Nicolás de Camino
Co-Founder & CEO at Xepelin
“Success is partly knowledge, a team and also wind in favor”
The Chilean Fintech who provides financial services to SMEs does not stop. It is in the midst of its internationalization stage, with an arrival in Mexico, a recent round of financing in which it raised US$80 million, and a new service for its clients. In this third installment of Meet the C-Suite, the Chilean entrepreneur who founded Xepelin shares his vision of what it is like to create a startup capable of reaching Latin America with the promise of generating value for small and medium-sized companies.
By SIMALCO Brandlink
Although he did not want to begin a startup as soon as he was done with school, Nicolás de Camino – a 36 year old commercial engineer from the Pontificia Universidad Católica – always knew that he was going to be an entrepreneur.
He was part of the collaboration team at BTG Pactual, where he played an important role in creating the Alternative Assets Area, and shortly after, at only 26 years old, he created the first invoice fund in Chile.
Why did you want to work in an established firm before starting your fintech?
When I was done with the university, I thought to myself: ‘either I start my own company right now or I train first and become a professional’. And I went along with the second option, mostly because I knew it was important to have experience and mentors. Also, I was offered to do an internship when I was not even done with my studies (Nicolás graduated with honors). As I was always interested in Alternative Assets, we did a bit of everything: a mining exploration fund that was very entertaining, then an energy fund that was actually not launched at the last minute.
That’s where you started noticing things…
I began to see that electronic invoicing was about to burst in Chile, because they were still paper-bound, and that this new law was coming into effect where you could buy that invoice and it could almost become a fixed-income security, like when you buy a bond of a corporate company. I saw that investment banks bought these bonds at super low rates, but then those invoices were bought from SMEs at an absurdly high rates- and I said, ‘here’s an opportunity’. I then spent the following six months investigating, meeting people on the street, more than in the office, and understanding what was happening. And it occurred to me that it could be a good idea to create an invoicing fund, which did not exist and was extremely innovative.
But it wasn’t easy…
At the office they told me I was crazy. ‘SMEs? paper bills? That’s not for an investment bank.’ So, I started to think of a way to make it safer, and it occurred to me to imitate something that was done in developed countries called asset bank security, with a safer series and a riskier series: those that brought the invocie would buy the risky series and then they would bear the first losses and the bank’s investors would buy the senior series, which was safer. We started with a US$ 5 million fund, and I didn’t stop from there.
It has been said that from there you shaped what is known today as “the private debt industry.”
I would say that the structure that we invented is today, the standard [for the sector]. We did everything back then: from car financing, mortgage credit, credit cards, loans, we were the first to bring pension funds to invest in this, we made about US$ 1,500 million [in profits]. My area started to grow a lot, they made me the youngest partner of the company and I was advancing so fast, and I was so entertained and everything we did was innovative, that I ended up staying probably longer than I had initially thought, when I first came to work there.
And how did you come to conceive this fintech model with fair practices, putting SMEs as a priority?
Around 2017 I became somehow restless. Mainly because I saw what was happening. I saw that electronic invoicing was going viral throughout Latin America and that it gave the possibility of generating a network and I thought ‘this could really reach everywhere’. But I also realized, for example, that [at my firm] we borrowed money to people to buy a house, a car, etc. But to SMEs, despite the fact that we managed to let competition enter and raised about US$ 6 billion in private debt, it did not get to SMEs and that made me think: ‘why doesn’t it go down, what is the reason that it has no impact?…the rates go down, but [banks and institutions] continue to borrow only to the 20,000 largest companies in Chile’.
Like any entrepreneur, you saw a “pain” that could be solved…
I began to understand that it was a structural problem, that it could not be done because of the structure, that it was very intensive in account executives, very manual, the information was very bad, it was difficult to acquire the small (companies), nobody was interested in attending small companies because, as the banks say: ‘they are not profitable, forget about it. What are you going to do with a small SME?’.
And although I tried to do it alone, fortunately it didn’t happen. It was then that I found my partner, Sebastian Kreis, whom I knew a little in person, but we had never talked about doing something together and another Co-Founder, Felipe Puntarelli, who knew about my dilema, we got together, and I saw that Sebastián was eager to create something and had a huge intellectual capability, and that’s when I realized that this was what I was missing. I had a well-defined model, I was very confident that it would work, but a piece was missing. And Sebastian, who is a great executor, also had the view that SMEs were abandoned, and he said, ‘the opportunity is huge’. And so, we convinced ourselves that we could do it.
Why the name Xepelin, with an X?
We spent several months thinking about our name. The company is called XCapital, because we needed to register it with a legal name. But the term ‘capital’, felt like a traditional financial industry and it was not what we wanted, we wanted something innovative, friendly. On the other hand, we knew that we wanted its name to have an X that implied scaling, multiplying growth many times: if a traditional company grows 20% per year, we wanted to grow at 20-30% per month. And our goal is to reach one million companies by 2025. But every time we liked a name it was already taken.
After months searching for a name, we decided to make an asado (barbecue) to find that name. And it wasn’t until 2:30 AM, already quite tired, that the owner of the house put on a Led Zeppelin song that we all liked… and suddenly our faces lit up. We ran to the internet to look for the name Xepelin.com and it did not exist. So, we immediately said ‘this is the name’. It felt very good and very natural.
FINANCING AND FIRST STEPS
What were your first steps? Did you consider starting with the help of an accelerator or Startup Chile (the government accelerator)?
I think that something good about not having started a business until after 30, and with a decade of working behind us, is that all of us in the founding team brought a lot of experience to the table. And we had a business model that we believed in. We were very convinced that it was going to work, we knew well what we were doing, we set ourselves a roadmap, a five-year plan, and in fact we have hardly pivoted anything since then.
Thanks to this experience in the industry, we also had the contacts and potential clients to start with and we were just lucky, because we need to be honest about it, I think that fortunately Xepelin has been successful and we want it to continue being successful in terms in which one as a manager refers to success, which is a part due to knowledge, team and also having the wind in your favor.
And, coincidentally, in 2019 the whole startups investment boom began.
In fact, I believe we arrived a little earlier, but we had investors who trusted us, who had known us since we were in our respective firms, so we didn’t have to go through a startup, and in the preseed round we raised a million dollars, because the people who knew us had a lot of trust in what we were doing.
But perhaps the pandemic in 2020 slowed things down?
The truth is that in 2020, COVID-19 greatly accelerated technology companies and this boom in raising money occurred, and then it was much easier, because the first round of financing is always much more difficult, but later it becomes easier.
Your most recent round raised $80 million, but you’ve raised a total of over $300 million. Who are your investors?
The first preseed round was in 2019 with an investment fund called Manutara, plus a couple of family members and two entrepreneurs. Then in 2020 names like Kayyak Ventures, Picus Capital, DST Global, Kaszek, Amarena entered, and we have not stopped. The last round, the most relevant, was with Kaszek, which is the largest fund in the region, and DST, which is among the top 3 in the world, financing fintechs. They are all good partners and today they are in the Xepelin board.
What was it like scaling from a team of six to 300 people? It is said that in a startup all hiring goes through the founders…
Actually, yes. We were talking to a founder of a company that today is worth 40 billion dollars and he said that interviewing and hiring people is, until today, one of the critical parts of it. I must do three key hires a year at a very high level and what I love the most and what I’ve learned to do in recent years is interviewing. At Xepelin, even though we are 300 people, we are continually looking for talent since this is a technology services company, it is not a sausage factory. We brought incredible ingredients to put together a good dish. But if we don’t have the team, that plate is not put together, and what is going to make the company what it is tomorrow is its people, then the most valuable thing about Xepelin is its people. And it won’t stop attracting talent is key for any company, especially if it’s a service company, and especially if it’s a technology service company.
Xepelin is already in Mexico. Why Mexico?
From the beginning we knew that we would quickly be in a second country. At first, we thought it was going to be Peru, but later when we started talking to international investors, they told us ‘Your company is incredible’, ‘go do this in Mexico, that’s the country to be’. ‘Prove me that this works in Mexico, and you will have my full support”. And it just so happened that Sebastián’s wife had an opportunity to go to Mexico, so it came out very naturally, it was perfect. He has done a giant job, starting from scratch, hiring, convincing people, because looking for clients in Chile was easy since we were all very well connected, but Mexico was starting from scratch for everyone.
In addition to opening an office locally, the entire team of founders is constantly traveling to Mexico. Why?
One thing we have realized that makes Xepelin so special is its people and its culture. And that culture probably must come directly from rather than simply telling the team: ‘Look, here are our core values, now get to work’. It is very important to be in Mexico and that all the cofounders are constantly going there and that our culture is transmitted. And probably if we are in a third country it will be something similar. We are going to be constantly going there, because that commitment from when we were only 6 in the team is what we want to communicate, and it’s very important for the growth of Xepelin.
SMEs AND PAYMENTS
In early March, Xepelin launched its most ambitious product to date: payments. It is an online platform that groups all supplier payment information in one place and allows immediate financing to be obtained for their settlement.
In this way, it becomes the first Chilean fintech to implement this digital solution, which seeks to alleviate the problems that companies have in meeting their financial obligations.
How does this system that you launched work?
With this new product, all registered companies will be able to organize and view their accounts on the platform, according to the needs of the business. The company will be able to pay its suppliers in three ways: with its own capital, full financing by Xepelin, or in a mixed format (where the company takes care of part of the debt and Xepelin the rest), all being processed instantly by the platform, without formalities or delays.
At Xepelin we are running a bit with something very unique, because this payment thing did not exist and I hope the term payment will be quickly adopted and that all banks provide the service, because that way 30 million companies could access these benefits.
That pain of the SMEs that they detected in Chile is the one that small and medium-sized companies have throughout the continent, apparently…
Chile, probably in terms of billing and initiatives in favor of SMEs, with a law that requires paying suppliers in one month, must be the most advanced country in Latin America for SMEs. In Mexico, something like paying within 30 days by law is light years away: the obligation to pay the [third party] who acquires the invoice has not even been made official yet.
Perhaps it is not a matter of legislation, but of how the SME sector works on the continent?
We don’t want to see the governments of Latin America to enforce, ‘you must pay [this company] in x days’, because it would create an imbalance in your money flow, because SMEs first must get paid and if they get paid in 180 days, then how could they make any payments in 30 days? We work with a lot of medium-sized companies, and forget about the small ones, they simply don’t have the cash [for that] and that is the first thing that Xepelin comes to solve: it precisely automates all those payments and [allows] companies to have a balanced and healthy working capital among your received accounts, your due accounts, and your cash. And if you need more time, Xepelin also can give you that. Everything centralized, in one place and in one ecosystem
How do you see Xepelin in the coming years? How would you like it to grow?
In 2 to 5 years, we see Xepelin throughout the continent, or in the most representative countries of Latin America. We see it fulfilling the promise to pay, finance and help sell more to any company, regardless of whether it is the largest or smallest in the country, with the same service, with probably almost the same conditions. Our goal is that in five years we have a million companies with us, that is our vision and I hope and believe that we will achieve it.
What is it like to be an entrepreneur in this era?
Today there is a very good environment to be an entrepreneur and that helps, at the end of the day the conditions are much more favorable, there is much more ecosystem, probably 10 years ago I would have had to knock on many more doors just to try to explain what I am thinking, what you want to do and why it might be a good idea and why it might have an impact. There is a frenzy in the region, with the nearly 30 unicorns that have emerged in recent years and a whole ecosystem for venture capital is being created, and when the ecosystem grows, players and opportunities enter, everything is more fluid. That said, there is now a sense that 2022 would be a little less booming than it was in 2021, and you can see it in the valuation of companies going public as well.