Sebastián Kreis, Xepelin | Fintech for SMBs, Raising Debt, and Expanding Across the Region [Ep. 86]

The audio and video are in Spanish. These notes are a translation.

One of the biggest obstacles for a small or medium-sized company in Latin America to obtain credit is not exactly access, but the prior preparation process.

Today we spoke with Sebastian Kreis, CEO and cofounder of Xepelin, a fintech that started by offering free financial management software, which became a distribution and data collection channel in order to offer credit to SMEs at scale.

This strategy allowed it, in just 3 years, to reach more than 5 thousand customers in Mexico and Chile, and to raise more than 400 million dollars between equity and debt, from investors such as Battery Ventures, DST Global, and Kaszek.

We talked about the business logic behind offering free software, how raising debt works for fintechs, and the methodology that has allowed Xepelin to expand regionally at such speed.

One of the biggest obstacles for a small or medium-sized company in Latin America to obtain credit is not exactly access, but the prior preparation process.

We talked about the business logic behind offering free software, how raising debt works for fintechs, and the methodology that has allowed Xepelin to expand regionally at such speed.

Youtube Timestamps*

[1:24] - Fintech for SMEs

How did Sebastián get into the fascinating world of startups?
In another interview, Sebastián said “for SMEs the problem is not only access to financing, but what you do beforehand to obtain it.” Does Sebastián explain this idea, and what was the “aha” moment behind Xepelin?
Xepelin offers free financial management software. What is the business logic behind offering a free SaaS?
Is there a trade-off for Sebastian between charging nothing or a little (in terms of user acquisition, usage, etc.)?
Did Sebastián ever think about charging for his software?
What does it mean for Sebastián to treat SMEs as consumers, and how is that reflected in the way Xepelin works on its product?
What metrics do they use at Xepelin to measure their Product Market Fit, and how do they make decisions to improve their product?

[13:44] - Fintech Business Model

How does Sebastián take care of the relationship with his customers?
Xepelin has raised a significant amount of capital from debt lines. How is this process different from raising venture capital?
What advice does Sebastián share for fintechs that are looking to raise their first debt line?
There is a spectrum of financing alternatives for fintechs. What is the right combination for Sebastián, and how does he see it evolving as his business scales?

[22:29] - Regional Expansion Methodology

At Xepelin, they always wanted to be a regional company and they made regional decisions from the start. What regional decisions did they make when they started, and in what way did those decisions facilitate their expansion?
What variables does Sebastián recommend that founders consider in order to define the best moment to expand to another country?
What processes does Sebastián consider it necessary to implement in order to communicate the learnings from one country quickly to the other?
When it comes to growing, what things does Sebastián consider a startup can prepare, and what things will inevitably break?

[32:41] - Tweet Round

Recommended book by Sebastián
Changes Sebastián would like to see in the Latin American startup ecosystem
Founder Sebastián recommends interviewing

Episode Mentions

You can find Sebastián on LinkedIn and Twitter

Recommended book: No Rules Rules: Netflix and the Culture of Reinvention by Reed Hastings