Karla Gallardo of Viwala // providing revenue-based loans for women entrepreneurs in Mexico [CC078]

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Jay Clouse 0:01
You know, Eric, on this show time and time again, founders talk about the importance of hiring great employees.

Eric Hornung 0:07
And they always say it’s so hard and so important early on to hire the right person.

Jay Clouse 0:12
It makes a lot of sense that is difficult because most founders don’t have experience doing high level searches or hiring top level talent.

And they’re also limited to their local talent pool a lot of the times.

That’s why a lot of founders choose to work with SPMB, the one of the fastest growing executive search firms in the country for over 40 years SPMB has specialized in recruiting upper management and board members to early stage VC funded startups and larger growth stage companies do.

Eric Hornung 0:38
They bring the knowledge of a large global firm and combine it with the personalized service and attention of a boutique.

Jay Clouse 0:45
They have a dedicated team focusing on the Mountain West and Midwest emerging tech markets. So no matter where you are in the country, if you’re trying to hire top level talent, SPMD can help you out.

Eric Hornung 0:56
If that sounds like you, you can go to upside.fm/spmb to learn how they are closing hundreds of C level searches annually.

Karla Gallardo 1:11
Actually, McKinsey did an amazing analysis about the companies that are already listed in the Latin America Stock Exchange. And usually the companies that have women in that in that top management are performing better, are 40% better.

Jay Clouse 1:30
Historical investment landscape is changing. and world class companies are being built outside of Silicon Valley. We find them, talk with them, and discuss the upside of investing in them. Welcome to Upside.

Hello, hello, hello, and welcome to the Upside podcast, the first podcast binding upside outside of Silicon Valley. I’m Jay Clouse, and I’m accompanied by my co host, Mr. Financial innovator himself. Eric Hornung.

Eric Hornung 2:10
That’s what they call me, Jay. Mr. Financial innovator. I’m just out there innovating on finance.

Jay Clouse 2:15
That’s what I call you I think anytime we get on the topic of finance investing, you’re like, let me tell you about this different model I think.

Eric Hornung 2:24
I think that finance has, we went through this crazy period in the 80s, where there was so much financial innovation, and a lot of that ended up being some pretty bad stuff. But there was so much going on in the world of finance, and it was where the smartest people were spending their time thinking about what was going how to finance things differently. The same thing kind of happened in the 1880s, the JP Morgan type era, the Gilded Age. And I think we’re kind of on the precipice of another era of thinking critically about how we finance things and what we can use and do to allocate capital differently.

Jay Clouse 3:06
It’s no secret that on the show, we have a little bit of an affinity towards Financial Innovation with some of the coffee chats we have on the show from Earnest Capital in the early days to tiny seed to Clearbanc Mainvest,

Eric Hornung 3:20
We talk to family offices, we talked to corporate we, when there is a different type of product out there. It is particularly interesting to me. So this show is definitely over leveraged on financial innovation. But I believe that we are we are somewhere that’s it’s gonna be cool the fractionalization of everything. We’re developing theories here, Jay.

Jay Clouse 3:38
We’re rallying good point.

Eric Hornung 3:39
We’re developing theories on the podcast about finance and the benefits of financial innovation is that I believe this round of financial innovation is expanding access to capital.

Jay Clouse 3:51
And that is what today’s episode is all about. We are talking to Karla Gallardo, the CEO of Viwala, which is based in Mexico City, Viwala provides loans for companies led by women that adapts to the monthly sales of their business. Eric, the model actually does remind me of Clearbanc. But I may be thinking about this incorrectly.

Eric Hornung 4:10
I think you’re thinking about it correctly. And it’ll come out in the interview as we talk a little bit more about it. But I think it’s a similar similar type of model. But rather than Clearbanc’s, which is based on stripe data, this is focused more niche and on micro businesses that are women owned and led.

Jay Clouse 4:29
We were introduced to Karla and Viwala through New Ventures or friends we’ve been in touch with for a couple of years now actually, New Ventures is based in Mexico City and helps businesses accelerate it finances businesses, connects people within that ecosystem. Shout out to Ana Gastelum for getting us connected. The Viwala initiative is born from the New Ventures group vision of financing small and medium sized enterprises that have a positive impact on the community. Over time they say they realized a greater challenge which was that access to credit for women entrepreneurs is very limited. And the companies that perform better seem to be those that have women in strategic positions.

Eric Hornung 5:06
I love the vision of what they’re trying to set up of what they’re building. And I think it’s going to impact a lot of people’s lives Jay.

Jay Clouse 5:12
It’s gonna help a lot more people live the one life that they have the best way they can just like our friends over at Ethos Wealth Management, if you’re interested in wealth management, or if you want to live your one life, the best way that you can, you might want to visit our friends over at Ethos Wealth Management by going to upside.FM/ethos.

Eric Hornung 5:28
We’re gonna hop in this interview, if anything sticks out to you, and you want to chat with us, you can reach out to us on Twitter @upsideFM, or send us something a little longer hello@upside.fm. And we’ll get to that interview right after this. I hate that we’ve demonized scheduling links, Jay.

Jay Clouse 5:48
Scheduling links are actually one of my favorite things. I love the ease of someone saying here’s where you can book a time with me. And then I can choose when it’s best for me too.

Eric Hornung 5:56
Whenever I get an outreach and someone says what time looks good for you. I asked them, hey, do you have a scheduling tool, and you know what scheduling tool I wish they had?

Jay Clouse 6:05
Which one is that?

Eric Hornung 6:05
It’s a new scheduling tool called SavvyCal. SavvyCal makes it easy for both parties to find the best time to meet.

Jay Clouse 6:12
SavvyCal makes the scheduling process even more savvy than any other scheduling tool that I’ve seen. And I mean that it makes it so easy to personalize your link, you can say, Hey, this is a meeting time for Jay and Eric. And it just looks so professional, so sophisticated.

Eric Hornung 6:29
So much so that we’re going to be using it for Upside going forward. And maybe even rolling it out to the Upside network.

Jay Clouse 6:35
You can use SavvyCal as well, you can sign up for a free account at SavvyCal.com/upside, that’s SavvyCal.com/upside. And when you’re ready to upgrade to a paid plan, you can use the promo code Upside for a free month.

Karla Gallardo 6:57
I’m Mexican. I’m born in Mexico City a lot of years ago, already 38 years ago, imagine that. And I’m an economist I studied in a Mexican University, University of Panamericana Economy and then it’s very fun because I I got my first job in New Ventures, Mexico. That is fun, because then later on 10 years later, I came back to lead Viwala. Afterwards, I did an MBA in the Netherlands. And then I came back I did three years in private equity in Mexico City too investing in SMEs in Mexico. Very, very interesting, because these funds, were looking for companies that were in transition between generations. So we jump there and we invest and we bought some companies and then we sold them. Then afterwards I spent eight years of my life launching companies in in the agriculture and and forestry industry. So that’s I spent eight years doing that. Amazing I really love it. I love the agriculture. I think there is a huge potential and then afterwards because personal issues like I were looking for less traveling because I were traveling like crazy because imagine the agriculture is not in Mexico City of course. So we were traveling around the world and in Mexico so I I needed to stop so I I started looking for a new adventure. And I and I talked again to Rodrigo Villar, who is a director and the founder of New Ventures Mexico my first boss by the way, and then we together a decided to put together a Viwala. And now I’m leading Viwala very happy already for two years and in this amazing adventure to try to give financing to women and to social and environmental companies.

Eric Hornung 8:52
Where did the inspiration for Viwala from you said private equity agriculture and now Viwala. So where were the first idea come from?

Karla Gallardo 9:02
If I have to mention one word of of my of my career and my experience is starting things this is one word and the second word is a small or medium enterprises in Mexico. So when Rodrigo and I were talking about this, we realized and because first experience of Rodrigo and myself a long chain SMEs in Mexico there is not there are a lot of SMEs in Mexican and Latin America. But there there is very few options for financing because in Mexico what is going on is that we have in one side the micro finance which is for very little companies that are they super good that they are they are this option. But then we have the other more traditional options like venture capital, private equity and banks. And what’s happening with them is small and medium enterprises in Mexico is that the most of them are not a target for venture capital and private equity. Because these guys are looking for rockets, you know, like these disruptive business models. And, and that the SMEs that though is the way that I call their medium, medium, small and medium enterprises in Mexico, these SMEs, some of them are starting, and they are not ready for the venture capital and the venture and the private equity. But the other ones, which, which are the majority there, they have more traditional business models. So that means that they are super good business, they are generating value for the economy, but they are not a target for the venture capital and the private equity. So, and we saw that, for instance, in new ventures or new interest has a business accelerator and already passed through around 1000. Companies, I we can say like just 20 of those receive private equity or venture capital funds, what happened with the other ones, the other ones are super good companies, and they are generating deep impact, because we just work with impact companies. So we decided that we need to launch a financial instrument that can help these kind of companies to really grow in the way they have to grow. Not necessarily in this rocket sees a type, you know, but they they we can help them to be better and bigger. So that’s, that’s the reason why we started Viwala.

Eric Hornung 11:14
You mentioned venture capital, private equity and banks, what’s the banking culture, like in Mexico for these SMEs.

Karla Gallardo 11:23
Look, that the thinking Mexico with the banks is that they are looking for companies a little bit bigger, like their requirements are, I’m sorry, I am going to talk in Mexican pesos, I’m gonna, I’m gonna try to do the translation into dollars, we they are looking for companies with five years already existing, at least 5 million pesos in revenue, which is around two to $250 per year. And they are looking for a guarantee like house a building as these kinds of guarantees. And unfortunately the most of that SMEs in Mexico don’t have that they don’t have the five years or sometimes they don’t they don’t have in revenues to 250 per year. So that’s why in Mexico there are a lot of financial non banking institutions as we realize that are looking for these companies, because these companies need money imagine a company that is growing they need a lot of a lot of money for working capital. Like I like to in my mind that typical company that we are looking for is a company that imagine second you decided to launch a business of organic foods and you are doing very well one day Walmart no door door or you better do not Walmart door and then he say Walmart say Okay guys, I like it come and start selling in five stores as a pilot and then you started You did very well and one day Walmart knock and say hello guys, I love it, you have to go to 10 or to 20 stores or to 15 stores or national in Mexico is a huge company is a huge country. So, if that happen, you will convert in that you have to grow very quick and you need money to produce to hire people to transport to do everything to packing. So, these kind of companies are the companies that we’re looking for mainly.

Eric Hornung 13:23
From the entrepreneur side from the owner side, how is revenue base capital lending, financing, whatever you call it, how is it perceived?

Karla Gallardo 13:32
Look is it depends depends. First, we call it revenue based lending, because we are trying to the differentiation between the financing with is what is happening in venture capital and private equity. What we did is that we transform that into into the lending hoochie which was super difficult to be honest, very, very difficult because of legal issues and accountant issues all that and all the tax regulation they don’t understand these kind of instruments, but we did it and we are actually we are doing that right now. And the perception from from the entrepreneur is super good, they really like it because when you approach entrepreneur and you say okay, you have to pay me depends of your sales and if your sales are zero, you will have to pay me zero. They really like it actually with the pandemia help a lot to our our clients or our portfolio companies. But the problems that we are having is more in the in the funding side investors as as you understand a company like Viwala the business is to bring money and then lend that money You know, so, what is happening is that the investors are struggling to understand that because they are they are used to that private equity or or venture instruments or in the other side, the length, but their traditional length when we have some We are like a hybrid, they struggling a little bit. We we are we are struggling to sell that. Fortunately, we have very good investors, we have a lead investor is a family office in Mexico, and they, they really trust in us. And we already have an investor too in the States. And we are growing. But it’s, we have to, we have to do 20 goals and maybe to understand the instrument, but it’s part of the job. You know, it’s something that we are we knew it since the beginning. And it’s part of our job, we have to sell this, this new financial instrument that is working very well.

Jay Clouse 15:38
I don’t know much at all about the culture or political climate, they’re like, how much is there to even how much is there to wrestle with from a policy standpoint or a political standpoint? Is that a battle that you have to fight uphill against?

Karla Gallardo 15:56
No, I mean, in Mexico, what what is going on right now, is that, unfortunately, from the side of the government is not is nothing about entrapreneurs. But we are coming before this administration, let’s say we have an and a specific institution from a global government working with intrapreneurs. So they did a lot for the entrapreneurship environment. Now these new administration is, is doing nothing. But the good thing is that that the ecosystem is is really strong in Mexico, about entrepreneurship. We have a lot of Entrapreneurs little kids now want to be entrepreneur, because if you ask me this question 20 years ago, when I it’s very fun, because when we started New Ventures, I started with Rodrigo, New Ventures, 20 years, 16 years ago already, we started with this thing that we call it sustainable business. And nobody understand that. And we were looking for this ecosystem. Then as I mentioned, I went I went to the Netherlands to study my master. And then when I came back, I realized that this ecosystem was super, super strong. There are a lot of accelerators, funds, VC, VC funds, p funds, companies like Viwala, they’re trying to invest in the missing middle companies. I think the ecosystem is doing very well. Although the government is not helping the FinTech for instance, which is was which is an industry that Viwala is part of because we are totally working with technology. So we call ourselves a FinTech too. It’s it’s amazing in Mexico, I don’t know if you know what the FinTech law is, the Mexican FinTech law is one of the more advanced in the world. And it’s now it’s it’s growing, I just read a report that the FinTech industry got in Mexico got much more money than in another countries in Latin America. So it’s doing very well. So we need we still need this part of the government. But what happened is, you know, it’s not just politics. So, so maybe, when did we we put this party away? Again, it’s coming, you know, and we have to wait and I think entrepreneurs now are super, we understand that the play, so it’s just like this.

Eric Hornung 18:14
When you were launching the Viwala, what was the I read about the idea of gender of gender lens investing? We haven’t talked about that much yet. How important or critical is that to the thesis behind Viwala.

Karla Gallardo 18:30
It’s super important, Eric, what happened is that as I mentioned, we are coming from these new New Ventures is like our father. Viwala is a joint venture between private money and a new ventures, and for new ventures as well as for me, while we are looking to invest only in companies that are generating impact. So in the past, impact means for New Ventures, just social companies, environmental companies, but now we Viwala we bring another vertical it’s a which is gender. And the reason why we we consider a women lead or a gender lens company has an impact is because two important things The first one is is because when when when a woman earn money, usually she invest between the 70 to the 90% of that money in the your family. So that generates a positive cycles, you know, that it generates development and social development. So this is one reason and the second reason is a business reason. And is because we there is a lot of a data and it’s a lot of literature, a McKinsey the IFC, the ADB all of them, I already wrote about that, and some others, but in general, they say that when the more diverse is a team or management team, the better results and actually McKinsey did an amazing analysis about the companies that are already listed in that Latin America stock change. And usually the companies that have women in that in that top management are performing better, or 40% better in terms of a return of investment and profits. So it’s a good business to so when we put together social development and a good business, we decided that we have to jump back there. And the other important thing, because Viwala is also we are in startups, too. Although we are lending we already started to so the opportunity is super big. In Latin America, the gender gap for whip for companies for SMEs in Latin America is 93 billion American billion. So it’s huge. So we need to find a way to fill that gap, the financial payment. So that’s the reason why we decided to go for women lead, and it’s super important, Eric, we just invest our we just lend to companies that have that are women lead, that are led by a male, but when it has direct beneficial for women and girls, or have or are a social company or environmental company. If so if if, if it’s not one of these companies, we don’t lend to those companies.

Eric Hornung 21:23
You mentioned that you’re a startup as well, you guys were founded in 2017, I believe, is that correct?

Karla Gallardo 21:29
We started operations in January 2019.

Eric Hornung 21:33
So what’s changed in the last four years for Viwala there was an idea. Maybe bucket those down for me, what’s been the biggest change for Viwala.

Karla Gallardo 21:47
look, I like to be super honest, because from their mistakes, we have to learn. So when we started a white lab, we decided that we want to have like a font, but in a little scale, you know, big mistake, it’s not possible, because when we when we did that, the easy numbers, we realize that we are doing tickets, but very little tickets between 30 between 20,000 to 250,000. American dollars. So if we want to do these kinds of tickets, we need to do a lot of companies, you know, and and the cost of a fund is super expensive. So we and and the other thing is that we need to, we need to raise money all the time. So the structure, the legal structure fund didn’t work for Viwala. So we decided to move to this financial banking institution. So we are a normal and legal entity in Mexico, we call it superior survey. But we are not a fund. So this is one of the other things, the first thing that we learn. The second one is that the way we have to lend to the women is not it has to be different. And the reason what happened is that we started Viwala we have the money, we opened the doors, you know, we we ever sighs everywhere and then the women didn’t came imagine that. I was like freaking out. And then quite we did is that we started to talk to a lot of women, owners of companies, potential client, we did a lot. And we realize that in order to learn to lend to women, we have to do more than just lending because women that we have a different way to assess the risk is not that women don’t like the risk. That’s not true. Women like the risk, what happened is that we assess differently when we have to be more sure that we can pay rather a male, you know, so what we did, and the other thing is that usually they’re the female, what’s happening with us is that the more or the women don’t don’t have finance training. So when when we put together the the possibility to take a loan, considering that you’re lacking in finance, that women feel very uncomfortable. So what we decided to do is that now we have a technical assistance we call boot camp. And in this boot camp, we are helping women with different capabilities in terms of business, and also balanced life. And this is helping us to create a community and through these technical assistance, their community and the right instruments, which is these revenue base long. We are now growing. So this was the first and the third one that happened first. Is this this idea to to become a FinTech. But because the other thing that we realize is that and this happened for women led companies, as well as for regular companies, but happening in Mexican in Latin America, is that the that small and medium enterprises are usually a one man show. So this one man show. Usually sale do the finance do the accounting. He has to ask for the credit. So if we ask for a lot of requirements, we ask for a lot of paperwork, they really struggle a lot. And it’s the first problem that is not helping them to get the credit. Because if they go to the bank, they ask for a lot of things. So what we did is that now we have a technology that that connect us with a tax office in Mexico. So the only thing that we need when the company apply to Viwala is that they enter their, they leave us a with all the security standards, of course, is encrypted, their tax ID and with that activity, we go directly to the tax office, we bring home the information we did, we did all the data and the analysis. And with these, we are able to give them a loan or not. But usually we took us two days, three days to do the analysis then takes a little bit more all the legal paperwork and these kind of things, but we are we are giving loans into 10 days, the most of them. So is what we are doing right now. So this is the big, big learnings, I think.

Eric Hornung 26:05
So I want to dive into that second learning a little bit for you personally. You mentioned you worked in private equity for a few years, you were launching agricultural businesses, I would say that, it sounds like you have a very high level of financial training. What was it like, personally for you to have the realization that maybe it was a little different for a lot of other women around Mexico?

Karla Gallardo 26:28
Very good question. Eric. Nobody asked me that before. Not, you know, I think, as a personal learning is that I mean, because of my background, I’m an economist, then I did an MBA. And I work in, as you mentioned, in private equity. And launching companies, for me is like very normal, you know, this thing about the finance and the numbers and the budgets and these kind of things. But then I learned that I have to think about the majority, you know, and not the majority is that, like me, things got very boring. Imagine I prefer the other one. And I was super interesting, because I personally did a lot of interviews, a lot of coffees with friends, and some other woman’s are not my friends, just to try to understand what what happened. Because we did, of course, a market research about the opportunity, and about you know, about more like business variables. But again, I’m super happy to see that at the end is about humans and how humans perform. And things God is like this, otherwise, we will be living in the machine, you know, in the machine world. So what’s a surprise, to be honest, I didn’t expect that that actually, I was the one that say, and I and they are scared, when I really understand that, in general, women are not discouraged. We just assess differently, the risk, for me was a super big learning to be honest. So now, what we learn is that we need to focus a lot and try to really understand what is going on in these with these kind of entrepreneurs. And when you think about it, I mean, I think it’s something that I miss because because imagine if I was looking to launch a business for for a kip, for sure, I will, I would need a lot of focus groups and understanding about that, you know, the kip, how they keep seeing how the kid says things, how they keep take risks, these kind of things. And we we didn’t did that, because we we actually we made the same mistake, as everyone in the world thinking that a male and females are the same, and we are not the same. So very interesting.

Jay Clouse 28:41
You mentioned that there’s a lot of selling and storytelling that you need to do for these investors. You mentioned, you know, you have these statistics of how well women led companies do historically. But you’re still taking big bets yourself with investor capital. So how do you how do you think about what makes you so certain that you’re able to find the right companies with female lead founders, so that you can actually return that investor capital?

Karla Gallardo 29:07
First we are, we are measuring everything, everything. So that’s a good thing to work about. With technology, you can you can do numbers about everything. So usually every month we do a cut a balance. This is one thing. The second thing we already have almost two years lending and our portfolio is performing very well just was we have problems with one company, that’s it. And the most of the women I mean, all the 100% then we think just the 100% of the women led companies have paid on time. We have some others that they have some you know they have some problems like one two days a month, they don’t pay then they and then they pay the most of them at least in the boiler portfolio and this is a fact are with male. The women are paying always on time, this is one thing, of course, I think we the time, we will have more information and will be easier. And I know and of course, we have all the information about the micro finance, that that’s helping a lot, because I might come from micro finance, have a lot of information about, about how the women are better payers, as a, as a male, I understand that it’s different, you know, the size of the company and education and everything, but at the end, I think is is part of the behavior and how, how a woman feels comfortable, and the women like to be like no problem with no problems, and that means pay everything on time and these kind of things, this is one thing and the second thing, Jay is that the brilliant that we are looking with potential investors is not the women that is not that the fact that we are investing in women is the fact that we are doing revenue based this is the thing that they are a little bit scary about is not is more the instrument and again to solve that is the same I we need to show some track record and and how are we how the companies are performing or how we are performing with this kind of instruments at the end we are we are in this stage that we are all we are using a funders, of course, we already have some debt lines, which is the next step. So we are we can say that we are in the second step. We started learning from our our equity. And now we are we are we started in January lending from deadline. So let’s see, with the time.

Jay Clouse 31:40
How long do you think how long do you think you would need to have this rolling in have investments that you’ve made to kind of show these numbers that you’re measuring? To say yes, this is working? How long do you think you’ll need to be in market making those investments to make these investor conversations easy.

Karla Gallardo 31:59
My expectation is two more years, like we already have almost two years in January, we know this one year and a half we have we can say and I think in two more years, 24 months, more or less, because you know, what’s gonna happen in 24 months is that we will still allocating and they all loans will, we will start paying completely complete the loan. So we will, we can we can show how we are doing Actually, this this month, we are a company just sell very well. And they did super well because they they catch a very good contract. So they are repaying the full contract. Because work like these, you know, like we I don’t know if you if you know how it works, but our revenue based loan is, instead of coming like, along with a specific payments already set since the beginning, like when you buy a car, you go and buy a car and they give you this amortization table, you know, what we do is that we set a percentage of the sales. So you have to pay me this percentage every month. So imagine is 5%. So if you sell 100, the 5% of 100. If you sell more than you have to pay me a little bit more, because a high percent of 200 is more you know, but if you sell 0.5% of 00, your payment is zero. So what happened with this company just now in April is that they got an amazing contract. So they have money. And because of their revenue, they have to pay a lot to be well ability. Besides that they have already money. So they decided to repay the credit. So for us, it’s library success story, you know. So that’s that’s the main idea is like a combination between a venture capital investment and a loan. But it’s not a conversion that is different, because it’s a way that we are charging the loan that the main thing.

Eric Hornung 33:56
You mentioned earlier that a fun structure would be too expensive. You’re running this as more of a traditional entity in the States, we call it a corporation or a LLC, depending on how you structured it. How do your investors get liquidity back?

Karla Gallardo 34:12
Okay, very interesting question. We have two kinds of investors. The first one is that equity investors, and I’m gonna talk about them at the end. And the second kind of founders is is through what through adapt to, so they give a loan to Viwala and Viwala give a loan to the client, you know, so the way that these guys are earning money is that we offer them a specific interest rate. And that’s it, actually, we’re trying to do revenue based lending also with them. We didn’t do that yet, but I’m looking for that and I will, but usually we are offering them an interest rate and they they gain like this. In the case of of the equity investors is like a regular company. So we have a business plan. Of course This business plan takes in consideration the amount of money we are embed, we are lending. And in this specific moment, we have our breakeven and then we start to generate money. So we have two options, we can use that money to lend or we can pay as a dividend. So is part of that. So actually the business model of our company that Viwala is very easy.

Eric Hornung 35:23
Very cool. Well, this has been fascinating. Karla, if people want to find out more about you, or Viwala or New Ventures, where should they go?

Karla Gallardo 35:33
And okay, myself in LinkedIn, I, there is there is myself. Thank you. And of course, they want to send me an email, of course, my email is Karla@Viwala.com. And about Viwala. We have, of course, in in our in our web page, which is Viwala.com. Or in Instagram or Facebook, we are like Viwala MX. We are we are there. And we are super happy always to answer questions and talk with with people.

Jay Clouse 36:06
Eric, do you know what my favorite part about podcast advertisements is?

That people actually listen to them.

While you read my mind. It’s almost like we’ve done this twice. Now. Yes, that people actually listen to them. Look, you’re listening right now, dear listener,

Eric Hornung 36:19
And me I’m listening to I’m listening to you, Jay here on the Upside podcast.

Jay Clouse 36:23
And if you have a message that you want to share with the Upside audience, people who care about startups, investing, the middle of the country, this is a really great place to put that message.

Eric Hornung 36:32
Because people will listen to it and if you have an event, or you just want to get something out about your brand to your hiring. This is the perfect place for the upside.fm/classifieds. That’s our classified ad that can run on one to five podcast episodes.

Jay Clouse 36:48
That’s right. Typically, we lock in sponsors for longer sponsorships, but we wanted to make this accessible to you and your message. If you have a message to share with our audience, go to upside.fm/classifieds, and get your ad on the airwaves.

All right, Eric, we just spoke with Karla Gallardo, the CEO of Viwala, once again, speaking about financial innovation here on the show what stuck out to you about Viwala’s model or about this opportunity?

Eric Hornung 37:19
Well, the model is great. I love the idea of providing more access to capital, it reminded me a little bit of micro loans. I know we touched on those a bit. But honestly, the thing that impressed me the most was Karla, she was incredible.

Jay Clouse 37:35
And she’s doing something new in an environment that’s difficult, you can tell that telling this story and getting this new model out there in supported is not an easy task has not been an easy task. But she’s chipping away and she’s making happen.

Eric Hornung 37:52
As we’ve said on the podcast for a while now innovating on structure is much harder than innovating on content. say more about that. So if you were to launch a venture capital fund, and instead of funding software, you fund consumer products and you use the exact same structure, you have the same management fee, the same carry, the structure has been created, people can understand that a venture, it’s a venture capital fund that’s investing in X, Y, or Z or maybe X, Y and Z that’s innovating on content, innovating on structure is saying what if I rethought how we invest, I’m not going to do the 3331 model, which is three losers three 1x. Three with a little bit of gain in one home run, I’m going to do a model that is 10 singles, or I’m going to do a model that is the return profile is different that’s innovating on structure, because you’re challenging the assumptions that are conventional in the fund model. You can also innovate on structure by changing the actual dynamics, the legal entities, the tax setup, she talked a little bit about that. innovating on structures really hard because you have to explain to somebody a thesis on why you’re doing something, and you generally don’t have anything else to point to to say, look, it works.

Jay Clouse 39:06
It’s like you’re doing two hard things, the content, the concept itself is already difficult to find the companies you want to invest in, for example, but then you also have to convince people that the model should be different than what has been historically you’re pitching two things at one time. It’s challenging.

Eric Hornung 39:19
It is challenging, and we’re gonna run into that it upside to take it selfish for a second here. Podcasting isn’t local, by nature. So we kind of feel the innovating unstructured thing and I think that the biggest returns and this is why we’re so excited about what was building what Clearbanc is building, what Earnest Capital’s building, what Rallyroads building, what Mainvest is building, they’re innovating on structure. And I think that’s where the biggest potential for change and returns is it’s going to allow you allow the world to do things differently.

Jay Clouse 39:50
And we innovated in our own way here talking to somebody outside of the United States, which is something we don’t typically do but are open to doing from time to time with good reason. And so if you have a company that you would like for us to talk to you that may not be based in United States but you think fits the Upside vibe and Ethos and I’m not talking about our friends at Ethos Wealth Management at upside.fm/ethos. I am talking about the way we go about things. You should introduce us to them on Twitter @upsideFM or email us Hello@upside.FM. And will talk to you next week. That’s all for this week. Thanks for listening. We’d love to hear what you think about this episode. So tweet at us @upsideFM or email us Hello@upside.FM and let us know. You can learn more about us and browse our entire back catalogue of episodes@upside.fm. And if you love our show, please leave a review on Apple podcast that goes a long way in helping us bring high quality guests to the show.

Interview Begins : 6:57
Debrief: 37:08

Karla Gallardo is the CEO of Viwala.

Viwala provides loans for women entrepreneurs who have high-impact businesses as well as a network of mentors and entrepreneurs who aim to reduce the gender gap in Mexican businesses.

We discuss:

  • Idea for Viwala 8:52
  • Banking Culture in Mexico 11:23
  • Revenue Based Lending 13:23
  • Sustainable Business Ecosystem 15:38
  • Gender Lens Investing 18:14
  • Viwala’s Growth 21:33
  • Women doing Business 26:05
  • Liquidity for Investors 33:56
  • Viwala was founded in 2019 and based in Mexico City, Mexico.

Learn more about Viwala

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