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.