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.
On the Dealmakers Show, Caicedo shared his learnings about the impact of external factors on your business, creating new markets, the only thing holding you back, fintech, speedy acquisitions, and fundraising rounds, and the toolset his latest venture has created to help SMEs get the credit they need.
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Learning The Impacts Of External Forces On Business
Diego Caicedo grew up in two different worlds, with two starkly different perspectives.
He was born in a small town in Colombia, with a population of just 150,500 people. A very conservative and traditional Latin culture.
When he was four years old, the family moved to San Francisco. Perhaps one of the most liberal places in the world. It was the 90s, and it was a high-energy environment where things were moving fast.
Then again, when his father chose to retire, they moved back to small-town Colombia, where he finished school.
However, in his last year of studying for a major in economics, his father and his friends decided that they wanted to do something to support local Colombian coffee growers.
There was a new wave of excitement about specialty coffee in the US. His father thought they could maybe set up a foundation and get donations to preserve the industry and farms. Diego saw the huge value being created and wanted to build a bridge to the commercial space with a real company.
He started a vertically integrated coffee producer, which purchased coffee beans from small farmers, roasted them, packaged them, and then shipped them off to supermarkets in the US.
They built up the business, and then, they were hit by bad weather. Coffee crops went into decline, and it hammered their business.
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Learning From Failures
While this was both a powerful and painful lesson about external forces and their impact on businesses, it was also a great learning experience and an inspirational one.
Diego says that he learned that there are no constraints on what you can do. There is no ceiling holding you back. Except for the limits you put on yourself. It doesn’t matter what your race is, or the language you speak; you can change the world if you want to.
After this first venture, Caicedo first thought it would be a good move to go back and finish his last year of college. Though, after just two weeks, he realized that sitting in classes again made no sense.
He had already learned how to run a real business. How to raise money, structure financing, and more.
At the same time, there was a mining boom in Colombia. He applied himself to learning everything about the industry that he could. Including how M&A was working in the local mining industry.
Initially, he was employed by an old Texan cowboy who had a portfolio of property that needed to be organized to sell to mining companies. Then he went on to help create this new market, helping major mining companies finance and acquire properties throughout the country.
Then commodity prices crashed, and dove by 50%. A big learning in not only external forces but in timing and business cycles as well.
On the upside, he also learned that you can take your experience and business acumen to many different markets and industries.
After beginning to study for an MBA, a friend recommended that he check out the new growing space of fintech, and consider how it could be applied in Latin America.
Diego already had first-hand experience of how screwed up traditional lending could be for businesses. So, they honed in on the underserved side of B2B lending and providing working capital to SMEs in the region.
His startup KLYM has now provided over $1.5B in funding to businesses in Chile, Colombia, and Brazil over the past five and a half years.
Their technology is designed to assess a company and make lending decisions in minutes. Which they are now providing to other banks to serve their clients as well.
Buying Back Your Own Company
Just after launching Diego found another entrepreneur Andres that had started an almost identical business in another country in the region. They almost immediately merged forces together.
Then, when seeking funding investors referred them to a similar firm out of London, which had already received some substantial investment capital.
After pulling off a whirlwind acquisition, that included a Series A raise with just 72 hours of due diligence, they were able to close the deal right before COVID lock downs hit.
However, to their dismay, that acquirer 9 months later went bankrupt. So, Diego and Andres led the team and investors to buy the company back. Which he continues to operate and grow today.
Storytelling is everything which is something that Diego Caicedo was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
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Listen in to the full podcast episode to find out more, including:
- 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