TReDS Platform M1xchange Raises Funding from BEENEXT and Mayfield

Rs 10,000Crore throughput volume

MSMEs across 352 Cities used the TReDS Platform during the lockdown period

To expand its network across India and emerge as a comprehensive Supply chain finance leader

Access to funds at a much lower rate through the platform

15th December, 2020, Mumbai, Beenext Asia, Singapore and Mayfield have jointly made an investment of USD 4.5 Million in the current equity round in M1xchange, largest among the three holders of the Trade Receivables Discounting System (TReDS) licenses issued by RBI. The round was led by incoming investor BeeNext from Japan and existing investor Mayfield followed on in this round as well. The utilisation of funds by M1xchange will be to expand its network across India and emerge as a comprehensive supply chain finance leader.

"We are very excited to partner with M1xchange in their journey. COVID-19 has accelerated digitization of cash, digitization of SME workflow and payments, commerce penetration into tier 2, tier3 towns and villages, and B2B payments to name a few things. M1xchange stands to benefit from all of these trends. With a solid software background, team has built a remarkable product to empower Indian MSME vendors over the next decade." said BEENEXT partner, Hero Choudhary.

Sundeep Mohindru, CEO of M1xchange believes, "The pandemic has had a profound effect on supply chains, businesses and economies. In the last few months, substantial positive movement has been felt for growth in business volumes versus previous quarter and this is also reflected in surge in volumes on M1xchange (TReDS). MSMEs across 352 Cities have logged into TReDS Platform since Pandemic time and have discounted invoices at rate of interest ranging between 4.75% pa to 8% pa. 60% of such MSME Enterprises are from Tier 3 & Tier 4 Cities and are able to take the benefit of this digital revolution. In coming days this secured marketplace for receivables financing will be integrated with other government digital initiatives"

Maple Capital Advisors, a Delhi based Investment Banking firm, acted as the financial advisors for this round of funding.

Started in 2017 under licence from RBI, M1xchange has scaled up to discount invoices worth more than Rs 10,000 crore. Some of their USPs include being a bank agnostic platform with 35 banks on-board. M1xchange is the only TReDS platform wherein the assignment of receivables is done digitally for every transaction, in favour of the financing bank. This gives confidence to bank's legal and risk teams for enforceability of Factoring Act regulations in the court of law, thereby bringing enhanced participation on the platform. The internal risk and repayment scoring algorithm of M1xchange has mitigated risk of fraudulent bills with zero exceptions in past 3 years.

The numbers of corporates that are approving invoices on M1xchange (TReDS platform) are byfar the largest amongst all exchanges and giving an opportunity to MSMEs to discount their invoices of multiple buyers. During this pandemic time, M1xchange took steps to further enable social distancing and implemented Digital On-boarding of MSMEs on the platform. This paperless, digital onboarding enables them to complete their digital onboarding journey within 15 minutes, without usage of courier for delivery of documents. "M1xchange plans to utilize the investment over few years to enhance its market reach and further evolve the technology for ease of use. The newer models of Supply chain financing and the resultant technology will be deployed in coming months", said Sundeep Mohindru, CEO of M1xchange.

With so much momentum even during the pandemic the MSME Ministry revised the definition of MSME and launched Udhyam portal as a single source for registration of an enterprise as an MSME. Sundeep Mohindru, CEO of M1xchange concluded by saying, "This has been of great help since many MSMEs have been able to reach out directly to the TReDS platforms and get themselves registered with us. There has been a considerable participation from corporates in the last 8 months (post lockdown) as they witnessed a merit in Supply chain finance, as a means for reduction in their Business cost and providing cash flow support to their suppliers under revised definition. PSUs have also started to allow their MSME suppliers to transact on the platform during the last few months. Some of these are , IOCL, BPCL, NTPC, ONGC, Power Grid, HAL, EIL etc. The PSUs are working on gearing up to the digital handling of their MSME suppliers so as to maximize the advantages of the platform."

"M1xchange continues to be the leader in this space and the only TReDS platform who is attracting international investor interest. Continued investor participation validates this large market opportunity. This round should go a long way in enhancing technology development and personnel to achieve greater scale." said Vikram Godse, Partner and Managing Director, Mayfield Fund India.

About M1Xchange

M1xchange is an RBI approved TReDS (Trade Receivable Discounting System) platform. TReDS is an institutional mechanism set up in order to facilitate the financing of trade receivables of MSMEs from corporate buyers through multiple financiers. TReDS will boost the Indian economy by solving the erratic cash flow problems of MSMEs caused due to slow paying invoices. M1Xchange has digitally transformed the vender payment ecosystem and the way MSMEs generate working capital. This has been achieved through seamless presentation of bills, their validation, discounting, and approval of funds on a single platform. There is no need for additional collaterals to raise money through the platform.

More details on M1Xchange can be accessed at http://www.m1xchange.com/. The utility of TReDS has been explained through videos at http://www.m1xchange.com/videos.php.

About BEENEXT

BEENEXT is an early-stage focus venture capital firm managed by serial tech entrepreneurs since 2015. The partners have hands-on capabilities and have been focusing on assisting founders in over 190 early-stage tech startups in Fintech, Marketplace, Healthtech, Agritech, AI/Data, and Spacetech domains. BEENEXT aims to establish the platform of the founders, by the founders, and for the founders across the globe primarily in India, South East Asia, and Japan with their own operational experiences, network, and perspectives.

About Mayfield

Mayfield is a global venture capital firm with $2.5 billion under management. Since its founding in 1969, the Firm has invested in more than 500 companies resulting in 117 IPOs and more than 200 mergers or acquisitions. Mayfield India has over $200 million under management and is a sector agnostic fund that invests in both technology, as well as, non-technology start-ups across sectors such as financial services, consumer brands, FMCG, logistics, and healthcare amongst others.

Supporting MSMEs, TReDS Platform M1xchange sets benchmark by Crossing Rs 5000 Cr worth Transaction in Biz Volume

Invoice discounting on Trade Receivables Discounting System (TReDS) platform by M1xchange has crossed Rs 5000 crores worth transaction which nearly occupies forty percent of the cumulative transaction conducted by all three platforms, making M1xchange India’s trusted and leading TReDS platform.

Before the end of this financial year it is estimated to cross Rs 7,000 crores (1 Billion dollars) and digitally transform the process of gaining access to working capital for MSMEs via invoice discounting through multiple financiers. M1 team since its launch on April 7, 2017 has worked through many challenges to ensure successful implementation of factoring in India for the first time however few regulatory amendments can speed the pace of dispersing trade receivables of MSMEs from corporate and other buyers, including government departments and public sector undertakings (PSUs).

Non-banking financial companies (NBFCs) have played a key role in India’s march towards financial inclusion and have particularly played a great role in providing solutions to the MSME (micro small and medium enterprises) segment. A recent announcement in relaxation of norms for NBFCs to be a part of TReDS is a pertinent step towards enabling the use of TReDS. . To bring more cash liquidity on TReDS, NBFCs need to be allowed on the platform for which an amendment of the Factoring Regulation Act, 2011 is necessary and expected to be taken up in the current winter session of the Parliament.

Sundeep Mohindru, CEO of M1xchange said, “It has been our commitment to find a one-stop solution to resolve all payment related issues for MSMEs and at this juncture our long trusted relationships with MSMEs across the country must be maintained strongly and the performance and delivery of M1xchange TReDS can be seen by the total worth of Rs 4700 cr transaction facilitated in last eighteen months . We are very pleased with the initiatives of the Government and RBI support for TReDS.”

The inclusion of NBFCs will also spur employment generation alongside economic value edition. It is now more than imperative for banks that the excluded units are brought within the fold of the formal banking sector. The TReDS platform provides MSMEs the critically important facility of obtaining quick easy and assured settlement of their invoices and at a competitive rate through an auction where multiple registered financiers can participate. Most importantly, it helps MSMEs boost their ability to re-invest in their businesses faster to increase turnarounds, overall scale and financial well-being.

About M1Xchange

M1xchange is an RBI approved TReDS (Trade Receivable Discounting System) platform. TReDS is an institutional mechanism set up in order to facilitate the financing of trade receivables of MSMEs from corporate buyers through multiple financiers. TReDS will boost the Indian economy by solving the erratic cash flow problems of MSMEs caused due to slow paying invoices. M1Xchange has digitally transformed the vender payment ecosystem and the way MSMEs generate working capital. This has been achieved through seamless presentation of bills, their validation, discounting, and approval of funds on a single platform. There is no need for additional collaterals to raise money through the platform.

India's First Blockchain Network Goes Live

India’s first blockchain-based network went live last week, when three online bill-discounting exchange platforms came together and implemented a solution for their operations to deter fraud.

The three platforms that offer Trade Receivables Discounting System (TReDS) -- Receivables Exchange of India (RXIL), A.TReDS, and M1xchange -- implemented the use of blockchain in the enterprise financial segment. The exchanges are marketplaces to which small businesses bring invoices to obtain financing from large Indian banks and several foreign banks. The exchanges sought a way to reduce fraud.

Notably, TReDs is an electronic platform that allows auctioning of trade receivable. The process is also commonly known as ‘bills discounting’, a financier (typically a bank) buying a bill (trade receivable) from a seller of goods before it’s due or before the buyer credits the value of the bill. In other words, a seller gets credit against a bill which is due to him at a later date. The discount is the interest paid to the financier.

The Reserve Bank of India (RBI) had introduced TReDS to facilitate financing trade receivables of micro, small and medium enterprises (MSMEs) from corporate buyers through multiple financiers.

The system, which is live now, provides a common platform not controlled by any one financial institution to securely and confidentially share information which reduces fraud around receivables financing. The platform is built on Hyperledger Fabric and does not rely on cryptocurrencies to operate.

“The project has been implemented without any cryptocurrency being used for settlement. Globally there are very few examples of actual live production blockchain networks at this point,” said Jesse Chenard, chief executive officer and founder of MonetaGo, which implemented the project.

MonetaGo is a US-based blockchain firm that works with central institutions and financial organisations globally to implement blockchain.

All the three platforms, which work independently, are interlinked with blockchain and share data. The blockchain solution had gone live on March 23 and so far 1,400 invoices have been processed on it

The implementation of blockchain will be helpful in MSMEs getting better rates and discounts.

With three active exchanges, buyers as well as sellers could register on all three platforms, thus raising the chances of the same bill getting discounted twice. However, with Blockchain this will not happen.

Kalyan Basu, MD. & CEO, A.TReDS added, “Our clients are particularly sensitive about their sourcing inputs, and we absolutely could not broadcast any of their private information to a shared network. This technology however enables us to work together with the other exchanges to achieve shared goals without sharing specific data. I look forward to the day when other players in the financial services industry also appreciate the value add in terms of preventing frauds related to Bill Discounting and become a part of this system.”

The above development was first reported in CXOToday.

To recall, in an another India's first Kerala Blockchain Academy of state-run IIITM-Kerala has become the first Indian Institution to get membership of Hyperledger Project.

In July 2017, Aurovine, a blockchain-based music sharing platform was launched in India. In the same month, Bajaj Allianz General, a private general insurance company in India, started using blockchain technology to fasten its claim settlement process.

Last October, Andhra Pradesh became the first state in the India to pilot blockchain technology in two departments - land records and transport. In the same month, IBM joined hands with five banks – UBS, Bank of Montreal, CaixaBank, Commerzbank and Erste Group – to launch a blockchain-based trade finance platform called Batavia, which aims to support trade finance transactions by helping banks and their clients automate the trade finance process, something which still majorly remains manual and paper-based.

Last year, we covered various stories on how the blockchain is invading financial institutions like banks and electronic voting systems in several countries, including India. Recently, we also carried an article about how Blockchain is blurring the lines between technology and nature through a new species called Plantoid, a new digital plant, which is designed to reproduce itself via transactions made on the blockchain.

India's First Blockchain Network Goes Live

India’s first blockchain-based network went live last week, when three online bill-discounting exchange platforms came together and implemented a solution for their operations to deter fraud.

The three platforms that offer Trade Receivables Discounting System (TReDS) -- Receivables Exchange of India (RXIL), A.TReDS, and M1xchange -- implemented the use of blockchain in the enterprise financial segment. The exchanges are marketplaces to which small businesses bring invoices to obtain financing from large Indian banks and several foreign banks. The exchanges sought a way to reduce fraud.

Notably, TReDs is an electronic platform that allows auctioning of trade receivable. The process is also commonly known as ‘bills discounting’, a financier (typically a bank) buying a bill (trade receivable) from a seller of goods before it’s due or before the buyer credits the value of the bill. In other words, a seller gets credit against a bill which is due to him at a later date. The discount is the interest paid to the financier.

The Reserve Bank of India (RBI) had introduced TReDS to facilitate financing trade receivables of micro, small and medium enterprises (MSMEs) from corporate buyers through multiple financiers.

The system, which is live now, provides a common platform not controlled by any one financial institution to securely and confidentially share information which reduces fraud around receivables financing. The platform is built on Hyperledger Fabric and does not rely on cryptocurrencies to operate.

“The project has been implemented without any cryptocurrency being used for settlement. Globally there are very few examples of actual live production blockchain networks at this point,” said Jesse Chenard, chief executive officer and founder of MonetaGo, which implemented the project.

MonetaGo is a US-based blockchain firm that works with central institutions and financial organisations globally to implement blockchain.

All the three platforms, which work independently, are interlinked with blockchain and share data. The blockchain solution had gone live on March 23 and so far 1,400 invoices have been processed on it

The implementation of blockchain will be helpful in MSMEs getting better rates and discounts.

With three active exchanges, buyers as well as sellers could register on all three platforms, thus raising the chances of the same bill getting discounted twice. However, with Blockchain this will not happen.

Kalyan Basu, MD. & CEO, A.TReDS added, “Our clients are particularly sensitive about their sourcing inputs, and we absolutely could not broadcast any of their private information to a shared network. This technology however enables us to work together with the other exchanges to achieve shared goals without sharing specific data. I look forward to the day when other players in the financial services industry also appreciate the value add in terms of preventing frauds related to Bill Discounting and become a part of this system.”

The above development was first reported in CXOToday.

To recall, in an another India's first Kerala Blockchain Academy of state-run IIITM-Kerala has become the first Indian Institution to get membership of Hyperledger Project.

In July 2017, Aurovine, a blockchain-based music sharing platform was launched in India. In the same month, Bajaj Allianz General, a private general insurance company in India, started using blockchain technology to fasten its claim settlement process.

Last October, Andhra Pradesh became the first state in the India to pilot blockchain technology in two departments - land records and transport. In the same month, IBM joined hands with five banks – UBS, Bank of Montreal, CaixaBank, Commerzbank and Erste Group – to launch a blockchain-based trade finance platform called Batavia, which aims to support trade finance transactions by helping banks and their clients automate the trade finance process, something which still majorly remains manual and paper-based.

Last year, we covered various stories on how the blockchain is invading financial institutions like banks and electronic voting systems in several countries, including India. Recently, we also carried an article about how Blockchain is blurring the lines between technology and nature through a new species called Plantoid, a new digital plant, which is designed to reproduce itself via transactions made on the blockchain.