.

Diego Caicedo: Um, learned how to operate a mining operation learned how to do ah exploration lot of fun stuff then went to work for major mining companies that wanted to do the same thing in Columbia so it was a lot of and a a lot of acquisition finance trying to figure out how to do these things in. Market that didn’t exist that time we built a great company then I got my second lesson about commodities and it’s when commodities crash money dries up fast. So commodity copper went from $3 to a dollar 75 and everybody said oh we really don’t want to go with flooring anymore. We think we measured focus just on what we’re doing so second big lesson is timing. Cycles is impossible and there was a ah 2 2 for ah 2 2 losses in that game but again learning a lot learning. That we can do a lot of things in different places. So.

Alejandro: That’s awesome. So then so then always we see you know like 1 thing led to the next and you guys you know, ended up looking at them. You know, ultimately taking a look at this banking thing. So why? So how was that transition of events. You know all the way that led to to that.

Diego Caicedo: Um, so that moment we said okay now I want to get away from these commodity cycles I want to move into something that is not as radical. Um, so I’m but it goes to something more traditional I wanted to go do my Mba and um I started studying and a friend calls me up and says hey diego do you want to learn about this thing called fintech there’s a great opportunity to explore for business ideas in Latin America around how technology and finance can help I’m like this sounds incredible. This was like for somebody curious like me. It was like the best job in the world with really smart people trying to figure out what we could do in Latin America and found a problem very near and dear to my heart which was how to understanding how screwed up lending to companies is at banks at financial institutions. How distortion that is not only in Latin America but everywhere in the world and. That felt like something. It’s just really hit me so hard and I’m like this is something I have to do I took it to but to the team that I was working with. They thought it wasn’t a very sexy idea at that moment nobody had been doing b two b lending.

Diego Caicedo: Nobody had that really done this and a lot of this the mentality was if this has not been solved in the us or in Europe why is it going to get solved in Latin America it makes no it made no sense to anybody and to be honest, it took us a while to understand why but it was it was it was really trying to get. How how that was something that could have been solved in lat ham and why nobody had solved it yet. It was so incredibly enticing to go and solve this problem so that’s how we got involved.

Alejandro: So then so then tell us about because obviously you know there were like different sequences here different company names. You know how? how. What did that up being klim. You know today? What is the business model of the company today for the people that are listening to get it like how do you guys make money.

Diego Caicedo: So Klein builds machine learninging tools to but to make credit decisions and working capital available to s andmes in Latin America so we provided completely digital underwriting experience. We’ve lent over one point five billion dollars with our technology over the left. Five and a half years and we work with 12 of the major banks in the region to help them provide capital in our home capital to companies. So right now we operate in Chile Columbia Brazil and what we basically developed is a toolset that is unique to how do you assess a company in minutes. How do you provide that company credit. And how do you do this in a way that is that you’re able to predict and have a really normalized loss even across periods like covid the social interest in our country and everything that’s hit us. We’ve been able to maintain a very sound business. Because the technology is really there. So we’re big. We’re raised $100000000 for the business to date. But that’s what we do basically enable banks to really participate in the smme lending market.

Alejandro: So what was that the journey like then of scaling this thing and then all of a sudden you sell this business and then you rebuy it again.

Diego Caicedo: So this is like I still when I talk about it feels a little bit. Ah unbelievable the story but we started to. We started the company I met my partner probably three months after starting the company had started exactly the same company. In Chile after a 1 hour call on the phone he got he got on a plane and we had breakfast the next day in colombian 24 hours after we had planned out how to merge the companies and it was perfect. It was a perfect fit and today an incredible partnership but we really started to raise money at a moment where. latin america was still way behind the cycle. So like there were very few fronts active. There were family offices starting to dabble in this but really no nobody structured around this so we went down and we started to raise what at that time was a huge series. A. So we wanted to raise $15000000 series a this was nineteen two thousand and nineteen and this was not the best year to raise like those became very early stage rounds afterwards. But this year was a hard year still ah. Ah, team 1 of the big vz funds out of mexico says diego there’s a company doing exactly what you’re doing based out of london you have to meet them. They’re called green silk capital we gave them two hundred and fifty million dollars and saw frank gave them one and a half billion dollars were like what.

Diego Caicedo: We looked them up. It’s like this is match made in heaven. This is a perfect partner for us. They have capital. We have the market the technology so we started working they wanted a partner in la town they wanted the technology provided in lots in America. So we started to work with them on that. Um, after two months of working they said you know what? Diego we think we should buy your company. We’re in the middle of raising our series. A we had already had term sheets and it was getting delayed and delayed it with a terrible moment. Um, and we were running out of capital. So at that moment we said okay I would love to sell you the company but there’s no time to do so um because we need to close the series a and it’s going to close ah in the next month or so and there’s no time for you to realistically come in. Term sheet try to buy the company or anything like that. So lex and the team there basically said at that moment you know what go to New York we’ll do the diligence in a week we’ll bring everybody from London to New York lock ourselves in a room for 3 4 days and see if there’s a business to be done here and then we’ll figure it out. Incredible team to be honest, a lot of smart people in the room challenging us ah and then we came out of that and they said you know what we’ll step into the series a fund it and we’ll figure out in January how what are the terms of acquisition. But.

Diego Caicedo: We’ll give you the money and the worst case scenario where shareholder in the company were like perfect I didn’t really believe it and over 72 hours they did diligence they had lawyers all over the world. Do this like the guy leading it is still one of the sharpest guys I’ve ever had the opportunity to work with which is David Solo um brilliant person learned a lot from him and in January we went to London closed the deal. We remember flying back from London and it was like we were coming back for a week and then going back in February went back closed the deal. Done that weekendened the world locked out that we could covid exploded airports closed one week later and we would have gotten been locked in London for nine months so we sold the company through covid we closed the sale in June harder. Hard times for for the world and everything and the business was thriving. It was really good then we were super happy like we were doing this global thing meeting great clients getting ready to go to far places with our technology. Ah, us Saudi Arabia like a whole bunch of crazy things and in hindsight really good things with the teams then March first hits and we get a call and we basically get a bloomberg alert that said green cell files for bankruptcy and a $12000000000.

Diego Caicedo: Bankruptcy across the world. This is probably one of the scariest days as an entrepreneur you can face. We had 220 people in the latin american team and we’re basically locked in a room covid pre-vaccines everything they like. What does this even mean like we’re like what’s going on. We were supposed to be ipoing. We were supposed to be on this great journey of success. This company had all raised all the money. What do you mean Bankruptcy so that was. An ice cold bath if you could if you’ve ever taken 1 um, and we’ve got the team together had a lot of pizza had a lot of alcohol that night and said okay tomorrow we’ll figure it out. We’ll try to understand this. We were able to. Understand transnational bankruptcy with an incredible legal team that helped us through this and a lot of good people that we were right into and over the next two weeks we raised $12000000 to buy back the company we went up for auction globally um. Everything without even seeing people because this was again no vaccinations and we walked back the company it was an incredible deal. It was the but fields of our lives.

Alejandro: Wow No kidding and and all in all now for the company. How much have you guys raised for claim.

Diego Caicedo: So now we’re at ninety seven and a half million dollars total raise to date.

Alejandro: That is incredible and how does it work like when you go out to raise money now for you know it’s not ah, it’s not like a you know newly formed company anymore. You know it’s like a company that you bought from another company you know, technically and so how how do you go about like really structuring the.

Diego Caicedo: Ah.

Alejandro: Story towards investors you know on on for a company like this.

Diego Caicedo: Um, it’s so like again to be honestlejandro. It’s one of the biggest challenges we’ve had across is because you when you hear it. It’s it’s hard to understand it and then when lawyers get involved. It’s human worth. Ah, but.

Diego Caicedo: Look we were fortunate enough to bring to have people come in in our series b that knew us from but from before the acquisition. Ah that already had understood that we’ve always been the same company. We’ve always been the same core team and our senior team has been through us. And stuck around so when people think about resiliency and entrepreneurs. This is a team that’s been through all of them right? So like we’ve been through the thick and the thin. So. That’s a great thing to tell about it but we also had the fortune of running into people that really understand our business and. Followed it closely so when J P Morgan and Ic came in to lead our b last year. It was a very ah they we were known to them. They had been tracking us like J Pp Morgan had been tracking us. Through all of the greensill side ic had known this for 4 years the team there and and that’s it’s that personal relationship that a lot of times and you read about it. Why the personal relationship with your investors is so important and all these things and it was really that it was the ability to be able to do that. But it’s a hard one today. We just basically none of that changed what we do. So. It’s a little chapter in our investment memo. This is our company track record but you grab our first deck from 2018 and it describes our business today. It describes.

Diego Caicedo: Everything that we wanted to do how we wanted to do it. Why we thought the thesis was there. It was. It’s still. We’re still true to our origin and as a business we haven’t really changed or shifted so it helps a lot when you’re you’ve been the only people talking about this for so long.

Alejandro: I Hear you now now when it comes to to all these investors Obviously you and and employees and everyone you need a good vision right? A compelling future that you’re living into So I Guess if you were to go to sleep to an idea when you wake up in a world where the vision of climb is fully realized what does that world look. Look like.

Diego Caicedo: So I think it looks like millions of s me is having instant credit just like we have in the world of people. So I think the world of in the world of personal credit. We now like I can’t remember the last time I stepped into a bank. Or submitted any paperwork to a bank. Everything is now on my digital footprint I dream of the same experience for a company being able to need that critical resource and having it within the hour in your bank account so you can continue to build your business this I want this to be the buous. Toolset that every bank just like they use today every bank in the world uses some sort of experience. Ah credit system based credit system. We want to be the same equivalent. But for the world of business which today doesn’t exist. So. If we succeed there means millions of companies around the world have obtained the credit that they need.

Alejandro: So then I guess a let me ask you then this when it comes to to. Also you know this this vision and the people you put around this I mean how have you guys gone around culture. What have you learned around culture.

Diego Caicedo: So I think culture has been one of those things that is really difficult to shape especially in the type of business we’ve had to build to be able to get here because when you think about it. It’s the two sides of the story like. There’s a lot of fintes that are more finned and tech or more than tech than fin. But we’ve really been split down the middle and we we had to build a full lender inside of our business because we needed to be the first client for our technology. So we we have to go and sit down with corporate clients around the world. Just like any bank would but then we also have to go and sit down with the smartest data and engineers and machine learning guys in the world and say you know what everything around that physical world. How do we translate it into models. How do we actually make this scalable. And so it drives it a huge ah bipolar focus on the company because 1 side of the company looks like a lender. The other one looks like a pure tech company doing super advanced machine learning work all day long. And being able to make them and make them med and make sure that the bankers and the data engineers can talk the same language has made it has made us have to develop our own culture around what it means to build our business. So it’s our own definition. It’s.

Diego Caicedo: Like a lot of people arrive. It’s far from a bank but it’s far from a pure techco ah a broad recommendation here can cost a lot of money. It’s not a misrecommended delivery route on ah on ah on a delivery app. It’s millions of dollars out the door. So it really. Has to shape the culture around what it is. We’re doing and finding the crazy people that believe in it and that have lived through why this is important

Alejandro: So then so then the other thing that that I’d like to ask you here is what about you know when we’re talking about working with people I think that in this case working with other institutions I think that for climb 2 working with big banks. You know has probably not been. You know the easiest day. You know of all you know tasks. So what has it been? What has it made it so challenging as part of really pushing through on the operation and how did you guys go about overcoming you know some of those challenges.

Diego Caicedo: So I think this is one of the things that not only for client but across the world I think there’s been a big change in the stance we’ve had around traditional financial institutions and technology companies such as ourselves. So. Many years ago when we started the companies I still remember mean I’m just walking into the chief risk officer from one of the major banks office and said look unless you can show me billions of dollars of track record. Why am I going to believe you. Like I do this business all day long was like wow and then you say why am I going to give you by fine for my money which was the other stance I don’t want to even deal with you. You’re my competitor and I think over the last three years we’ve had a major shift inside of the banks and inside of climb. And it’s look ultimately, the banks have two critical parts of the puzzle so they have clients that need the capital and they have the capital what they’re lacking is the enablement to be able to actually use that capital on those clients and make those decisions at scale. They don’t have those tools today and when we started to look at and show us as an enabler for their businesses for their clients for their capital. It completely changed the stance we went from ah from a competitive stance. We still like competing with the banks like we still go in Rfps. We compete against banks. Ah.

Diego Caicedo: Last year last year we won one of the biggest rfps in the region against probably all the banks. But ultimately we had to go to all the banks and say we want this but you guys still have the capital and we need to work together on this and we need to really change how we look at each other and I think that’s been fundamental in understanding that they have a business. With a lot of respect to that they’ve built and they’ve built incredible businesses and we can continue to push that further is a great is a great way of working together. It’s that mutual respect and understanding that we both bring things to the table nobody has an absolute ah truth around any of this stuff is critical. And ultimately you run into great people at the banks and you work really well and ah, we’re all after the same thing banks have to want to serve their clients. Want to make sure that they do it in a responsible way and it’s the same objective. We have so. It’s really been around that.

Alejandro: so then so then I guess now imagine if I put you into a time machine and I bring you back in time and to maybe like that moment that you are like dropping out of school and and I give you the opportunity of having a chat with your younger self and being able to give that younger deal. 1 piece of advice for launching a business. What would that be and why given what you know now.

Diego Caicedo: And ah, that’s that would be an incredible opportunity. But I think all in its moment um look the focus on really trying to go for for everything at the same time is so difficult like I think. This to me and after many years its focus is worth so much in this business and when you build it sometimes and we all suffer from it. We call it the shiny object syndrome and we chase a lot of things. But ultimately when you double down it just focus on doing that 1 thing. And incredibly well doing it and just become the person that or the team like we’re the company that knows credit That’s what we do like we we know how to do this. We invest most of our man hours of this company building credit systems for this. And if I had that same focus all my life who could have known but who could know what would have happened but it’s sad I think it’s just double down focus.

Alejandro: I Love it now for the people that are listening do What is the best way for them to reach out and say hi.

Diego Caicedo: So I think the best ways on Linkedin Super activeive there. Um, and on Twitter so at Dc I think I sayli and but really do appreciate the time on I have to that has been incredible.

Alejandro: Thank you so much. Do it has been an honor to have you on the show read. Really thank you. Thank you? Thank you.

Diego Caicedo: Thanks so much.

* * *
If you like the show, make sure that you hit that subscribe button. If you can leave a review as well, that would be fantastic. And if you got any value either from this episode or from the show itself, share it with a friend. Perhaps they will also appreciate it. Also, remember, if you need any help, whether it is with your fundraising efforts or with selling your business, you can reach me at al*******@pa**************.com

Podcast: Play in new window | Download

Subscribe: Apple Podcasts | Spotify | TuneIn | RSS | More