Behind the Idea: a55 | The Fintech Times

Behind the Idea: a55 | The Fintech Times

2021 was a watershed year for crypto technology. The volume of cryptocurrency transactions grew 567 per cent year-on-year to reach $15.8trillion in value and demonstrating that trading in digital assets has hit the mainstream. Although the market has seen some correction this year, 2021 was such a Rubicon moment that no one can deny: cryptoassets are here to stay.

So, its perhaps unsurprising that 2022 saw the launch of Latin Americas first crypto debt operation in the form of a blockchain-based funding model led by LatAm alternative lender, a55.

Hugo Mathecowitsch, Founder and CEO of a55
Hugo Mathecowitsch, founder and CEO, a55

We spoke to Hugo Mathecowitsch, the company’s founder and CEO, about its move to decentralised finance and its groundbreaking approach to funding.

Born in France and raised in Barcelona, ​​Mathecowitsch moved to Brazil in 2013 to take on a business development role in asset management. It was here his entrepreneurial spirit really took off.

He knew there was a future for him in Latin America’s burgeoning economy, which led him to found Amerigo technology investment banking. That venture ultimately failed but gave Mathecowitsch invaluable learning and experience, which he applied in setting up a55 in 2017.

Five years on and successful funding rounds later, Mathecowitsch still relishes the thrill of pursuing new ideas and building something genuinely new in a market he’s deeply passionate about.

What has been the traditional company response to financial technology innovations nationally?

To an extent, we are writing the history of capital markets here in Latin America with the first hybrid debt operation in Brazil. We were able to raise funds that well use to finance our own investment in companies based on their current recurring revenue and alternative data.

Its not just significant for the local market, but it paves the way for data-driven companies worldwide to leverage alternative data as a direct, enforceable, and reliable source of collateral, using blockchain technology to unlock liquidity and fund growth.

How has this changed over the past few years?

Access to capital, in general, has never been so easy, particularly for tech start-ups. In the past 20 years or so, weve seen a global explosion in investment. This exponential growth brings with it both risks and opportunities for companies and lenders alike – we’re already seeing evidence of this – but it fundamentally means that banks and the traditional finance sector are no longer the sole sources of funding.

While weve seen sources of funding go through a transformation, we havent seen the same shift in lending criteria until now. a55 has been able to harness new technology to increase access to funding for companies that have been typically underserved by traditional banking, had limited access to equity financing, or were looking for an alternative to dilutive capital.

Is there anything that has created a culture of change inside the company?

Were an ambitious team and I think our appetite for innovation helps us maintain a culture thats receptive to change and seeks constant improvement. Our clients expect it from us too – they rely on us for that kind of out-of-the-box thinking that allows us to disrupt traditional models and make access to finance more obtainable. I think our collective experience also contributes to change, bringing best practices from past enterprises.

What fintech ideas have been implemented?

Within our underwriting stack, we incorporated open banking, then open finance, and now open data applications to improve our revenue predictions at the SMB level. On the funding side, cryptocurrencies and the adoption of decentralised finance (DeFi) liquidity pools have been among the most transformational fintech ideas we implemented recently.

What benefits have these brought?

I think DeFi-based liquidity pools will represent a major additional source of funding for data-rich companies in the future and make hybrid debt the new normal for everyone.

For us, integrating stablecoins and DeFi liquidity protocols into the funding stack represents the best of both worlds – connecting decentralised solutions to traditional finance markets. And increasing the speed and efficiency of administrative operations through technology is bringing down the cost of cross-border transactions.

Do you see any other industry challenges on the horizon?

We expect blockchain technologies will disrupt traditional capital markets massively with the disintermediation of multiple parties, including asset managers, distributors, administrators and trustees.

We also see challenges on the payments side with continued compression of managed detection and response (MDR) services and the need to re-invent payments with services that add value beyond simply processing third-party verification.

Can these challenges be aided by fintech?

Absolutely! At its simplest, fintech is about finding and fixing holes in traditional financial services models or streamlining processes that can be rendered more efficiently.

Enhancing access to capital, commoditising data, and being smarter about how we use that data, both to enhance the customer experience and to drive continuous improvement through artificial intelligence (AI) and machine learning, allows us to preempt and stay responsive to challenges.

Connecting with the customer and applying technology solutions to meet, adapt to and exceed their expectations is key to our approach.

Final thoughts…

With the increasing demand for smart capital from a55 customers, our technology has allowed us to open up access to funding for companies of the connected economy.

And given the size and energy of the Latin American market, Im excited to see what new developments this will bring. Also, to expand our horizons beyond the Americas and into Europe with some new world thinking.

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