Gerry Giacomán Colyer
CEO & Founder
Startup Contributor

Why Targeting B2B Is an Opportunity for Entrepreneurs

By Gerry Giacomán | Mon, 08/30/2021 - 09:10

The Mexican fintech ecosystem has reached new heights in the past year. According to Mexico’s Fintech Radar, the number of players in this space has grown at an average rate of 23 percent every year, with at least 441 active startups registered to date. This high growth is fueled by the greater adoption of tech and new digital solutions during these unprecedented times. Fintechs in particular are introducing new technology to one of the largest and arguably the most strategically important sectors in the economy: financial services.

Although historically many fintechs have focused on the needs of consumers, particularly the unbanked, there’s also enormous opportunity to address the needs of businesses. According to Finnovista's 2020 Fintech Radar, fintech startups with a B2B focus total around 100 companies, or less than a quarter of the Mexican fintech universe. Within this, business lending makes up less than a third.

According to a 2020 report by the International Labour Organization, 40 percent of companies worldwide didn't have access to financing products to support their COVID recovery. Of the companies that did have access, two-thirds reported the available financing was insufficient.

In the past two years many companies have become more open to technology by adopting new digital solutions, while others have been forced to do so to remain viable or competitive. The pandemic drove companies to accelerate their digital transformations by three to five years, according to studies performed by renowned consultancies. Unsurprisingly, data from Clara reveals a clear trend of rapid adoption of new software solutions with a 7x monthly spending increase.

Financial Impact

According to an International Labour Organization report, COVID-19 drastically compromised companies’ financial health, with 86 percent saying it had a high or medium detrimental impact on them. SMBs were the most affected segment. With traditional financial institutions retracting and becoming more conservative, fintech can step in to help restore the financial health of SMBs and the economy more broadly.

Two of the main reasons startups fail are financial mismanagement and cost overflows. At Clara, we’ve focused on developing an end-to-end corporate spend management solution to help companies move with agility and sound financial controls. Our goal is to empower businesses and their growth, helping teams focus on higher-value-added activities rather than repetitive or menial accounting tasks.

There are still great opportunities in B2C — where consumers will continue demanding better and more agile solutions — but the current context also demands a special focus on companies’ needs. Companies empowered with better software translates to more competitive companies and better work opportunities. There’s enormous value to add by becoming a company’s strategic partner during their transition to the digital era and enabling them to remain competitive in an environment of constant change.

Challenges, Opportunities

Long forgotten by global investors, Latin America is finally experiencing its moment in the innovation economy spotlight. Though the local system is not yet as developed as other hubs, such as the Bay Area, Latin America is experiencing a very exciting moment: for the first time there’s a critical mass of talent, investors and entrepreneurs to build massively impactful businesses faster than ever before. Though fintech has already taken hold in the region, there are still plenty of opportunities to introduce innovative solutions and solve major user pains, particularly in the B2B segment.

Photo by:   Gerry Giacoman