Intoo is a listing startup that provides information on small businesses to potential lenders.
Intoo, based in Brazil, was introduced to a U.S. audience at the Innotribe Startup Showcase in New York last week.
The company is focused on getting loans to small businesses in Brazil. The Brazilian small and medium business market is integral to the country’s economic success. Small businesses account for 30% of the country’s GDP, but only 7% of them have access to credit.
CEO Arthur Farache recognized at an early age that his father and family friends, who were small business owners, had difficulty acquiring the credit they needed to expand and support their businesses. He saw that there was a massive difference in outlook between small businesses and banks, who were treating businesses as individuals, not recognizing that the two have very different needs.
“The biggest challenge for banks is information,” Farache said. “The banks don’t know how to get information about companies efficiently — it’s very expensive and time-consuming. Banks pay a lot of people for easily accessible documentation and it takes awhile to collect as well.”
There are only four or five major banks in Brazil that “dominate the lending market,” Farache said. This significantly impacts the lending market, enabling banks to charge high interest rates that vary widely. But, since the rates vary, it makes sense that small businesses would want to weigh their options in search of the best deal. COO Dan Lockwood notes that the issue is that this process is costly and time-consuming for businesses.
Intoo is essentially a marketplace to solve those inefficiencies, explains Farache. “We allow small businesses to procure the best interest rate by having banks and investment funds to compete for their business, which hasn’t existed up until now. The competitive landscape is very favorable…. At the SME level, nobody is doing this in an online environment. The idea is very novel and its purpose is to help make the economy more efficient.”
Companies submit a profile, providing Intoo with all sorts of data, including financial information. Using a company’s tax ID number, Intoo’s technology scours public and private databases, collecting any information attached to the tax ID number, including outstanding tax liens, labor disputes, environmental disputes and more. This gives banks key information about these businesses that are easily accessible and inexpensive to access. Banks only pay when they close a transaction. This also helps lenders figure out risk more accurately. That, and the increased competition among lenders, helps lowers the interest rates attached to the loans.
Intoo, which was founded in May 2013, has raised $200,000 in funding so far, and is looking to add another million. The eight-person team has already processed $20 million in transactions and 30,000 companies use the platform. Intoo’s revenue model is pretty standard — it charges companies a fee to get a listing on the Intoo marketplace, and charges lenders for closing deals.
The company plans on expanding, but still looks to focus on small and medium sized businesses. Intoo hopes to enter the Colombian marketplace by the end of 2014 or early 2015, signaling that the company is not only looking to help Brazilian companies, but smaller businesses throughout Latin America.
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