“‘Unicorns’ is a phrase that we would like to forget. We are very focused on creating companies that will last for decades and that are already reaching profitability with super solid businesses; obviously we invest to create value, we are a fund that has to give back money to our investors,” Jonathan Whittle, co-founder of Quona, said in an interview.
The investor added that in the last year and a half, the sector has had a “reality check” and although the title of ‘unicorn’ was used as a strategy of marketingnow the focus is on the fundamentals of business, that is, on long-term profitability.
Whittle noted that much of that marketing was done by late-stage investment funds. “You have to distinguish between those of us who invested in early companies and helped them grow and those who in the bubble were frankly doing some things that, in retrospect, we considered pretty crazy,” he said.
Quona considers himself a patient investor, that is, he expects a return between four and eight years as long as he complies with three principles:
1. That the company demonstrates that there is a market for its product.
2. That the product generates a good profit margin.
3. That the company is very clear about how much money it will need to achieve its break-even point.
The co-founder said that while some of the companies he invests in are making losses, this is on purpose due to rapid growth. “Many companies in our portfolios today are either near breakeven or are deliberately growing at a faster rate in order to reach significant scale, to create more value for investors,” he said.
The Konfío case
The Mexican fintech -which achieved the name of ‘unicorn’- serves the SME sector with financing and highlights that 9 out of 10 loans it grants are the first product accessed by that micro-entrepreneur. As of last month, the fintech had granted more than $1 billion in loans, according to Francisco Padilla, co-founder of Konfío.
In addition, about 30% of its clients are female entrepreneurs, a factor that is relevant to investors like Quona.
The company, which in recent months faced a crisis due to massive layoffs, arguing that they were to make the business more efficient, said after an alliance with the Inter-American Development Bank (IDB) a study was carried out whose results showed a 40% growth in business led by them.
“Interest rates can grow a percentage, but there is a real benefit for society where if it is not in Konfío, it will be difficult to find it elsewhere,” said Padilla.