MSME-Focussed Fintech Startup M1xchange Raises $10 Mn Led by Amazon

M1xchange, a digital invoice discounting platform for micro, small and medium enterprises (MSMEs), has raised $10 Mn in a fresh funding round led by ecommerce giant Amazon India, along with participation from existing investors BEENEXT and Mayfield. 

Launched in 2017 by Sundeep Mohindru, M1xchange connects MSMEs with NBFCs and banks to facilitate financing based on invoices and bills. According to CEO Mohindru, the new investment comes at a time when M1xchange has been working on integrating its secured marketplace for receivables financing with other government digital initiatives. 

“With this new funding, we plan to further expand our reach beyond the 352 cities from where MSMEs currently enjoy the benefit of discounted invoices,” said Mohindru, added in a statement.

M1xchange 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.

To date, the has raised over $14 Mn in equity financing from investors including Mayfield India, BEENEXT, and SIDBI Ventures.

Speaking about Amazon’s latest investment into M1xchange, Amit Agarwal, SVP and Country Head, Amazon India said that a majority of the 7 lakh sellers on the Amazon India marketplace are classified under the MSME category. “We are continuously exploring different ways to help MSMEs scale their business and grow. As we continue to focus our efforts to realize our pledge of digitizing 10 million MSMEs by 2025, we believe an efficient digital exchange like M1xchange will encourage many more MSMEs to adopt e-commerce to access a nationwide customer base,” Agarwal added.

The funding comes on the same day that the ecommerce behemoth announced a $250 Mn Amazon Smbhav Venture Fund for startups and SME entrepreneurs in India. The launch of the fund came on the sidelines of the company’s annual event focussed on the SMB sellers and vendors on its platforms. 

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.

The TReDS platform is a centralised online exchange set up under the supervision of the Reserve Bank of India (RBI), which facilitates 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.

The startup claims to handle discount invoices worth more than INR 10K Cr and has 36 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.