Karolayn started her business five years ago when she and her husband visited his grandfather. They noticed that local avocado producers were struggling to get their produce to market. She started by helping one neighbor harvest his fields and sent his avocados to buyers, and soon others approached her. She remembers another neighbor saying, “I have this land and these trees, but I need help harvesting and selling.” Karolayn used her savings and support from her family and friends to launch Don Beño, a wholesale avocado distribution business named after her husband’s grandfather.
Don Beño sources avocados from small producers in Chile, sorts and packages them, and then delivers them to various consumers across the country. The business is responsible for getting food from farmers to consumers safely, quickly, and efficiently. Latin America is one of the world’s leading food producers and exporters, and agribusinesses like Don Beño play a critical role in Chile’s food supply chains, from food production to distribution to sales. The COVID-19 pandemic exposed the fragility of global supply chains and reinforced their importance in moving food from producers to tables. Many distributors are also micro, small, and medium enterprises (MSMEs), which make up more than 90 percent of businesses worldwide and are the engine for ensuring that food and agricultural products reach consumers where and when needed. Despite the prevalence and importance of MSMEs, many businesses in Chile face difficulty getting the funding they need to grow.
In the beginning, Karolayn and her husband worked from their home and their workspace spilled out into the hallway of their patio. Now they have a flourishing business on their hands with a sizable office and warehouse. While their business is now stable and established, they started slow and faced challenges along the way. For example, when she needed investment for a bigger office and warehouse space two years ago, she found that capital was scarce. “It was a moment in which no one would support you,” she remembers. “We were only two years old, but the banks were asking for revenues and statements for businesses at least four years old.”
Until recently, Karolayn still faced the same funding problems. Things changed when she learned about RedCapital, a crowdfunding platform with a sole focus on MSMEs in Chile, and filled out their credit application. She remembers she didn’t have records or sales receipts but, under the company’s new credit scoring model adapted for the MSME segment, her application was approved. RedCapital disbursed the loan electronically, leveraging the digital infrastructure of its platform. She says, “They believed in our business, but, more than that, they believed in us as people.” RedCapital issued Karolayn her first loan, and now she is in her third round of credit. She states proudly, “they trusted us, and we have delivered.”
Though Don Beño is an established business now, Karolayn isn’t done growing. In fact, she says they are only halfway there. She wants to acquire another warehouse and invest in materials for temperature-controlled packaging. Since Don Beño is committed to getting its customers fresh avocados at the exact ripeness required, seasons can present a challenge. The fruit ripens too fast in the summer and not fast enough in winter. Adding cool packs to the boxes during the summer would alleviate stress during the warmer months and ensure that local consumers get the food they need when they need it. But such materials require capital.
Karolayn also wants to invest in a machine to sort the avocados. Currently, the team separates the fruit into five different grades by hand, weighing each avocado individually and placing them in separate corners of the warehouse. A machine could automate this sorting and cut two days of work down to just an hour. She notes that this investment would allow her business to grow dramatically, but it can only be acquired via credit. It isn’t feasible to save for such a purchase because her capital is tied up in inventory and smaller investments like boxes, trucks, and other assets. Any spare capital goes to these incremental growth opportunities, so she must look for financing for large investments like this machine and materials for temperature-controlled packaging.
RedCapital has helped Karolayn make the investment Don Beño needs, and she is hopeful the next phase of her business is within reach. RedCapital supports many businesses like Don Beño, which are critical to enabling players across the food chain — farmers, restaurants, retailers, and consumers. These businesses are essential, but they cannot succeed without adequate support and services. Financial institutions like RedCapital assured small business success, and in so doing, shore up the food production and distribution value chain, contributing to overall food security.
Accion worked with RedCapital, with support from MetLife Foundation, to develop a digital credit product distributed through their crowdfunding platform. Specifically designed for MSMEs like Don Beño, their product helps entrepreneurs grow their business while giving them the ability to understand and improve their financial health. Watch Karolayn’s story here: