Small and medium-sized businesses in Latin America may find it difficult to obtain the funds they need to export their goods to the United States. It’s a gap Marco Financial seeks to bridge the gap through its technology-based risk assessment platform that can provide a better idea of who should receive loans.
To continue its mission, the Miami-based trade finance firm raised $ 7 million in seed funding and $ 75 million in credit facility, led by Arcadia Funds LLC and Kayyak Ventures, to boost its line of credit. to $ 100 million. Marco was supported last September by a small round table of Struck Capital and Antler and over $ 20 million in a credit facility underwritten by Arcadia Funds.
Other investors in the new seed round and extended credit facility include Village Global VC, Flexport Ventures, Tresalia Capital, 342 Capital, Struck Capital, Antler LLC, Antler Elevate, Florida Funders and Fox Ventures. Strategic angel investors include Phil Bentley, CEO of Mitie, and Naman Budhdeo, co-founder and CEO of TripStack and FlightNetwork.
Jacob Shoihet, co-founder and CEO of Marco, not only says that there is a trade finance market of around $ 350 billion to tap into, but cited data from Javier Urrutia, director of foreign investments at PROCOLOMBIA. , an organization that promotes foreign investment and non-traditional exports. in Colombia, that for every 1% increase in the productivity of exports, 500,000 new jobs can be created.
“For small and medium-sized commerce businesses, this is important for businesses that create a high level of job growth and reduce the poverty rate,” Shoihet told TechCrunch. “By making it easier for businesses to transcend the 30, 60, 90 and now even 120 days they wait to be paid for supplies, we can close this gap and unlock billions of value so businesses can scale.” “
Shoihet met his co-founder and COO Peter D. Spradling through the Antler Accelerator, a Singapore and New York-based early stage investment and advisory services program that connects entrepreneurs and technology operators to launch new businesses. They launched Marco in 2019 and now have offices in New York City, Dallas, and across Latin America.
Spradling was born in Uruguay and knows the challenges of importing and exporting firsthand by working in his family’s slaughterhouse and later founding three of his own businesses. In fact, one of his companies imported electronic cigarettes – his mother had always smoked and he wanted to help her quit. He remembers pre-selling his inventory at a discount in order to get the money to import the goods.
“Banks don’t like risk, which means companies spend most of their time trying to get financing rather than increasing sales,” Spradling told TechCrunch. “Latin American banks have a saying that they lend money to people who don’t need it. Families with cash can access banks, but you can’t start a business without capital, and many homeowners don’t have that access to banks.
Marco’s factoring product allows new businesses to get started without having to provide the large amount of collateral demanded by banks. Banks typically review the financial statements for the last two years of the business and extend a line of credit accordingly. Not needing so many collateral also allows more women in Latin America to become business owners, as they often don’t have collateral, Spradling said.
On the other hand, Marco reduces risk by basing his lines of credit on an analysis of the company’s future potential, thus freeing up liquidity so that small and medium-sized exporters can continue their operations and invest in their growth. The company is able to show what type of financing can be obtained based on the amount of data provided by customers. Marco also said he could reduce the loan process from more than two months to a week and provide financing to approved exporters within 24 hours.
Cristóbal Silva Lombardi, general partner of Kayyak Ventures, told TechCrunch that Marco offers an alternative for small and medium-sized exporters to access the capital they previously needed to get from friends and family.
In countries like Chile, innovation in electronic invoicing has allowed the factoring industry to thrive and in turn companies like Marco tend to become leaders in supply chain finance. and reduce the high interest rates between small and large businesses.
“Marco wants to take this to the whole world,” Silva Lombardi said. “There is a lot of value to be addressed. Factoring is one of the corners of the finance market that has not been addressed, and using technology, Marco is building and creating value for the whole of society. This is where venture capitalists should invest their money – in companies where technology and talent unleash a lot of value. “
Since launching its product in January 2020, the company has processed thousands of invoices in 20 countries, totaling more than $ 18 million.
However, it wasn’t easy at first, according to Shoihet. Starting with the global pandemic, Marco initially had difficulty accessing the market due to the strain of exports and supply chains.
Today Marco has found his rhythm and lends as little as $ 25,000 a month and up to $ 10 million, Shoihet said.
As such, the new funding will serve to simplify cross-border payments, assess risk, and produce ways to take unstructured data, process and work to create a better customer experience. The company also said it aims to give large logistics providers the ability to finance exports themselves.
Marco was also successful in attracting new leaders, including Prajwal Manalwar, Director of Products, and Sabrina Teichman, Director of Growth. Manalwar worked for 13 years at PayPal, where he was most recently a product manager focused on debit card authorization rates and in-store payments. Teichman joined the US government after 11 years, and most recently served as Managing Director of US International Development Finance Corp.
“Now we can work on how to solve the problem on a larger scale by building infrastructure and information through the underwriting process and through partnerships with larger players in shipping, commercial services and the insurance – all industries in place that have clients with working capital, ”Shoihet mentioned. “By innovating in the underwriting process, we can draw better conclusions and be the provider of trade finance as a service for clients in emerging markets. “