Banks don’t need to become venture capitalists. They can finance the contract.

By Jonathan Joel Mentor | @jonathanjmentor

We keep asking banks the wrong question. A bank does not need to believe a startup will become the next unicorn. It needs to know whether someone credible has already agreed to pay it.

In the Dominican Republic, bank credit to micro, small and medium-sized enterprises reached RD$534.988 billion in March 2025, up 8.5% year over year. The weighted average interest rate for MSMEs was 14.3%, versus 10.4% for the rest of private commercial lending.

That spread tells us something obvious but important: smaller firms are already being financed, but at a higher price because they are harder to underwrite. The mistake is assuming that innovation makes that problem unsolvable.

Across Latin America, founders are already moving beyond equity. LAVCA reports that VC-backed startups secured more than US$2 billion through credit lines, structured debt and FIDCs in 2025.

Innovation finance is not synonymous with venture capital. The capital should follow the risk.

Stop asking banks to price venture risk

Banks should not finance a founder’s unproven hypothesis the way an equity investor does. Zero-revenue experimentation, uncertain product-market fit and asymmetric upside belong to capital designed to absorb that uncertainty.

The problem begins when every innovative company is treated as though it remains in that stage forever. Once a credible buyer signs a contract, purchase order or recurring commercial commitment, the risk changes.

The question is no longer only, “Will anyone buy this?” It becomes, “Can this company deliver, invoice and collect?” Banks understand that second question far better.

This is where the debate often goes wrong. We keep asking banks to behave like venture funds instead of noticing when venture risk has already become commercial risk.

A bank does not need to finance the dream. It can finance the evidence. Once that evidence is a signed obligation from a credible buyer, there is something to structure.

The contract changes the risk

In June, the International Finance Corporation (IFC) and Banco Santander launched a risk-sharing facility covering up to US$500 million in supply-chain-finance assets. Over three years, it is expected to support about US$1.5 billion in transactions across emerging markets.

The architecture matters because suppliers can obtain financing based on the credit profile of the buyer rather than only their own. The strongest balance sheet in the transaction may belong to the customer, yet too often the supplier is underwritten as if that customer did not exist.

That is not charity or disguised venture capital. It is using evidence already inside the transaction to make working capital easier to underwrite.

The Dominican market already understands the instrument. Banreservas offers e-Factoring and, in 2026, expanded governmental factoring so suppliers can convert accepted invoices into liquidity. The concept is not foreign to the banking system.

The harder question is how much earlier in the revenue cycle we can responsibly recognize commercial evidence.

A signed contract is not automatically bankable

Not every contract deserves financing. A purchase order can be cancelled. Margins can be too thin. Delivery risk can be fatal. A buyer can be slow, concentrated or unreliable. A signed document does not magically eliminate underwriting.

But a contract changes what should be underwritten. The lender can examine the buyer, payment terms, assignment rights, delivery milestones, gross margin, collection history and the consequences of nonperformance.

A transaction becomes more bankable when enough uncertainty has moved from market risk to execution risk that a financial institution can price it. That is more useful than asking whether the company looks sufficiently “startup” or “traditional.”

From contract to capital: where the risk changes · Successment

The point is simple: discovery risk, delivery risk and collection risk are different risks. They should not be financed with the same instrument.

The Dominican Republic already has the pieces

Dominican banks are not absent from MSME finance. The Superintendencia de Bancos reported 557,287 MSME loans outstanding by March 2025. The system is already carrying commercial risk at scale.

What is less developed is the link between revenue evidence and the capital product best suited to it.

In a recent column, I argued that venture capital often arrives too late because founders are asked to prove the company before receiving the capital supposedly designed to fund discovery. Banks sit later on that curve. Their opportunity begins precisely where proof becomes stronger.

Between a pre-seed check and a paid invoice sits an expensive gap: payroll, inventory, onboarding, implementation, equipment, certifications and delivery costs. A company can win the customer and still lose because it cannot finance the work required to serve it.

The buyer can be part of the underwriting

The most important balance sheet in a transaction is not always the seller’s. A small supplier with a credible institutional buyer may be stronger than its historical financial statements suggest.

Supply-chain finance recognizes this. The buyer can confirm the obligation, standardize onboarding, share payable information and make the transaction easier to underwrite. The bank can price the buyer and the transaction alongside the supplier.

Multilaterals and development-finance institutions can go further by sharing risk, as the IFC-Santander facility demonstrates. Sometimes the innovation is simply a better allocation of who carries which risk.

That creates a much more practical role for banks in the innovation economy. Not judging whether a founder has the charisma of a venture-backed CEO, but deciding when commercial evidence has become financeable.

For banks, corporations and development institutions, the task is to identify the evidence, locate the risk and finance the transaction without pretending all innovation capital is equity.

The institutional opportunity is to recognize those transitions. A bank should not be asked to guess which pre-revenue startup becomes a unicorn. It should be equipped to notice when a credible buyer, contract or receivable has changed the risk.

The missing instrument may not be another startup fund. It may be a bridge between the purchase order and the balance sheet. Banks do not need to finance the dream. They can finance the evidence.

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Jonathan Joel Mentor is CEO of Successment and founder of Digital Nomad Summit Santo Domingo, working across revenue systems, innovation architecture and economic modernization. A UN World Summit Award nominee and ADOEXPO National Export Excellence Award winner. successment.co | digitalnomadsummit.co