Credit and finance for MSMEs: TReDS platform M1xchange, promoted by Mynd Solutions, has raised Rs 38 crores from its existing investors B2B platform IndiaMART and venture capital fund Beenext for an additional 3.4 per cent and 1.99 per cent equity stake respectively. The deal also marks the exit of M1xchange’s early investor India Opportunities Fund by SIDBI Venture Capital, the VC arm of SIDBI. Global VC fund Mayfield and Amazon are other existing investors in the company.
M1xchange said it has discounted invoices amounting to Rs 34,000 crores of over 13,000 MSMEs so far and the latest “transaction (funding) illustrates that the TReDS platforms have matured into an important source of funding for the economy, easing accessibility of funds to more than 13,000 MSMEs as well as recovery for the financed and the financiers.”
Sundeep Mohindru, CEO of M1xchange said the invoice discounting is based on the credit rating of the buyer and therefore cost of finance is very cheap. “This makes MSMEs more competitive in pricing to their customer while banks have also benefitted from M1xchange as this has opened a new avenue of business for banks.”
Mohindru was not immediately available for comments on funds deployment.
According to the data from statistics portal Statista, M1xchange had raised an undisclosed Series A round from SIDBI and Mayfield in January 2019 followed by a $4.5 million round led by Beenext in December 2020, $10 million round led by Amazon in April 2021 and around $4 million led by IndiaMART in the secondary market in November 2021. With the exit in the latest round, SIDBI Venture Capital has made spectacular gains on its second tranche of investment done in 2019, realizing around 4.6X on its total investment, said Mahendra Lodha, Nominee Director & Senior Fund Manager, SIDBI Venture Capital Limited.
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Apart from M1xchange, other TReDS platforms licensed by RBI were RXIL and Invoicemart. Earlier this month, RBI licensed the online marketplace for working capital C2FO Factoring Solutions to operate as the latest TReDS platform. The US-headquartered C2FO serves over 10 lakh businesses representing $10.5 trillion in annual sales spread across more than 160 countries. In India, C2FO serves over 2 lakh businesses, many of which are MSMEs.
In FY22, TReDS platforms have registered a steep rise in the value of invoices financed, doubling to Rs 34,362 crore from Rs 17,080 crore amid Covid in FY21, and more than tripling from Rs 11,165 crore during pre-Covid FY20. The data was shared by MSME Minister Narayan Rane in a written reply to a question in Rajya Sabha in March this year. TReDS as a concept was introduced by RBI back in 2014 towards addressing the working capital challenge for MSMEs due to delays in payment from their public and private buyers.