SCG556-Afflore and Polymath Ventures

SCG-5 56
Revis ed J uly 3, 2020

JEREM Y B. DANN
DANIEL P AREDE S
Aflore and Polymath Ventures:

Two Sides of the Coin
“C
umpleanos feliz, te deseamos a ti…” The lyrics of “Happy Birthday” could be heard
throughout Aflore’s offices. Ana Barrera rushed into the conference room just as Rosa was
blowing out the candles on her birthday cake. Barrera would have liked to have been there
for the whole song, but as the CEO of Aflore, a financial services startup built for Colombia’s unbanked
and its rising middle class, it was hard to cut short a conversation with a venture capitalist.
Birthday celebrations had been more frequent at Aflore over the last year: more loans and more
growth opportunities meant more employees and more birthdays. Barrera looked down at the
conference table as 20 or so teammates began to take their slices of the birthday cake. She chuckled as
she realized the cake itself was a symbol of the company’s progress in its five years of operation.
The birthday cake had been baked by a woman named Marta

Milagros, a recipient of a loan from Aflore and also an “Informal
Advisor” in the company’s grassroots marketing, direct sales and
service network. A recent retiree who wanted to launch a small
business, Milagros used the $500 loan from Aflore to buy a blender
and other equipment that she utilized to create her cakes and pastries.
She became a frequent provider of treats for birthdays and other
celebrations at Aflore.
As Barrera finished up her small slice of cake, she looked at her

watch. In a few minutes, she and her chief operating officer and
cofounder, Manuel Jiménez, would need to brave Bogotá’s intense
traffic and head to the office of Polymath Ventures. Polymath, a
startup incubator, had six years earlier developed the concept that
would become Aflore and began the process of building the business.
Undoubtedly, Polymath’s Founder and Managing Partner Wenyi Cai
would be very curious to know how the conversation with the outside venture capitalist went.
Fundraising was a consistent concern for Polymath and its family of eight ventures since Polymath did
not possess a large, standing investment fund.
Barrera and Jiménez ordered a taxi cab affiliated with Táximo, one of Aflore’s sister ventures within
the Polymath portfolio. In an hour they would be meeting with Cai, Polymath partners, and other
portfolio company founders to discuss cross-cutting issues affecting the portfolio companies. Barrera
gathered her materials and looked into Aflore’s conference room as she exited the office. She considered
bringing the remaining cake to the meeting at Polymath, but realized there would not be enough for
everyone.
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SCG-556 Aflore and Polymath Ventures: Two Sides of the Coin
Polymath: Building the Business Builder

Wenyi Cai was born in Hangzhou, China, but moved to the suburbs of Chicago, Illinois in her youth.
She attended Harvard College where she concentrated in physics. However, she was also drawn to the
study of philosophy, which, like physics, formed a strong base from which she investigated other
subjects. “Philosophy and physics are built on ‘first principles’ [a calculation or argument is said to be
from first principles when it begins with established evidence and does not make assumptions] and you
don’t take shortcuts. So, the foundation is very solid and you know how every piece builds up,” Cai
remarked. One of her formative experiences at Harvard was her work on an arts and culture publication
called Tuesday Magazine. Cai observed how “hybrid thinkers” on the staff would apply concepts from
their diverse disciplines to address problems in untraditional ways.
Following her graduation, Cai worked for the consulting firm McKinsey & Company, mostly in the
Middle East, Africa and South Asia. In 2009, at the height of a recession, she moved to Silicon Valley
and joined Milo.com, a company focused on local product search. She rose to the position of chief
operating office at Milo before the company was acquired by eBay in late 2010.
Cai enrolled in Harvard’s John F. Kennedy School of Government in 2011 to pursue studies in public
administration and international development. During her return to Harvard, she developed a concept
for a “venture studio” that would originate and foster new businesses serving the emerging middle
classes in developing economies. Along with classmates in the program, she honed a set of
methodologies that, according to Cai, “mirrored scientific processes.” Cai dubbed the nascent firm
Polymath, a term meaning “a person of great learning in several fields of study.”
Cai and her classmates analyzed emerging markets around the world in order to find the best
location for the first of the envisioned business design studios. The team eventually targeted Colombia,
which, after years of narco-terrorism and armed insurrection, was re-establishing its place in the global
economy and beginning to see the return of an educated diaspora of business professionals (see
Exhibit 1 for Colombia economic and demographic statistics).
In June 2012, Polymath was launched. Cai committed $600,000 to the new endeavor and recruited
a core team of three Colombians and six expatriates. Among the original team members was Craig
Edelman, an alumnus of the Kennedy School with experience in social enterprises and international
business. “It was a week from my first conversation with Wenyi about the opportunity to the ‘Hey, you
should fly down to Colombia to try this thing out’ conversation,” Edelman recalled. “We were in a huge
former narco pad. The whole team was bunking there together and I ended up sleeping on the pool
table. We weren’t getting paid—it was purely a ‘room and board’ situation as we tried to get this going.”
Edelman and his new colleagues/roommates began working on transportation concepts and a
grassroots finance idea that would eventually grow into Aflore.
Prof. Jeremy Dann, Lecturer in Entrepreneurship and Director of the Case Program, and Case Fellow Daniel Paredes
prepared this case. The development of this case was supported by a grant from USC Marshall’s International Business
Education and Research Program (IBEAR). This case was developed from field research and published sources. Cases are
developed solely as the basis for class discussion and are not intended to serve as endorsements, sources of primary data or
illustrations of effective or ineffective management.
Copyright © 2019 Lloyd Greif Center for Entrepreneurial Studies, Marshall School of Business, University of Southern
California. For information about Greif Center cases, please contact us at greifcases@marshall.usc.edu. This publication
may not be digitized, photocopied, or otherwise reproduced, posted or transmitted without the permission of The Lloyd Greif
Center for Entrepreneurial Studies.
Aflore and Polymath Ventures: Two Sides of the Coin SCG-556
Polymath’s Process
As the new team researched potential ventures, they refined a business-building method that would
become the core of Polymath’s activities for the next several years. Cai and the team foresaw a process
with four main stages: Seed, Redesign, Acceleration, and Fundraising (see Exhibit 2 for a description
of Polymath’s business-building methodology). During the Seed Stage, the team utilized ethnographic
research and Human Centered Design (also referred to as “design thinking”) to create concepts in the
segments of the Colombian economy they thought would expand dramatically with the growth of the
country’s middle class. After identifying a few leading concepts, Polymath would then conduct
preliminary tests in the marketplace using “lean startup” techniques. The team sought to validate or to
disprove their initial hypotheses and gain additional insights which could lead them to generate even
more concepts in the same markets. For example, Polymath’s first market test in the transportation
sector involved services for commuters on Bogotá’s crowded mass-transit system. After finding that
this business idea didn’t resonate and actually reinforced some of the negative aspects of commuting,
the team shifted its focus in the transportation sector to a concept that would eventually become a taxi
management business called Táximo.
Polymath planned to group its ventures into cohorts or “Labs” based on the time of their founding—
in part for fundraising purposes. Táximo and the nascent Aflore—a company several months behind
the transportation concept in its development—were grouped into “Lab I” in 2013. In the following year,
Polymath launched VincuVentas (an employment agency), Autolab (a car repair business) and KIDU
(an after-school education center) as a part of Lab II.
While Polymath’s young—often international—staff members conducted much of the early stage
ethnographic research and advanced the strategic thinking around prospective ventures, outside
executives and managers were usually hired once the concept reached the execution stage. Polymath
sometimes utilized the deep domain knowledge of experienced professionals from the sectors being
researched via a model similar to an “entrepreneur-in-residence” system, often employing these
executives on a part-time basis.
Even as Polymath nurtured fledgling business ventures, it also needed to build out its own
capabilities as a firm. Noting the dearth of legal, accounting, finance, creative and technical services in
Colombia geared toward the needs of startups, Polymath developed a Shared Services group internally
that could support all of its ventures. Once a business reached a certain scale and its needs for a service
like accounting or HR expanded, it could hire its own manager for that functional area. For a time, Cai
and her team even considered growing the Shared Services group into a full-fledged company that could
offer its expertise to what Polymath hoped would be a growing ecosystem of Colombian startups.
Polymath set that idea aside in 2016.
Cai and her partners also faced some hurdles as they sought to build up Polymath’s staff. In its first
few years of operations, expats represented a disproportionate percentage of Polymath’s employees.
The workplace language was English and around 50 percent of the staff members spoke English as their
native language. The majority of those within “Polymath central” who investigated potential new
businesses were expats. They often had experience in e-commerce, management consulting,
investment banking, or design. The majority of native Colombian employees performed support
services for the new ventures. Friction about this divide grew when a major devaluation in the
Colombian peso led to a cost of living pay adjustment for the expat staff, most of whom still incurred
expenses in their home countries. Some of the local hires started to perceive a “glass ceiling.” Polymath
fought this perception by instituting a mentor system and an ambitious training program—unusual for
an early stage firm—in order to advance the careers of its Colombian employees.
School is in Session
After launching two ventures in 2013, Polymath initiated three new businesses in the summer of
2014. Among these was KIDU, an afterschool education and childcare program envisioned as a solution
for families within the rising Colombian middle class. Compared with the US and many other developed
economies, Colombia possessed a scarcity of after school programs like those sponsored by YMCAs and
other types of organizations. This gap in care was usually filled by grandparents or caregivers within
the informal economy. Polymath developed an educational program that emphasized “21st Century
Skills” such as empathy, confidence, tolerance and creativity.
Parents could purchase a three day per week plan for $90/month or a six day per week plan for
$160/month. The service was designed to be targeted toward rising middle-class parents making the
equivalent of $10,000-20,000 per year.
“I was really attracted to this model from very early on and I also saw the value from a social impact
perspective. It would be really attractive to the growing number of working women,” said Carlos de la
Pradilla, a founding partner at Polymath and former private equity investor in Spain. Spanish private
equity focused mostly on larger companies and very traditional “basic needs industries,” according to
de la Pradilla; he was excited by the opportunity to focus on more novel, technology-enabled business
models. He paid special attention to the new education venture: “I was confident enough to put my own
money in alongside Polymath’s money in the early days.”
Polymath created a trial KIDU location in an upper middle-class neighborhood in Bogotá. In its first
full year of active operations, the first KIDU location did not illustrate that it could achieve long term
profitability. After solid results with a summer program, KIDU retained less than 50% of its customers
as the school year started and was converting only 4% of its qualified sales leads. The average family
relied on KIDU services only 2.3 days/week.
As the Polymath founders pondered the disappointing results, they zeroed in on a few explanations.
First, the new venture was hindered by a repeated turnover in leadership, with three individuals
occupying the top post in the first year and a half of operations. Second, the location selected didn’t
prove to be the best testing ground for the service Polymath imagined, one geared toward the rising
middle class. The upper middle-class neighborhood chosen was populated with families with different
concerns than those originally targeted in the plan. Third, KIDU also ended up receiving a higher
population of children with learning disabilities than the team originally foresaw, a development which
challenged the teachers and caregivers on-site. Finally, parents had trouble understanding and seeing
the value in the original “21st Century Skills” pedagogy KIDU was promoting.
After some adjustments, Polymath decided to not pull the remaining funding committed to the
startup—several hundred thousand dollars—and to support KIDU for a second year of operations.
During the second year, many of the key metrics showed marked improvement. KIDU increased its
monthly retention rate to over 90% and the average number of days of enrollment rose to 3.5
days/week. Conversion rates for qualified sales leads quadrupled to almost 17%.
Despite the improvements, Polymath’s leadership chose to terminate its work on KIDU after just
over two years of operations. Polymath sold the education center to the director of the facility and it
was still in business as of the beginning of 2019. “The value of the investment essentially went to zero,”
de la Pradilla stated. “The purchasing power among the [customer] group we were ideally targeting just
wasn’t there. Plus, it’s hard to build something with so many competitors to the business model in the
informal economy.”
De la Pradilla also noted the challenge of building a very “brick and mortar” business with the
Polymath model. “We didn’t build an experimentation platform with the flexibility required to test more
things. Getting trapped into a location with these demographics limited the capability to test more
alternatives,” he asserted.
“The assumptions we made during the design process about profitability and scalability turned out
to not be true. We were still getting the niche in the middle income that were the most demanding
users,” Cai noted. “And for the biggest part of that segment, it wasn’t easy to supplant the main scenario
of ‘leaving the kid with grandma.’” Still, Polymath’s research and operational work on KIDU produced
knowledge of Colombia’s growing population of working women that the leadership team believed
would continue to bear fruit. “The work was definitely not thrown into the garbage! We could transition
it to other business models,” de la Pradilla said. “Elenas [a marketplace and social media-based network
of women selling cosmetics] grew directly out of what we learned from KIDU about these working
women.”
Aflore: From SEED to Blossom

Intrigued by the estimate that over half of all Colombian adults weren’t using formal financial
services (see Exhibit 3 for comparative country financial services statistics), in 2012 the Polymath
team began conducting ethnographic research exploring the financial behaviors and beliefs of the
emerging Colombian middle class. In their research, the team discovered an overwhelming amount of
skepticism and lack of trust in financial institutions. They also discovered a strong presence of informal
local savings clubs and a large number of women acting as informal financial advisors to their friends,
family, and co-workers; these individuals were identified as embodying financially-responsible
behavior by individuals within their communities. One example the team encountered during its
ethnographic research was a hairdresser who worked at a Medellín country club; this woman had
managed to purchase two apartments and a bus on a very modest monthly salary. “You could see the
way the other girls in the salon went to her for advice and how they treated her,” Cai recalled.
Recognizing the value of the role that these (mostly) women played in their communities, the Polymath
team decided to use these insights as the foundation for a venture in the consumer finance sector.
Finding a Founder
Hesitant to formally launch a venture without having the right founder in place, the Polymath team
first engaged a local headhunter to help find a CEO for the nascent effort. This proved difficult, however,
as the team interviewed over twenty men with experience in banking, but came across few with the kind
of “outside-the-box” thinking they were looking for. “None of these guys really understood the core
innovation of Aflore,” Edelman remarked. “They were just not the right type of thinkers or doers that
we needed. For us to succeed, we felt that we needed to find someone who could build a whole different
way to reach the middle class. Our thesis was: ‘it’s about trust.’” Then, in the Spring of 2013, Antoine
Dumit, CEO of Polymath’s portfolio company Táximo, heard Ana Barrera give a talk at a McKinsey-
sponsored event in Bogotá about “Hybrid Value Chains”—business models that reach potential
customers at lower income levels in more effective ways. After learning more about Barrera, the
Polymath leadership felt they might have a good candidate for the founding team of Aflore.
A Colombian-born graduate of La Universidad de Los Andes in Bogotá and the London Business
School, Barrera began her professional career working at the trading desk of the Colombian National
Coffee Federation and eventually moved to London to work at Lehman Brothers as an interest rate
derivatives structurer. Following the bankruptcy of Lehman Brothers in 2008, Barrera joined Nomura,
a Japanese bank, where she played a role in the company’s European expansion. Although she enjoyed
the many entrepreneurial aspects of her job, Barrera began to look for opportunities to deliver more
impactful financial products. Barrera recalled, “I quit my job without knowing exactly what I wanted to
do. All I wanted was to find an opportunity to combine the experiences that I had in finance to deliver
products that have more impact on the people that don’t have access to financial services.” In 2011, she
decided to leave Nomura and moved to the Philippines to help build a friend’s company in the
small/medium enterprise lending arena. Eventually, she received a job offer to work with Ashoka (a
well-established organization supporting social entrepreneurs around the world). This, however, was a
somewhat frustrating experience for her. “I was not suited for working at an NGO. I felt more
comfortable talking about investments rather than asking for grants,” she stated. After meeting with
the Polymath leadership team and learning about their methodology and vision, Barrera decided to join
Polymath as a part-time consultant helping analyze the feasibility of their embryonic financial services
concepts.
Preparing the Ground

During her first couple of months affiliated with Polymath, Barrera played a pivotal role building on
the initial findings of the Polymath team and honing in on a viable business model for a grassroots
consumer finance concept. To augment the research and high-level strategy developed earlier by
Polymath, the nascent Aflore team, which included Barrera, a Polymath partner, and a junior associate,
took to the field to speak with potential local financial advisors for their network. They wanted to test
the value proposition and confirm whether it would be feasible to build a robust network of grassroots
“Informal Advisors” (IAs). Having worked for most of her career in the “macho,” “cowboy” banking
culture, Barrera initially found it difficult to work on an initiative that involved so many women.
All of my professional life before Aflore, I was working in an all-male environment

and I was used to it. I didn’t know any better. For 10 years working in investment
banking, I was the only girl on the team. In the beginning with Aflore, it was a
challenge because all of a sudden, I was working in an environment that was 99%
female and, quite honestly, I realized that I didn’t even know how to relate to
women because I had only dealt with one kind of relationship.
Making a “conscious effort” to develop a more “empathetic” and “relatable” management style,
Barrera built a small network of three IAs. Together, they began testing a variety of savings, lending,
and insurance products while refining communication strategies that allowed Aflore to establish trust
and legitimacy within local communities.
A Complementary Cofounder
In late 2014, Manuel Jiménez—a Spanish-born expat living in Colombia with over fifteen years of
operations and analytics experience in banking—reached out to Polymath. Jiménez, who received his
MBA from the Instituto de Empresa in Madrid, was the VP of Sales of the Falabella Bank in Bogotá
where he was leading a 1000-person sales team. “It was originally my dream to become a VP of Sales at
a Bank like Falabella, but I felt that I was missing something,” he commented.
Possessing a long-time interest in entrepreneurship, Jiménez was intrigued when he found out
about Polymath via Internet research. He believed the firm’s incubation model might help him
transition to a more entrepreneurial career. He noted, “It was very difficult for me to start something
from scratch when I was in my corporate career and had so many responsibilities.” Jiménez had a series
of conversations with the Polymath leadership team about becoming a consultant for VincuVentas, a
Polymath venture in the human resources sector. However, the Polymath team decided to introduce
Jiménez to Barrera and quickly realized that their complementary skill sets and interests could help
Aflore overcome some of its most pressing challenges. Recalling this decision, Edelman noted,
“Essentially we are a talent organization. We bring talent together and get them to figure out how to
identify issues and find and capture opportunities.” For the next seven months, Jiménez worked part-
time on the weekends and during his vacations. He focused on developing processes and systems that
could help the venture scale. In October 2014, Jiménez agreed to a substantial pay cut and formally
accepted the opportunity to join Aflore as the chief operating officer.
Cultivating a Company: The Care and Feeding of a New Venture

Fundraising: Not Fun
Initially, Polymath allocated $200,000 to the design phase—the SEED process—and early
operations of Aflore. Though Polymath itself funded ventures through their earliest phases, additional
outside funding was required before the new companies could scale. Polymath leadership and the Aflore
team initially looked to tap venture capital firms, family offices and high net worth individuals for
additional funding. Edelman recalled the challenge:
It took us twelve months to raise our first financing round for Aflore, which is an
enormous amount of time. An issue in the market in Colombia is that capital is
overvalued. The opposite is happening in Silicon Valley where people are actively
investing and there is so much capital that the capital is not worth as much. But, in
Latin America, where there is not enough capital, you have these large family
offices that are used to putting in $300K [$300,000 in USD] and getting 70-80%
of a company.
The venture’s focus on financial services also made the investment round difficult. Aflore was in an
industry that was not well understood by many Colombian angel investors, according to Edelman.
These difficulties were compounded by scandals at the time in Colombia involving taxi financing,
payroll lending, and debt instruments, de la Pradilla noted.
De la Pradilla played a key role in the team’s fundraising efforts. He remarked that the tasks involved
were demanding an inordinate amount of time from him as well as Barrera and Jiménez. “From an
operational and business model perspective, the company’s development was slowed dramatically
because of the leadership’s need to be focused on fundraising,” de la Pradilla stated. Aflore fell well
behind its projections on customer acquisition and loan origination. During this delay, Barrera and
Jiménez developed an operational strategy so that as soon as the money came in, they would know
exactly how many people to recruit, how to train them, and what early milestones they needed to
achieve. The duo was intent on making up for lost time. Early in 2017, the team closed a Series A
investment from Fiinlab, the “innovation lab” of Gentera, a Mexico-based financial institution
specialized in banking and credit services. De la Pradilla also made an independent investment in
Aflore.
Sibling Rivalry?
As soon as the company closed its financing round, it ramped up its operations. “Before the round,
we were sitting at the Polymath office, but as soon as the money came in, we really focused on
executing,” Barrera recalled. This extreme focus on rapidly gaining ground caused some friction with
the extended Polymath family, however. Barrera noted:
They felt that we left them behind and that we weren’t involving them in our
decisions. They had the perception that we were becoming completely independent.
At the time, we were being asked to be involved with Polymath’s problems, but we
didn’t even feel we had any information to be useful.
This tension had been a minor, but noticeable undercurrent within the Polymath ecosystem for a
while. During the first several months of Aflore’s operations, most of Polymath’s resources were
committed to Táximo. Barrera remarked on the simmering dissatisfaction:
I remember having the feeling: “Why do I have to start off by myself while my ‘older
brother’ [Táximo] is getting more benefits?” But I began to understand. Polymath
itself was also a start-up. It’s not that Polymath was a mature “parent.” In a lot of
ways, they faced the same problems that we faced on a day-to-day basis, but the
type of relationship we had was as if we had a very mature parent while at the end
of the day, we were both start-ups.
Following a candid conversation with Barrera, the Polymath leadership team responded by investing
more human resources into Aflore, which provided valuable “brainpower” to solve key problems at a
crucial stage in the company’s development. Additionally, Polymath began to explore ways they could
better communicate with venture founders and leverage their expertise.
Cash Conundrums: Delinquent Payments and Collections

During the early days of Aflore, the team had to decide how to deal with delinquent payments. At
first, the Informal Advisors were used as the main collections channel and delinquency hovered around
3%. This was significantly lower than most traditional microfinance institutions in Colombia, which
usually experienced delinquency rates around 11-12%, according to the Aflore team.
By 2018, as the network of Informal Advisors scaled up, Aflore’s delinquency rate also increased, to
a level of 9%. To address the rising delinquency rates and the pushback from IAs about having to engage
in difficult conversations with loan recipients, the team decided to outsource the collections to an
independent collections agency. “This was a mistake,” Jiménez recognized, noting how this decision
“damaged the trust” that the organization had managed to establish within communities. In response
to this, Aflore quickly moved away from this strategy and built an internal collections team to call, text,
and then visit loan recipients whose payments were delinquent. The IAs would thus exclusively serve
as a source of information to help the internal team understand problems that the loan recipients were
facing.
Letting a Thousand Flowers Bloom: The Effect of Aflore

Since its founding, Aflore had recruited just over 19,000 IAs and considered approximately 6,300
as “active” as of early 2019. The company and its network of IAs had attracted around 13,500 clients
and disbursed 18,600 loans totaling over $11 million. Approximately $3.3 million in loans were
currently outstanding. While some smaller amounts had been distributed, in general the company
sought to keep the low end of the lending range at approximately $300. Other financial products also
contributed to Aflore’s impact. According to the company, since Aflore started marketing insurance
products, around 60% of its lending customers also purchased some form of insurance (see Exhibit 4
for key Aflore performance metrics).
Beyond the metrics of customers served and loan volume, Barrera liked to reference the stories of
customers and (especially) IAs as evidence of the impact Aflore was having. While canvassing during
an early recruitment campaign for IAs, the Aflore team came across a man and a woman who seemed
interested in the new service. “We were giving away piggy banks as a promotion for anyone who would
take our short screening quiz for Informal Advisors. We really wanted to talk to the woman, but the
man wanted a piggy bank, so he took the test, too,” laughed Barrera (see Exhibit 5 for IA recruitment
materials and Exhibit 6 for the IA screening quiz).
The man, named Wilson, told the team he would like to take the loan products to his neighborhood,
where he was convinced they could have a tremendous impact. “He was from a very tough
neighborhood and Manuel told him that we didn’t plan to send Aflore employees or IAs into that area,”
Barrera remarked. “But Wilson started calling Manuel every day and even coming to the office. When
he promised that he would personally deal with any past due loans in his neighborhood, we agreed.” It
turned out that Wilson was a homeopathic doctor and very well-trusted in his community. In total, he
had generated over 100 loans as of March 2019. “He just told me, ‘I don’t even remember how much
money I’ve made, I just remember the people I’ve helped,’” said Barrera.
Another major player in the grassroots network was Mery, an IA, IA recruiter and, later, a borrower.
“She’s the classic woman neighborhood leader,” Barrera remarked. “She has many professions and
manages her household. She knows everyone in the neighborhood.” Mery lived in a three-story
structure, devoting one floor to the residence, one floor to a rentable event space and one floor to a
small gym equipped with stationary bikes and other workout machines. “She works at the front desk of
the gym, so she sees people coming through all of the time. She can keep up to date on their businesses
and families,” Barrera said. Mery had originated almost 50 loans for Aflore, but also tapped into the
loan program herself, financing new fitness equipment and gaining an education loan for her child.
Barrera also liked to recount the story of the very first loan Aflore even disbursed. “Jenny was only
in her late teens when she moved from the countryside to Bogotá. She had been working as a cleaning
lady and had always been paid in cash in the informal economy, so she was never able to get a loan from
a bank even though she was this super-organized, effective person,” Barrera remarked. Since the first
loan, Aflore lent Jenny funds four more times and all of the loans were repaid on time. Most recently,
Jenny and her husband took out a small loan so that the husband’s bicycle repair shop could purchase
some common parts in bulk. The reduced costs for parts led to greater profit margins for the bike shop
and a quick repayment of the loan.
The Money Model

Loans from Aflore usually accrued interest at a rate of 30% per year. While that level was higher
than typical bank loans for traditional customers, it was much lower than the 5-10% monthly rates that
Aflore’s typical borrowers might be offered from players in the formal and informal financial industry,
including microfinance organizations. Aflore’s average loan size was the equivalent of $850US and the
company’s main loan product had no origination fee. Unlike some companies catering to smaller
borrowers, Aflore did not charge early repayment fees. Aflore had found the average length of the loans
to be approximately 20 months until payback. “Early payback in a few months is rare with this
demographic. The real value is in the relationship—this is not viewed as a one-time loan,” Barrera
noted. “If businesses start to grow, they come in for ‘top offs.’ And if they are doing really well, the loans
start to grow.”
For clients with higher risk profiles and/or a dearth of information, Aflore could still offer a loan—
one backed by an insurance policy the borrower signed on to. The borrower was charged a one-time fee
of 20% of the requested loan amount and this extra cost was added to the outstanding balance and
subject to interest accrual until the loan was repaid.
Aflore had also started to use its network to market insurance products (selling products originated
by established underwriters). The company marketed low-cost life insurance as well as other products
tailored toward the needs of the Colombian working class and rising middle class. One offering provided
policy holders an income for every day of work they missed due to illness, up to 30 days a year. Aflore
also sold accident insurance due to Colombia’s requirement that all vehicles be insured; motorcycle
coverage was particularly popular among the venture’s core customer group. Recently, the company
had begun selling pet insurance. “One of our IAs told me about how she had to spend four times her
monthly salary when she took her pet to the veterinarian. Vet care is major commitment for people with
the incomes of our main block of customers,” Barrera remarked.
Aflore customers made payments on loans and insurance products via payment networks accessible
through major convenience store chains and even many “mom and pop” operations. Customers could
wire their remittances with no additional charges.
The company’s network of Informal Advisors received compensation for many activities in the realm
of financial services and company building. IAs earned 1% of any loans they originated at the time of
the borrower’s first interest installment and then received 2% of the original loan amount per year as
long as the account was open. Aflore IAs also received a commission for the insurance policies they
originated, taking in a percentage of the premium (often a significant amount since many premiums
were required to be paid up front). Building and replenishing the network of IAs was extremely
important to Aflore and it rewarded the IAs who helped in that effort. An IA could earn the equivalent
of $3 for every new advisor he or she signed up and $20 when that person originated an initial loan.
Some IAs showed particular ability to recruit and train new members of the network—Aflore had
dubbed these individuals as “Leaders.”
Informal Advisors were paid by Aflore via a mobile phone equipped with a digital wallet. They
received points for all of their activities within the Aflore network and these points could be converted
to cash, used to pay for cell phone bills and/or applied toward the purchase of merchandise below retail
prices. Many IAs also accrued prizes for high achievement during targeted Aflore monthly or quarterly
campaigns. The company partnered with another firm with an existing platform to handle the incentive
program. “We’ve offered Colombian soccer team merchandise if they train a certain number of hours
per month. We might take our top ten IAs in the city out to a very nice restaurant,” Barrera commented.
“Sometimes the little recognitions and the prizes are the things that can make people the most
motivated and engaged.”
Polymath: Growing and Learning

As its family of ventures continued to grow, Polymath continued its attempts to expand and refine
its operations.
New Frontiers
“We have essentially been building a Mexico City office for two years,” Cai remarked. “It’s been tough
to build momentum for it.” Polymath initially sent a principal (a position junior to a partner) to build
up its Mexican presence, but that individual left soon thereafter to return to his home in Europe.
Following that, a new partner was sent to spearhead the effort, but the Mexico expansion effort still had
trouble gaining traction. Cai also believed that because the firm had sought to launch the Mexico City
presence “on a shoestring budget,” it was difficult for the new office to gain a critical mass of committed
team members and become self-sustaining. More recently, one of Polymath’s most experienced
partners had been leading the effort to build the Mexican outpost. Cai noted that his deep experience
was key to recent progress with potential clients and team members in that region. “Transferring that
culture and getting the ‘cultural engine’ going for a new office is really, really hard. It’s been painful, but
we are finally gaining some momentum,” she said.
In 2016, Polymath launched an office in Shanghai, China. Though Polymath started new SEED
processes there, the firm did not end up launching any new businesses. It suspended business-building
activities after one year. According to Cai:
We were not able to recruit the same caliber of founders that we had in Latin
America. We probably had overemphasized how much [business-building]
methodology mattered. Our ‘foundational strength’ in Latin America has probably
been our ability to attract really talented people at both Polymath and the venture
level. It’s super hard to be a first-time entrepreneur in Latin America in terms of
knowing what to do and capital raising; our value proposition has resonated. In
China, we were just not able to do that.
10
China had built up a much more significant venture capital ecosystem than had Latin America, so
talented entrepreneurs usually did not need the help of a firm like Polymath to gain early stage funding.
“While the GDP of China is something like 2X that of Latin America, there is something like 80X the
level of venture investing there,” Edelman asserted. “It helps when a group like Polymath can raise a
fund for Latin America rather than entrepreneurs trying smaller individual raises.” As of early 2019,
Polymath maintained a small presence in Shanghai, in large part geared toward tapping into China-
based funding sources.
Polymath had raised a total of $27 million in support of the ventures it launched during Labs I and
II. In Fall 2018, it announced plans to plans to raise a $100 million fund to back the growth of startups
throughout Latin America.
The Parent and the Portfolio: Who’s Helping Whom?

All of Polymath’s ventures in its early years started with internal research projects. They continued
to be supported by the “mothership” via strategic guidance, support services and infusions of cash. The
staffs of Polymath and portfolio ventures worked hand-in-hand. “At the beginning, people from
Polymath were sitting with us all the time, working with us every day on all of our plans and operations,”
Jiménez noted. “But by mid 2015, we were needing much less from them on the day-to-day operations
and they were moving toward being more of a strategic advisory body.”
He added: “We had more knowledge about what we were doing and had the vision, so the
relationship with Polymath became more transactional. ‘Can you help us with this specific problem?
Can you help us hire this person?’”
Barrera remembered it as a time of optimism around the fledgling finance company. “Things at
Aflore were going very well and we were really rolling,” she stated. “But there were beginning to be some
signs of friction with Polymath.”
With Aflore’s increased self-sufficiency, Barrera and Jiménez believed they could charge ahead with
their own focused efforts on building the personal finance business. They believed both organizations
would benefit from this heightened level of independence. “We looked back at Polymath and some of
the ventures and they were having some challenging times,” Barrera recalled. “We wondered why it
would make sense to take from their time when they were dealing with problems. We retreated, in a
way, to take away the burden.”
It turned out that Polymath, still just a three-year-old company itself, still had much it could draw
from the executives at one of its most developed portfolio companies. Barrera remembered:
I talked with Wenyi about some of the issues and she said, “It doesn’t seem like you
guys care about the group, anymore.” It made me realize Polymath needs us as
much as we need them. It was a little selfish for us and some of the other ventures
to pull back. This is when it became a real relationship and not just demanding
help from Polymath.
Cai and the other Polymath partners proposed a new coordination body that would include all of the
founders within the Polymath portfolio (see Exhibit 7 for a list of Polymath portfolio companies). They
intended to change the methods of information sharing within the extended family of ventures. “We’ve
always had cross-pollination of knowledge between the ventures within Polymath, but Polymath was
always at the center, like a ‘hub and spoke’ system. It was too much of a burden for Polymath,” said Cai.
“We saw an opportunity to have more direct sharing between the ventures by forming a ‘Leadership
Committee’ and having it behave more like a matrix organization.”
11
Polymath envisioned the main executives at its various ventures gathering not only to share
information, but also to collaborate on key initiatives. The company founders would work together in
committees on areas like fundraising, talent management, data analysis and other priorities. They could
also talk about potential synergies and joint ventures for concurrent entries into new markets like
Mexico. Jiménez found significant positives in the new leadership body. “We had a lot to share with
each other about the professional and personal journey. It was good to go back to more of a common
vision,” he declared.
Polymath’s creator believed the new structure would strengthen decision-making across all of the
companies going forward. “The relationships with the ventures have all gotten better—now it’s more
like a peer relationship,” Cai opined. “Before this, it was like trying to get your kid to respect you. Our
new setup was an acknowledgement that we are all new…we are all ventures…we are all ‘adolescents.’
We need to figure out challenges together—rather than Polymath being the one that figures most things
out.”
Decisions
Driving toward Digital
Though behind the scenes Aflore had always utilized many information technology tools to run its
financial network, the vast majority of its customer origination activities still relied on the network of
Informal Advisors. While the Aflore leadership team knew there were many opportunities to increase
the role of apps, social media marketing, and other “digital economy” tools in the Aflore service model,
they knew there were some risks.
“The business started pretty much entirely offline. Five years ago, we conducted some experiments
in Facebook, but they were a disaster,” Jiménez stated. “But now more and more of our core clientele
has smart phones and people are becoming super digital. We see possibilities, but need to have good
judgment.”
With exposure to an array of companies across the Polymath portfolio, de la Pradilla had seen the
increasing role technology was playing in a number of sectors. “We as Polymath should really serve as
the ‘trigger element’ to get the businesses to push faster toward digitalization,” he asserted. “Aflore’s
leaders are executing and sunk deep into the day-to-day. Sometimes it can be hard to see the big
picture.”
Cai noted that since digital business models were so popular with the VC set—and thus, eminently
fundable—that Aflore might face some risks if it did not start to become more aggressive in the use of
new digital communications, marketing and other tools. “There’s an opportunity to recruit Informal
Advisors and even customers through social media and other digital technologies rather than going
door to door,” noted Cai. “We think the channel Aflore has built—this network of real people—is still
incredibly powerful going forward, but some might start to question it.”
According to Barrera, as of early 2019, 50% of Aflore’s IAs were recruited through Facebook
marketing tools—so digital media tools were already well-ensconced in that portion of the business.
However, the company had not developed formal marketing campaigns for loan origination using social
media, campaigns which could diminish the central role of the Informal Adviser or take her out of the
picture altogether. “We are already getting hundreds of loan requests through our regular IA
recruitment ads on social media. We know we could convert this to a pretty effective channel for loan
origination almost immediately,” Barrera stated.
12
If Aflore began to recruit borrowers via social media and other digital business channels, could that
diminish the importance of its most important differentiator to date—established due to the original
insights during Polymath’s SEED process—the Informal Advisor network? Barrera and Jiménez needed
to ponder: should Aflore launch new experiments specifically geared toward bypassing the IAs in
customer recruitment?
An Evolution…or a Handoff?
“There’s a good side and a bad side of helping people create a credit history for the first time: you
are helping a lot of people accomplish things they could not do before…but then your clients can be
easily stolen by bigger financial institutions,” declared Barrera. Since full credit ratings required both
the positive and negative aspects of a customer’s financial history, she was also concerned that some of
Aflore’s positive social impact could be diluted. She cited the example of a printer who fell behind in
the repayment of his modest loan. Aflore agreed to receive printed stationery, forms and business cards
in lieu of loan repayment until the printer’s business could recover. Other financial institutions, guided
by the information from full credit reports, would likely not be so kind to borrowers.
As a growing venture, Aflore was under pressure to not only build the base of rising middle-class
clients, but also to figure out ways to retain and/or monetize the existing client base. Barrera was
concerned that if Aflore handed off clients to the traditional financial sector as their incomes rose, those
individuals might be vulnerable to predatory practices. “They would still just be learning many aspects
of the more formal financial institutions…I worry they would be offered too much. It could prove to be
a predatory environment for those customers,” asserted Barrera. Still, Aflore needed to develop a plan
for the clients who may be “graduating” from the type of loans and other products it currently offered—
and soon, if it wanted to attract more capital for its operations.
Designing the Deck: A New Beginning?

While Barrera and the Aflore team still had many weighty issues to work out with the business, right
now she had her own challenge: Powerpoint. The next meetings with potential outside investors were
on the calendar and she wanted to ensure that she was highlighting the most attractive elements of
Aflore’s story. Though Aflore’s presentation material had historically started with information and
anecdotes about its Informal Advisor network, Barrera wondered if it was time to adapt the
storyline.
Should information about the customer base be moved into the first section and augmented? Was
the story of the emerging middle class in Colombia and across much of Latin America something that
would grab investor attention more? Alternatively, Barrera could feature digital marketing
strategies and a possible fintech future.
Barrera and the core leaders within Polymath Ventures viewed both information technology and the
“human touch” as absolutely critical to Aflore’s future. However, fintech “pure plays” seemed to be
getting the lion’s share of attention in the current investment environment and some felt that mobile
phone-equipped consumers—even those at the base of the pyramid and the rising middle class—would
be most attracted to native digital business offerings.
Even after all of Aflore’s progress, Barrera knew that the storyline had to convince a cohort of new
investors if Aflore was to expand within Colombia and then to other countries. She pondered what part
of the Aflore narrative would be best to cultivate.
13
Exhibit 1: Colombia Economic and Demographic Statistics
Economic Performance
Year GDP (PPP) GDP (Real GDP Per Capita Gross National Unemployment
Growth Rate) (PPP) Saving Rate
2017 $711.6 billion1 1.8%2 $14,4003 18.9% of GDP 4 9.3%5
2016 $699.1 billion 2% $14,300 19.0% 9.2%
2015 $685.6 billion 3% $14,200 17.4%
Other: Telephones/mobile (2017)

Subscriptions per 100 inhabitants: 130 6
1) $315 billion in real exchange rate. Global ranking: 31/197 countries

2) Global ranking: 160
Total Population and Age structure (2018)
Total Population: 48,168,996 1
Population growth rate: 0.97% 2
Birth rate: 15.8 births/1,000 population 3
Age % of Males Females

Population
0-14 years 23.89% 5,895,637 5,611,298
15-24 years 16.96% 4,161,661 4,006,875
25-54 years 41.98% 10,043,080 10,177,042
55-64 years 9.44% 2,145,031 2,404,090
65 years and 7.73% 1,555,848 2,168,434
over
Source: CIA estimates

14
Exhibit 2: Polymath Ventures Business Development Stages

Source: Polymath Ventures

15
Exhibit 3: Comparative Financial Services Statistics, Colombia and Selected Countries
Note: Statistics for ages 15+ unless otherwise noted.

Source: World Bank Global Findex Database 2017
16
Exhibit 4: Aflore Growth Statistics
Cumulative Loans Cumulative IAs Hired Current Portfolio Over 30

Distributed Days Late
(MM Colombian Pesos)
Jan. 2016 1,134 696 5.83%
July 2016 1,822 1,163 6.36%
Jan. 2017 3,795 3,192 2.50%
July 2017 8,677 6,999 4.26%
Jan. 2018 16,960 11,549 5.64%
July 2018 23,519 14,313 8.52%
Jan. 2019 31,370 17,059 9.00%
July 2019 37,390 20,439 8.24%
Note: July 26, 2019 exchange rate: 3238.50 COP=1 USD.

Source: Aflore
17
Exhibit 5: Aflore Informal Advisor Recruiting Materials

English Translation: We help build dreams. Become an Aflore advisor. We are the first direct sales company that offers loans through a
network of counselors.
Source: Aflore
18
Exhibit 6: Aflore Screening Quiz for Informal Advisors
AFLORE FINANCIAL HEALTH CHALLENGE

This test will evaluate how well you handle your own finances and how much you know about basic
financial concepts. Once finished, you may calculate your results and get advice on areas of
improvement. Circle the answer that best describes your situation.
1. Your best friend, Jonathan, and his family dream of going to San Andrés. Very soon,
his daughter will turn 8 years old and he wants to take this opportunity to take a family
trip to the island but he has doubts about their ability to pay for the trip. What would you
do?
à A) You would recommend that they go to San Andrés because it is a unique experience and that he
figures out how to pay for his trip once he is back.
ªB) You would recommend that they go to San Andrés because it is a unique experience and if he
doesn’t have the money to pay for it, you would loan it to him.
§ C) You would ask him how much the trip is going to cost and how much he has in his savings to
see if he can afford to pay for it.
ª D) You would tell him that it might be best not to go to San Andrés and that it would be better to
use the money for something more productive.
2. The trip costs $500,000 pesos with everything included. Jonathan’s family earns $1
million pesos per month, they spend $800,000 pesos per month, and they have
$200,000 available to save at the end of the month. Would you recommend that he take
the trip to San Andrés?
à A) Yes
§ B) No
3. Have you had a similar situation to the above where a friend or relative has asked for
advice on topics related to money, investments, or other similar matters?
§ A) Yes
à B) No
4. If so, what did you do?
© A) I told them that it would be better for them to not ask me since I don’t know much about those
topics.
© B) I tried to help, but I am not sure it was very helpful.
§ C) I gave them advice and I think it helped.
5. If a company you trusted gave you the resources to give your family and/or
acquaintances access to loans with good interest rates without you being the co-signer,
would you do it?
§ A) Yes
© B) No
19
Exhibit 6: Aflore Screening Quiz for Informal Advisors, continued

6. If so, how many of your family and/or acquaintances do you think would be interested
in this?
¨ A) 1
¨ B) 2
¨ C) 3
¨ D) 4
§ E) 5
§ F) 6 or more
7. If you had a family emergency today and needed $1,000,000 pesos, what would be your
current situation to resolve this emergency?
§ A) You would have enough money saved to cover the cost.

© B) You would have part of the money saved and you would need to borrow the rest.
ª C) You would be in trouble because you don't have it saved and you couldn’t borrow it.
WHAT DOES MY SCORE MEAN?

Count how many you have of each figure and multiply it by the points below:
[§ x 5 points] + [¨ x 3 points] + [© x 2 points] - [ªx 2 points] - [à x 0 points]
Find your score to learn what the status is of your financial health and what advice we have to
improve your knowledge.
Score Results
0-12 You should take better

care of your finances. Use the information below to identify what areas you could
improve. You can also visit our Facebook page where you will
find more tips. In a few months you may try the online test
Your finances are healthy, again, to see if you have improved.
12-25
but there is still room for
improvement.
You know how to manage your finances very well! We

encourage you to share your best practices with others and help
your family and friends manage their money.
At Aflore, we form a network of Financial Advisors, an

Your finances are very innovative network in which you can help your friends and
25-35
healthy. family have financial health as good as yours and access loans
and insurance.
You may also earn commission, awards, and recognition. We

invite you to participate in this network. Sign up at
www.aflore.co
20
Exhibit 6: Aflore Screening Quiz for Informal Advisors, continued

HOW CAN I IMPROVE MY PERSONAL FINANCES?
Make a budget
Questions 1 and 2 measure how well you manage your budget. If you scored 0 points on any of these
questions, you should better manage your money. If you want to improve this, we recommend that you
write down every income and expense you have for a month. At the end of the month you can see how
much you have earned, and what you have spent. Almost everyone who does this can identify unnecessary
spending and can start saving more.
Establish a savings plan

Questions 3 and 5 deal with your savings. If you scored 0 points in any of the questions, you must establish
a savings plan. The first thing to do is create a fund to cover emergencies, your fund should be equal to
three months of your salary. Even saving small amounts quickly add up and can become an important
resource. In Question 8, we test your knowledge of how to make a savings plan. If you didn't have it right,
we advise you to read more about how to make a savings plan.
Manage your debts better

Questions 6 and 7 deal with your debts. If you scored 0 points on one of these questions, you are or have
been in trouble with your debts. We advise that the sum of all the monthly payments you pay towards
debts (even those you have with your friends and family) don’t not exceed 30% of your monthly income.
If they do, make a budget so that you can plan how to pay your debts faster and explore how you can
refinance your debts or how you can make lower monthly payments. With question 9 we test if you already
know that it is very important not to pay more than 30% of your income in debts. If it was not correct, now
you know that it is a very important number to take into account when acquiring a debt.
Get Insured
Similar to savings, insurance protects you from emergencies. One of the things that most contributes to
the financial stress of Colombians is the death of a loved one. A funeral costs around $3.5 million pesos,
while insurance only costs $30,000 pesos per month. If you do not have a fixed income, it is also worth
thinking about having hospital indemnity insurance, because it pays you a fixed amount when you cannot
work.
Note: Translated from Spanish
Source: Aflore documents, case writer translation

21
Exhibit 7: Polymath Ventures Portfolio Companies, 2019
Source: https://polymathv.com/ventures/
22

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SCG-5 56

Revis ed J uly 3, 2020

Aflore and Polymath Ventures:

The birthday cake had been baked by a woman named Marta

As Barrera finished up her small slice of cake, she looked at her

Polymath: Building the Business Builder

Aflore: From SEED to Blossom

Preparing the Ground

All of my professional life before Aflore, I was working in an all-male environment

Cultivating a Company: The Care and Feeding of a New Venture

Cash Conundrums: Delinquent Payments and Collections

Letting a Thousand Flowers Bloom: The Effect of Aflore

The Money Model

Polymath: Growing and Learning

The Parent and the Portfolio: Who’s Helping Whom?

Designing the Deck: A New Beginning?

Exhibit 1: Colombia Economic and Demographic Statistics

Other: Telephones/mobile (2017)

1) $315 billion in real exchange rate. Global ranking: 31/197 countries

Total Population and Age structure (2018)

Total Population: 48,168,996 1

Population growth rate: 0.97% 2

Birth rate: 15.8 births/1,000 population 3

Age % of Males Females

Source: CIA estimates

Exhibit 2: Polymath Ventures Business Development Stages

Exhibit 3: Comparative Financial Services Statistics, Colombia and Selected Countries

Note: Statistics for ages 15+ unless otherwise noted.

Exhibit 4: Aflore Growth Statistics

Cumulative Loans Cumulative IAs Hired Current Portfolio Over 30

July 2016 1,822 1,163 6.36%

Jan. 2017 3,795 3,192 2.50%

July 2017 8,677 6,999 4.26%

Jan. 2018 16,960 11,549 5.64%

July 2018 23,519 14,313 8.52%

Jan. 2019 31,370 17,059 9.00%

July 2019 37,390 20,439 8.24%

Note: July 26, 2019 exchange rate: 3238.50 COP=1 USD.

Exhibit 5: Aflore Informal Advisor Recruiting Materials

Exhibit 6: Aflore Screening Quiz for Informal Advisors

AFLORE FINANCIAL HEALTH CHALLENGE

4. If so, what did you do?

Exhibit 6: Aflore Screening Quiz for Informal Advisors, continued

§ A) You would have enough money saved to cover the cost.

WHAT DOES MY SCORE MEAN?

0-12 You should take better

You know how to manage your finances very well! We

At Aflore, we form a network of Financial Advisors, an

You may also earn commission, awards, and recognition. We

Exhibit 6: Aflore Screening Quiz for Informal Advisors, continued

Establish a savings plan

Manage your debts better

Source: Aflore documents, case writer translation

Exhibit 7: Polymath Ventures Portfolio Companies, 2019

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