The reason YC gave for the rejection was that Mexico was an unknown market, and they felt lending in there was too risky for them.
Makes me wonder what was the decision logic to accept this Stablegains, against that background it doesn't make any sense.
Was YC aware of the ponzi nature of this thing and decided to dip in? It just makes no sense.
They don’t “understand” Mexico and are scared that their investment will get Pemex’d or something - and since that’s a known financial risk their backers would be like “wtf you doing?”
But “unknown” risks (even if actually quite easy to see) don’t have the same pushback from their investors. In fact, their investors may be demanding that they heavily invest in unknown risks.
Malcolm Gladwell had a phrase for this in a 1996 article about a vacation town that favoured hiring temp workers from the Caribbean (Gladwell is part-Caribbean) instead of black Americans who lived in nearby towns.
The employers made a decision on the basis known unknowns and unknown knowns. Gladwell described it thusly:
"Better the ghetto you don't know than the ghetto you know".