Amazon leads $10 mn funding round in TReDS platform M1xchange

Mynd Solutions-operated M1xchange, which holds a central bank-issued Trade Receivables Discounting System (TReDS) license, on Friday said that it has raised $10 million in a funding round led by ecommerce giant Amazon. 

Other participants in the funding round included returning investors Beenext and Mayfield. The two had last invested $4.5 million in M1xchange in December 2020. It is also backed by SIDBI Venture. 

Amazon made the investment via its $250 million Amazon Smbhav Venture Fund, which it announced on Friday, to support startups digitising micro, small, and medium enterprises (MSMEs). 

Through the TReDS platform, M1xchange offers trade receivables exchange for suppliers, corporates and financiers. The platform helps users calculate the final transaction amount and enables fund transfer from the financier's bank account to the supplier’s account.  

It also aids suppliers to select the most suitable bids. The company claims to be the largest among the three RBI-issued TReDS license holders in the country, in terms of cumulative value of invoices discounted. Its platform currently supports 36 banks. 

Since the launch of the exchange in 2017, M1xchange has discounted invoices totaling $1.7 billion across 10,000 MSME suppliers. The suppliers access the website from 352 cities digitally to finance their receivables and avail interest rates of 6%-10% per annum. 

The company claims that its internal risk and repayment scoring algorithm has mitigated risk of fraudulent bills with zero exceptions in the past several years.  

The Gurugram based company, founded by Sundeep Mohindru and Vivek Misra, has a presence in Maharashtra, Karnataka, Tamil Nadu, and West Bengal, apart from its headquarters.  

During the ongoing pandemic, M1xchange said it took steps to further enable social distancing and implemented digital onboarding of MSMEs on the platform. It facilitated digital onboarding journeys of 15 minutes each, without any need for courier of documents. 

PSUs such as IOCL, BPCL, NTPC, ONGC, Power Grid, HAL and EIL allow their MSME suppliers to transact on the platform. M1xchange’s team said it recently launched a mobile app to fit in features such as usage of Aadhaar based e-sign to enable quick authorization and acceptance of invoices and bids. 

With the fresh infusion, the startup’s total funding tally has now reached $21.3 million, as per VCCEdge data. Delhi based Maple Capital Advisors advised M1xchange on the latest fundraise. 

“Our unique approach to supply chain finance will also benefit the large ecosystem of vendors built by Amazon in India. This investment comes at a time when M1xchange is working towards integrating this secured marketplace for receivables financing with other government digital initiatives,” Sundeep Mohindru, CEO of M1xchange, said. 

Mohindru added that the fresh capital will help M1xchange further expand its reach beyond the 352 cities from where MSMEs currently avail the benefit of discounted invoices. 

In 2020, the Indian government revised the definition of MSMEs, and launched Udhyam portal as a single source to enable enterprises to register as MSMEs to avail benefits such as tax rebates and cheaper bank loans.