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Policy Proposal: Deepening Peru's Capital Markets Through Mobile Money Markets

Updated: Feb 20, 2023

Peru's economy has emerged from the pandemic, like its challenging 20th century, full of opportunity. Peru presents an interesting market then; unlike Brazil or Mexico, VCs have largely overlooked the market despite an attractive consumer base and innovative startup landscapes.

This Peruvian paradox reflects the development of extractive financial and economic institutions which built a society around primary resource extraction. The social, economic, and political strains of this system are felt today in low finance education, political corruption, and

entrenched yet ineffective financial systems that cannot attract the same opportunities as regional peers.

Macroeconomic stability has created the conditions for an aspirational private sector still underserved by political and economic institutions marred after centuries of exploitation. Subsequent underinvestment in SMEs reflects a pernicious loop where Peruvian capital markets stay shallow due to a lack of demand while Peruvian SMEs stay small due to inaccessible capital. This dynamic exacerbates informality and inequality, leaving productive real-economy investments unexplored.

While fintech is in its fledgling state in Peru, the lack of effective financial intermediation and a supportive regulatory environment presents further opportunities.

Connecting uninvested and internationally interested capital directly to Peruvian startups can help bypass flawed capital market institutions and create the intermediary needed to connect SME demand and international capital's supply.

The Fiador platform creates this space, offering mobile-based, centralized due diligence to handle direct issuance "Micro-IPOs" from quality startups. Thus allowing public capital raises in a private market. By creating diversified financial products that are brought directly to international, domestic, and retail investors, the Peruvian stock exchange's liquidity drought is avoided while investors get high growth exposure to the nascent startup ecosystem.

Enhanced allocative efficiency then helps create a virtuous circle of more information, higher-quality investments, and more private sector capacity to generate jobs and real-wage gains.

Through gamification, education, and institutional backing, the Fiador platform can create a crutch to deepen capital markets. With relative stability, a fertile business environment, and unregulated space, Peru presents an ecosystem for experimentation in alternative capital markets solutions to enhance allocative efficiency and provide profitable, pro-social value for the country's engine of employment.

Read the full white paper here:

Fiador Platform White Paper
Download PDF • 2.25MB

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