MSME-Focussed Fintech Startup M1xchange Raises Fresh Funding From Beenext Asia, Mayfield

M1xchange, a digital invoice discounting platform for micro, small and medium enterprises (MSMEs), has raised $4.5 Mn of funding led by VC firms Beenext Asia and Mayfield. Delhi-based Maple Capital Advisors acted as the financial advisors for this round of funding in M1xchange, which holds a Reserve Bank Of India license for operating a Trade Receivables Discounting System (TReDS) platform.

With the fresh capital, the company plans to expand its network across India and further invest in technology with the deployment of the newer models of supply chain financing in the coming months. Last year, the company raised an undisclosed amount in a Series A funding round from Mayfield India and SIDBI Ventures.

A centralised online exchange being set up under the approval of Reserve Bank of India (RBI), the TReDS platform facilitates the financing of trade receivables of MSMEs from corporate and other buyers, including government departments and public sector undertakings (PSUs), through multiple financiers on a pan-India basis.

Launched in 2017 by Sundeep Mohindru, M1xchange connects MSMEs with NBFCs and banks to facilitate financing based on invoices and bills. It also integrates with multiple third-party systems including enterprise resource planning systems and core banking systems for easier approvals and maintenance of loans. The company allows individuals to raise funds through formal channels without any collateral.

The company claims to have scaled up to discount invoices worth more than INR 10K Cr and has 35 banks on-board. In December 2019, it crossed INR 5000 Cr in transaction value which is nearly 40% of the cumulative transactions on TReDS. It has also come up with digital onboarding of MSMEs on the platform wherein it claims to complete the entire process within 15 minutes without the usage of a courier for delivery of documents. M1xchange claims to be the only TReDS platform wherein the assignment of receivables is done digitally for every transaction, in favour of the financing bank.

Speaking about leveraging the government’s TReDS platform, CEO Mohindru said, “MSMEs across 352 Cities have logged into TReDS platform since the pandemic and have discounted invoices at a rate of interest ranging between 4.75% pa to 8% pa. 60% of such MSMEs 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.”

He added that post the pandemic, there has been increased interest from the corporate sector around TReDs-enabled services. “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 the 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. “