Creci Founder Andres Idarraga on Expanding Social Impact Investment Opportunities

Creci (pronounced kreh-see) is a play on the word “to grow” in Spanish. Growth is an important part of what brought me to Creci and what we are trying to do with the company.  

In sum, Creci is a fintech company that mobilizes funds from social impact investors, currently from the United States, to provide credit products to businesses and entrepreneurs in the Americas that are pursuing at least one of the United Nations’ Sustainable Development Goals (SDGs), which serve as our benchmark for impact. 

We aim to be the first social impact neobank for the Americas, offering a suite of financial products that incentivize and reward investors and enterprises that, respectively, have social and environmental goals at the heart of their investment goals and business models. We offer investors a fixed rate return on their impact investments. For qualified businesses that track, measure, and report their positive impacts through our proprietary social impact tool, we offer interest rate rebates and other rewards on our financial products. 

We believe that tying the price of financial products and services to the advancement of these goals, as Larry Fink has stated, will lead to a “fundamental reshaping of finance.” Our impact investor platform is here. Our credit side platform — which is only for companies in Colombia at the moment, our initial credit side market — is here. 

I am passionate about the expansion of equitable and sustainable economic opportunities. This passion combines my personal, academic, and professional interests. I have had the privilege and luck of living many lives in one. I have experienced poverty, incarceration as a young man, elite levels of education, and prestigious professional settings, and all these experiences collectively led me to founding Creci. 

After graduating law school, I was focused on first establishing a financial foundation for my family, with the goal that once I had achieved some measure of that, I would work on projects that furthered my passion noted above. This led me to working at a top-tier US law firm, where I worked on securities, antitrust, and other complex litigation matters. I then became the general counsel of a fintech company. After a few years at the fintech company, and with the support of my family, I decided to take the leap and founded Creci.

I believe equitable and sustainable economic opportunities are a key pillar of healthy and vibrant communities. And at Creci, we dearly wanted to play a role in expanding these opportunities by channeling capital from impact investors to companies that are working to better their communities and the world.

The companies we are looking to support lack… 

• Access to credit products 
• Easy ways to report and profile the impact they generate. 

In Colombia, approximately 62% of small businesses lack access to credit products, which translates into an approximate credit need of $35 billion. When considering all of Latin America, the credit need is as high as $250 billion. In the US, the credit gap faced by small businesses is estimated to be between $87 billion and $465 billion. 

Notably, more than 80% of these small businesses are pursuing or have the potential to pursue at least one of the SDGs, our benchmark for impact, but they lack easy-to-use tools that allow them to identify, measure, and report their impact. We believe that if they had these tools to better profile the positive impact they generate, small businesses could attract funding from the 85% of investors and 95% of millennials who state that they want to invest for impact and financial return.  

I began working on the idea for Creci with Veronica Pena, a colleague from a previous company where we both worked together, and Carlos Ruiz, a childhood friend from Central Falls, Rhode Island who is a software engineer. Veronica was a co-founder. She was passionate about microfinance and economic development, having worked in these areas in both Latin America and Africa. Unfortunately, she unexpectedly and suddenly passed away from a blood clot in her lungs. Carlos is a skilled software engineer whose experience had previously been focused in the healthcare and human resource spaces, including at early-stage companies.  

After Veronica’s passing, I recruited another co-founder, Pravin Rodrigues. He is one of our initial investors and advisors and has experience with large-scale transformation initiatives — including environmental, social, and governance initiatives — in the financial services sector, including for the Royal Bank of Canada, TD Bank, Scotiabank, and IGM Financial. In addition to an MBA, he also holds a master’s degree in sustainability leadership from the University of Cambridge in England.

We also recruited the head of investments from a well-known pension fund to manage our risk and data analytics models and another top flight technical person who previously worked at a large airline to help us develop our technology infrastructure and processes. In total, our team consists of 14 people, 10 of whom are full time.

Morgan Stanley reports that 85% of investors and 95% of millennials want to invest for impact and financial return. But it notes that one of the obstacles for adoption is the limited products and solutions available to satisfy investor demand. We think there are two reasons for the gap: 

• Current products are repackaging traditional large companies as impact companies.
• There are barriers for small investors to participate in alternative impact investing products.  

At Creci, we are transforming those two areas by first positioning small businesses that are measuring or committing to measuring that impact as an impact investing opportunity and by secondly using crowdfunding legislations to allow retail investors to participate in impact investing, which for alternative products would be restricted to only accredited investors.

We have direct competition from two angles. The first is from other debt crowdfunding platforms where investors can earn a fixed return. The other is from credit product providers to small businesses. Our main differentiator on both sides is our impact focus.  

On the investor side, we aim to appeal to the 85% or more of investors who want to show their impact values through their investments. We provide our investors with a dashboard that shows the performance of their investments and will soon add reports about the impact generated by our portfolio.  

On the credit side, through our cost structure and rewards programs, we want to incentivize businesses that are doing good to do more good. For example, we provide interest rate rebates for the timely provision of impact metrics and are establishing rewards programs where companies can use points to support initiatives, such as reforestation and education.

We are a debt crowdfunding platform pursuant to Regulation A+ of the Jobs Act. Our current particular offering allows us to raise up to $70 million in debt through our Creci Notes, but investors can invest as little as $10. Creci Notes pay 5% annual interest, compounded monthly and credited daily. They each have a 36-month term from the date of purchase. Investors can withdraw up to $500 or 10% of their principal and accrued interest, whichever is greater, per quarter. Our offering is live until we sell out of the $70 million of Creci Notes or in three years, whatever occurs first. At that time, we would have to set up a new offering.  

We plan to use almost all the funds raised to fund the credit products we provide to small businesses. We are able to use up to 5% of funds raised for operational expenses.

Our next hire is a senior marketing person to help us tell and distribute our collective story. I think we have a unique solution for impact investors and impact businesses. And we also have compelling reasons for why we founded the company and for where we are going. Someone who can help us tell and get an audience for the above will be key for our growth. 

The most challenging moment for me was the unexpected death of my initial co-founder, Veronica Pena. Her death knocked the wind out of my sails. As a company, we had to do a few things. First, we needed to make sure Veronica’s family — she left behind three children, including a newborn, and her husband — was okay. I am proud of the way Creci and our supporters rallied around her family. We were able to support them financially and emotionally. 

Second, our company rallied to cover the significant hole she left until we were able to recruit another co-founder with complementary skills. We could have easily failed as a company during this time, but we did not. 

Creci to us is both an opportunity to create a successful, profitable company and a passion play. We believe that individual investors and the capital markets at large have an important role to play in determining whether impact projects get funded. That includes investors reading this.

For immigrant founders, as is the case for all founders, being able to establish broad and deep, diverse networks where you can mine talent and funding is critical. People who grew up with wealth or in highly educated households and communities have these networks by default, for the most part. Many immigrants will not have these networks, so the grind of trying to establish a company will be much harder. 

Oftentimes, entrepreneurial immigrants may be the safety net for their families, which makes entrepreneurship even more perilous. Fortunately, we see venture capital and other investors searching wider and farther for investable projects. We also see a great deal of talented young men and women looking to work on interesting projects.  

My advice, in a nutshell, is to be strategic and relentless in building these networks.