- Focus Areas
Pictured above at the launch of the Networked Trade Platform (NTP), from left to right, Rupert Sayer Co-Founder and CEO GTR Ventures, Tingxi Tan Co-Founder and Head of Legal and Compliance Culum Capital, Ginnie Chin Co-Founder and CEO Culum Capital, Heng Swee Keat Singapore Finance Minister, Kelvin Tan Co-Founder and CIO GTR Ventures
Date: September 26, 2018
Location: Orchard Hotel Singapore
The Networked Trade Platform (NTP), which officially launched September 26 2018, combines all customs and trade-related services and brings together four government certification services required for trading in and out of Singapore. The Networked Trade Platform will replace TradeXchange and Tradenet, the two prior trade facilitation programs.
The NTP’s goal is to help digitize trade processing and bring the entire ecosystem to one platform, where individual entities can interact and trade together.
GTR Ventures’ portfolio company Culum Capital is one of the 90 organizations being onboarded to the Networked Trade Platform.
Date: October 22nd – October 25th
Location: Sydney, Australia
The 2018 SIBOS Conference returned to Sydney October 22 through October 25th. The event was held at the International Convention Center and had more than 7,500 attendees. The week’s themes related to financial technology, and the increasingly digitalized world of banking. Shayne Elliot, Chief Executive Officer of ANZ Bank, stated one of the weeks major themes in his keynote address, describing how banks need to become increasingly more agile and adaptive to the technological advances in society.
Kelvin Tan, Founder and CIO of GTR Ventures attended the week’s events along with portfolio company Tradeteq – represented by Mattia Tomba and André Casterman.
Mattia Tomba, Director Tradeteq and Head of Tradeteq Asia, pictured above at the HSBC Panel Event at Sibos 2018. The panel shared their thoughts on the evolution of trade finance as an asset class, and included Surath Sengupta – Global Head of Trade Portfolio Management at HSBC, Kah Chye Tan – Founder of CCRManager, Alexander R Malaket – CITP CTFP and President of Opus Advisory Services International, and André Casterman – Non-Executive Board Member and Chair Fintech Committee ITFA.
GTR Ventures is looking forward to SIBOS 2019, which will take place in London September 23rd through the 26th.
Date: November 12 – 16, 2018
Location: Singapore Expo
Singapore Fintech Festival drew nearly 45,000 participants from over 130 countries. GTR Ventures was excited to attend, alongside partner companies Lucidity and iLoan. The festival featured more than 250 speakers, including Christine Lagarde, Managing Director International Monetary Fund, Barbara Novick, Vice Chairman Blackrock, Ashok Vaswani, CEO Barclays Bank UK, Ari Sarker, Co-President Mastercard Asia Pacific, and Aharon Aharon, CEO Israel Innovation Authority.
GTR Ventures announced three new partnerships with Lucidity, iLoan, and RM Tech on the first day of the festival [see press release here]. Other announcements included the launch of the API Exchange, an online fintech marketplace, as well as Vanda Global Capital’s opening of their $1.5 billion Asia agriculture technology fund, in collaboration with Shenzhen Dayshine Fund Management and Raffles Capital.
GTR Ventures also attended many of the post-festival industry events, such as the Innovation Lab Crawl hosted by MUFG Bank, ADB Asian Fintech Night, and the UK Singapore Fintech Bridge Networking Reception.
The Singapore Fintech Festival will return next year 11th – 15th of November, and GTR Ventures is looking forward to attending this 4th edition of the festival.
Date: October 31st, 2018
Location: Hong Kong
Pictured above – Jolyon Ellwood-Russell, Partner at Simmons & Simmons and Advisory Board member of GTR Ventures, and Ningwa Lau, representative GTR Ventures (China and HK SAR), at Hong Kong Fintech Week 2018.
Fintech Week is the world’s first cross-border financial technology event, with over 8,000 senior executives and over 200 of the world’s leaders in the fintech industry including founders, investors, regulators, and academics. GTR Ventures was thrilled to be a part of this five day financial technology event that works to bring together innovative thinkers and industry leaders within the fintech and trade finance industries.
Significant takeaways pertinent to trade and supply chain included Hong Kong Monetary Authority’s launch of a new blockchain-based trade finance platform called “eTradeConnect”. This platform combines the services of 12 different banks, both domestic and international, with the goal of allowing better trading among the network of European and Asian organizations. Angie Lau, Bloomberg Television Asia’s former lead anchor, also announced the launch of her new blockchain-related news platform Forkast.news, where she will operate as the Chief and Lead Anchor.
On the 2nd day of HK Fintech Week LiqEase hosted a morning gathering of 25+ finance and industry experts to discuss the role technology is playing in disrupting trade finance and presenting access to new investment opportunities. Stakeholders, including deal originators, investors, and family offices, joined the LiqEase team at one of Hong Kong’s historical clubs and enjoyed a vibrant and interactive atmosphere learning about pain points in the international wine trade, and how LiqEase’s platform unlocks tied up capital in the supply chain – allowing firms and investors to both benefit from this new ecosystem and exciting asset class.
Prominent speakers throughout the week included Jim Lai, Tencent VP and Head of Fintech Greater China, Paul Chan, Financial Secretary the Government of Hong Kong, Norman Chan, Chief Executive HKMA, Ashley Alder CEO SFC, Jessica Tan, Executive VP, COO & CIO Ping An Group, Aldi Haryopratomo, CEO Go-Pay, Richard Mash, VP Paypal, Mancy Sun, Managing Director & Head (PSI) Goldman Sachs, and many others.
“Hong Kong Fintech Week, in its 3rd edition this year, is a splendid occasion in which to showcase to the world what Hong Kong has to offer” described Carrie Lam, CEO Hong Kong Special Administrative Region.
GTR Ventures is looking forward to Hong Kong Fintech Week 2019.
Sector: Transaction Banking, Investment Banking
Key markets: China, Southeast Asia
RM Technology Co., Ltd, a Fintech company setup in China from 2015. The vision of the company is to make SMEs’ supply chain finance simple and safe. We collaborate with commercial banks, to provide enterprises and B2B portals with a payment, accounts and settlement platform, while enabling low cost financing. Our solution – “Bank Account as a Service” have digitized and connected sellers and buyers in B2B marketplaces for their payment and settlement services, while retaining a connectivity to banks. Our solution supports businesses who wish to create a “platform” for their supply chain with full payment and banking services. At the same time, financial service providers enjoy efficient and effective risk Management. Currently we have tested this model in China with multiple customers and in different industries. We are already working with different banks in China. Currently, we are working on a proof-of-concept (POC) with a bank which focuses on imports to China with Supply Chain Finance services inbuilt. We will continue to make Supply Chain Finance simple and safe.
Sector: Trade Operations
Key markets: Southeast Asia
Lucidity is a trade finance solutions provider that is paving the way for greater adoption of digitalized documents in global trade transactions. Lucidity also goes beyond digitalized documents by harnessing the power of machine learning to solve one of the most important challenges surrounding trade documentation – its deep reliance on human experience and comprehension. Lucidity provides comprehensive automation and digitalization solutions for supply-side documentation, ranging from transaction origination to electronic BL solutions for exporters and traders. Applying our unique and AI-centric technology, Lucidity also explores new automation solutions for trade finance operations within the banking and financial services industry, in order to empower our customers to compete and stay ahead of their competitors in today’s increasingly cost-conscious macroenvironment..
Sector: Technology and Loan Aggregation
Offices: Sri Lanka, Hong Kong
Key markets: Southeast Asia, Hong Kong
Founded in 2017, iloan is an emerging fintech company that provides access to working capital for micro and SMEs in South Asian frontier markets. It has developed a proprietary loan aggregation engine and invoice verification protocol using distributed ledger technology to enhance transparency on underlying loan assets for financial institutions.
倫敦和新加坡2018年11月13日電 /美通社/ —
PSA unboXed副總裁Elton Fong就此次交易表示：「我們非常高興投資Lucidity。
GTR Ventures信息總監Kelvin Tan稱：「
GTR Ventures 在倫敦、新加坡和香港設有總部，
From left to right- Poh Teck Tan EVP GTR Ventures, John Khaw CEO Lucidity Digital Pte Ltd, Rupert Sayer CEO GTR Ventures, Sopnendu Mohanty Chief Fintech Officer Monetary Authority of Singapore, Fazley Azhar Director iLoan Sri Lanka, Ningwa Lau Co-Founder iLoan Sri Lanka, Kelvin Tan CIO GTR Ventures
GTR Ventures Announces Three New Deals During Singapore Fintech Festival
Deepening Financial Inclusion Across Emerging Asia Through Fintech Partnerships
London/Singapore – November 12 2018: GTR Ventures, the world’s first investment and venture-building platform specialised in trade and supply chain, has announced three new deals with Lucidity, iLoan and RM-Tech. These three investments, representing an expanded pivot towards markets in China and South Asia, were announced on the first day of the Singapore Fintech Festival, the world’s largest fintech gathering.
Sopnendu Mohanty, Chief Fintech Officer of the Monetary Authority of Singapore (MAS), says: “Asia is going through a phenomenal digital transformation on the back of innovation led by fintech entrepreneurs, financial institutions, and the rise of digital trade and e-commerce platforms. I welcome GTR Ventures’ recent investee companies to our ecosystem, and look forward to greater financial inclusion for SMEs in this region.”
Lucidity is a trade finance documentation solutions provider that employs automation and machine learning to improve efficiencies in manual paperwork such as letters of credit, allowing exporters to get paid faster and improve their productivity. Lucidity also enables automation in trade finance compliance checks for banks, helping them to reduce operational costs as well as lower their risks against the global backdrop of increasing compliance oversight. Lucidity is backed by PSA unboXed, the corporate venture capital arm of Singapore’s global port operator PSA International.
Commenting on the deal, Elton Fong, Vice-President of PSA unboXed, elaborates: “We are pleased to have invested in Lucidity. Leveraging our access to the global trade community, we look forward to working with all stakeholders, including banks, to increase the digitisation of trade.”
iLoan provides blockchain solutions for loans to SMEs, wholesalers and distributors. Its technology allows lenders to reduce invoice fraud, lower processing costs and have efficient traceability of each transaction. iLoan is a part of John Keells X, which is a startup accelerator designed to support early stage startups, initiated by John Keells Group, Sri Lanka’s largest business conglomerate.
According to an Asian Development Bank (ADB) study, emerging Asia constitutes 40% of the global US$1.5tn trade finance gap. Meanwhile, a World Bank study on SME finance attributes the working capital gap at US$2.6tn. Adding to these finance gaps are the legal complexities, FX risk, and overall costs of cross-border payments that make it difficult for SMEs in emerging Asia to quickly and cost-effectively make payments globally.
RM-Tech is a fintech solution provider to banks, corporates, and business-to-business (B2B) portals. Its product suite allows for multi-channel payments and unparalleled connectivity to banks for clearing and settlement services. Connected to seven banks in China, it has over 300 Chinese customers and processes over RMB100mn of transactions each month. RM-Tech is working with GTR Ventures to offer cost-efficient cross-border B2B payment services from its existing network of banks and Chinese exporters.
Kelvin Tan, CIO of GTR Ventures, says: “These latest additions to our investment portfolio correspond with our vision to create a compelling network effect of digital fintech solutions in the world of trade and supply chain that can comprehensively cater to banks, non-banks and SMEs. Be it geographical reach, loan products, operational efficiency, settlements or asset distribution, we are on track to tackling different parts of the transactional value chain with a view to deepening financial inclusion for exporters and SMEs globally.”
PSA unboXed is the corporate innovation and venture capital arm of PSA International. PSA unboXed seeks to harness technology and innovation from startups with a focus on ports, maritime, logistics and containerised cargo flow. PSA International is a leading global port group handling about 64mn containers (TEUs) out of 700mn globally, with port projects spanning across Asia, Europe and the Americas.
Lucidity provides automation and digitalisation solutions for supply-side documentation, ranging from transaction origination to electronic bill of lading (BL) solutions for exporters and traders. Going beyond digitised documents, the company employs machine learning to solve one of the most important challenges surrounding trade documentation ‑ its deep reliance on human experience and comprehension. Lucidity allows financial institutions to compete and stay ahead of their competitors in today’s increasingly cost-conscious macro-environment.
John Keells Holdings PLC (JKH) is Sri Lanka’s largest listed conglomerate in the Colombo Stock Exchange. From managing hotels and resorts in Sri Lanka and the Maldives to providing port, marine fuel and logistics services to IT solutions, manufacturing of food and beverages to running a chain of supermarkets, tea broking to stock broking, life insurance and banking to real estate, JKH has made its presence felt in virtually every major sphere of the economy. JKH is a full member of the World Economic Forum and having issued Global Depository Receipts on the Luxemburg Stock Exchange, was the first Sri Lankan company to be listed overseas. With a rich history of over 150 years, since modest beginnings as a produce and exchange broker in the early 1870s, JKH has been known to constantly re-invent, re-align and reposition ourselves in exploring new avenues of growth.
About iLoan (Contact: email@example.com; website: www.iloan.ik)
Founded in 2017, iloan is an emerging fintech company that provides access to working capital for micro and SMEs in South Asian frontier markets. It has developed a proprietary loan aggregation engine and invoice verification protocol using distributed ledger technology to enhance transparency on underlying loan assets for financial institutions.
RM-Tech is a fintech company based in Guangzhou, China. Connected to seven banks in China, it provides enterprises and B2B portals with a payment, accounts and settlement platform, as well as enabling low-cost financing. RM-Tech has processed over RMB1bn of transactions to date and processes over RMB100mn-worth each month.
GTR Ventures has recently appointed Sébastien Bruyant as a Senior Advisor at GTR Ventures, as well as Aidan Beresford as the new fall analyst. They join a well-established team led by co-founders, Rupert Sayer and Kelvin Tan.
Sébastien Bruyant is a Senior Advisor at GTR Ventures. Sébastien co-founded and managed as CEO Alcora Global, a Fund Management Company in Singapore managing Alternative Trade Finance funds in Asia, investing in short term private trade financed debt issued by large and medium size materials player across the value chain, trade corridors, and industries.
Previously, Sébastien held various positions in public and private banks. He started his career working for the French State Investment Bank (Oseo) focusing on growing fast mid-cap companies in France before joining BNP Paribas in Singapore and then in Paris covering Natural Resources strategic projects and companies. Sébastien joined HSBC first in Paris to manage a the EMEA portfolio of Energy customers in the Commodity and Structured Trade Finance teams before being relocated to Hong-Kong SAR and prepare the ground for the deployment of the teams in Asia-Pacific. Lately, he was relocated to Singapore as Director (executive level) of the Strategic Energy Solutions Group at HSBC, and managed and developed a network of a strategic relationships with senior executives leading global and regional Energy enterprises in Asia-Pacific.
Sébastien has been a regular speaker to industry conferences.
Sébastien’s education includes MAP from INSEAD and a LLM (DESS) in Business Law from Paris-Dauphine University.
Aidan Beresford recently graduated from Brown University, and has previous experience as a Derivatives Group and Business Intelligence Intern at State Street Global Advisors in Boston.
GTR VENTURES MAKES FIRST AFRICA INVESTMENT
VENTURE BUILDING FIRM BACKS DIGITAL TRADE AND INVESTMENT PLATFORM ORBITT
London/Singapore – October 30 2018: GTR Ventures, the world’s first investment and venture-building platform specialized in trade and supply chain, has announced an investment in Orbitt – a pan-African focused fintech deals platform.
Orbitt connects investors with trade and investment opportunities through its smart-matching technology. The company has facilitated over $100m of equity, debt and trade finance transactions to date and is digitising the African investment ecosystem.
While becoming GTR Ventures first Africa-focused investment, Orbitt joins a growing portfolio of tech-enabled companies that are delivering products for the global trade and investment community. GTR Ventures, based out of London, Singapore, and Hong Kong, will work with Orbitt to strengthen their trade finance capabilities from a product and innovation perspective as well as growing the platform’s relationships within the global marketplace of traditional and digital trade finance players.
“Our partnership with GTR Ventures comes at an exciting time for us,” said Lanre Oloniniyi, Co-Founder of Orbitt. “GTR Ventures’ network of trade and export organisations will be important in helping us attract major banks and funds across Asia, Europe and the Middle-East, to increase trade finance lending and investment into Africa.”
The announcement falls during the Global Trade Review (GTR) Africa Trade and Investment Conference in London, which has become a key annual gathering for international trade, export and project finance professionals interested in the continent. Key financial institutions present at the conference include Afreximbank, Ecobank, Standard Chartered, SMBC and BACB.
Singapore-based Kelvin Tan, Chief Investment Officer of GTR Ventures elaborated, “Africa-Asia trade today stands at $500 bn, annually. However, capital providers to Africa remain hampered by the lack of financial tools and access to data. Orbitt’s technology can help lenders manage their risks, and to complete timely transactions in otherwise disconnected markets. We welcome partnerships with all stakeholders to improve credit transparency on the continent. Collectively, our vision is to enhance the bankability of every firm, SME, and transaction in Africa.”
Peter Gubbins, Managing Director of GTR and co-founder of GTR Ventures, added: “Although the continent has a trade finance gap of over $100bn, we see an increasing amount of institutional and impact capital keen on doing more with Africa. Leveraging GTR’s tremendous African footprint – Nigeria, Kenya, Zambia and South Africa, we see Orbitt working alongside our partner banks and funds to bridge this gap.”
For the first time, alternative funders will be able to derisk invoice and receivable finance transactions – reducing compliance costs and fraud.
Singapore, October 16 , 2018 – Fintech global invoice discounting platform Incomlend has adopted Invoice Check – a blockchain application developed by Trade Finance Market (TFM) – to quickly and easily determine if an invoice on their platform is potentially being double financed on the outside.
Invoice finance fraud is a huge problem because a financier has no way of knowing if an invoice is fraudulent or has already been financed by another funder. The International Chamber of Commerce found almost 20 percent of banks reported an increase in fraud allegations over the past year – representing a major threat for businesses and organizations around the globe. When a default occurs, there may be several funders who all think they own the invoice or receivable. This problem is magnified in cross border transactions, especially when only paper invoices are used and in markets where there is no central registry with which to register a charge.
Using blockchain technology, Invoice Check encrypts transaction data whilst also providing information on whether an invoice is potentially fraudulent or being double financed. A key difference with Invoice Check is that it does not rely on a central registry – using instead the power of decentralized ledger technology. Data is protected from potential competitors and is tamper resistant once on the blockchain. Invoice Check works alongside existing technologies and can be easily deployed via an API, which keeps costs down and increases accessibility.
Founding Partner of Incomlend, Dimitri Kouchnirenko, sees this as an important development:
“Partnering with TFM on invoice fraud risk mitigation through practical blockchain technology is a major milestone for Incomlend. We are proud to be on the forefront of innovation with TFM’s Invoice Check deployment into our systems, reinforcing even further our cross-border risk management framework. We invite all the fintech invoice trading platforms and other financiers to join the TFM initiative to build the world’s first global immutable registrar of receivables finance transactions based on decentralized ledger technology, contributing to making international trade finance a safer place.”
“We are extremely pleased to be working with Incomlend – demonstrating how fintechs are taking the lead in pioneering practical use of distributed ledger technology.” said TFM Executive Director, Raj Uttamchandani.”The inability to validate invoices is an obstacle for SMEs in obtaining finance and slows growth. Invoice Check fills this gap and utilizes blockchain in a way that has never been done before – with the end goal of providing funders with security and SMEs with liquidity.”
Kelvin Tan, Co-founder and Chief Investment Officer of GTR Ventures, which has invested in both TFM and Incomlend, adds:
“We are very happy to see both our portfolio companies in the fintech lending space, working together to enhance their risk management processes. Multiple invoicing is a global, industry-level risk that afflicts not only alternative fintech lenders and factors, but also banks, insurers, and credit funds.
Such collaboration fulfills our vision to go beyond mere venture capital investing, and, as a venture builder, take proactive steps to solve structural pain points in the lending sector.”
Leveraging Singapore as a starting point as a trusted digital data hub, we welcome all lenders, banks, non-banks, and fintechs,to partner us in our vision to build an alliance to reduce risks in the lending sector, and mitigate fraud.”
Date: 26 September, 2018
Location: Orchard Hotel Singapore
Time: 10:30 AM
At the launch of the Networked Trade Platform (NTP), Minister of Finance Heng Swee Keat outlined key initiatives for the new organization.
NTP seeks to digitalize trade documentation and processes, transforming the trade landscape while raising productivity and creating new opportunities for digital trade service providers and the trading community more generally.
Heng Swee Keat also hopes to broaden and globalize the Singapore trading community by integrating B2B and B2G transactions.
He described NTP as a transformational platform that will give Singapore traders a “one-stop” interface for all trade related regulatory transactions. He believes NTP will help boost productivity and competitiveness, while unveiling new opportunities to traders.
Click below for a link to the speech.
Date: 5 September, 2018 (Day 2 of the conference)
Location: Marina Bay Sands
Time: 11:00 to 13:00
With the trade finance market seeing a constant stream of new entrants, from invoice financing platforms to blockchain-based technology consortia, this showcase competition brought various start-ups together for the chance to “pitch” their business models, strategies and activities to a panel of expert judges. Strong emphasis was placed on innovation, efficiency and providing greater access to finance particularly for the underserved SME market.
Host: Jolyon Ellwood-Russell, Partner, Simmons & Simmons
Seabury TFX provides businesses with the freedom to run, to grow, and to succeed. As specialists in supply chain finance, the company’s expertise lies in having the “right financing product at the right place at the right period at the right price”-the Four Pillars’ of Seabury TFX. Seabury TFX excels at providing the “right financing product” as it ensures that manufacturing businesses can replenish their capital at the fastest speed and lowest cost to keep the supply chain moving. Seabury liberates businesses from the constraints of liquidity and gives them the capital necessary to be successful.
Lucidity is a trade finance solutions provider in Singapore, specializing in automating manual processes and reducing the knowledge deficit that often contributes to documentation discrepancy. Lucidity’s platform enables companies to create, review and approve paper trade documents with its supply chain. Lucidity counts PSA (the world’s second largest port operator) as one of its key shareholders
In December 2016, AgriDigital achieved the world’s first settlement of a physical agri-commodity on a blockchain between a farmer and a buyer in New South Wales, Australia and was recognised by Fintech Australia presenting AgriDigital the Excellence in Blockchain and Distributed Ledger Technology award for 2017. AgriDigital recently launched its digital supply chain platform for the agricultural sector and continues to work with blockchain and other novel enabling technologies to bring efficiency and transparency to global supply chains
Singapore-based Trade Finance Market is a fintech leader in providing alternative trade finance solutions for small and medium enterprises. TFM also develops blockchain-based tools to derisk and lower the cost of trade finance transactions – including InvoiceCheck, a tool designed to reduce invoice finance fraud.
Operating in Hong Kong and Singapore, Incomlend is a global invoice exchange where companies from different countries can fund their export receivables by selling them to private investors at a discount. The platform trades in multiple currencies and offers an integrated digital receivables discounting solution to both suppliers and buyers, dynamic discounting and factoring products. Investors’ capital is protected against debtors’ credit risk by world leading credit insurers
RM Technology Co Ltd, a Fintech company setup in China from 2015. The vision of this company is to make SMEs supply chain finance simple and safe. RM Technology collaborates with commercial banks, to provide enterprises and B2B portals with a payment, accounts and settlement platform, as well as enabling low cost financing
On June 11, approximately 150 delegates representing over 100 countries gathered at the JW Marriott Hotel in Hong Kong for the GTR Asia Tradetech Forum. The conference brought together an array of trade and industry experts all featuring the latest technological developments for trade and supply chain.
The conference featured a discussion on the latest around the Global Trade Connectivity Network. The Global Trade Connectivity Network is the first joint venture innovation project arising from the agreement signed by the Hong Kong Monetary Authority and the Monetary Authority of Singapore. The panel was moderated by David Koh, Regional Head of Transaction Banking for Greater China and North Asia for Standard Chartered Bank, and featured Nelson Chow, Chief Fintech Officer for Hong Kong Monetary Authority, and Serene Ho, Director of the National Trade Platform Office for Singapore Customs.
To close out the conference, a #tradetech technology showcase panel was led by the following experts:
The showcase featured four different presentations led by fintech startups.
The Wild Digital Venture Tech Conference, hosted on July 4-5 in Kuala Lumpur, Malaysia, featured presentations from 70 speakers with over 1200 delegates from an array of industries. The conference centred on the theme Inspire Connect Disrupt and brought together top internet players, entrepreneurs, investors, executives and founders. Day one of the conference featured a presentation on venture capital funding by GTR Ventures’s CIO Kelvin Tan, and it was truly an honour to be selected to appear at this prestigious event.
By Mike Dimelow at Accelerated Ventures
The global trade finance market is worth $12trn USD annually, which is largely funded by banks and currently isn’t an investable asset class for institutions.
Tradeteq’s founding team want to change all that through an AI-driven marketplace platform which opens up trade finance to a more diverse set of companies than traditional credit scoring models do.
A platform approach to trade finance can remove the friction currently preventing institutional investment at scale and enable fast growing internationally focused SME/SMB’s to access competitively-priced finance.
Initially the marketplace connects trade finance originators with institutional investors and provides them with an arena to interact and transact efficiently. Machine learning is used to deliver advanced credit analytics and reporting, making trade finance asset investment transparent and scalable.
Since launch in 2016, $150m of assets have been processed through Tradeteq’s platform – resulting in Wealth and Finance Magazine naming it ‘Best Trade Finance Collaboration Network 2018’.
This is a huge opportunity and a space that Tradeteq’s founding team have years of world-leading trading experience within and are ready to redefine the industry. We’re really excited to play a small part in this big mission!
Christoph Gugelmann, co-founder and CEO of Tradeteq (formerly Goldman Sachs, Merrill Lynch, Morgan Stanley): “We started Tradeteq with the vision to make trade finance investable and to establish trade finance as an alternative asset class. This funding is a significant milestone for Tradeteq as it will allow us to aggressively expand our sales and marketing efforts as well as broaden and expedite product development.”
Nils Behling, co-founder and CFO (formerly Weil Gotshal, Merrill Lynch, Trafigura), added: “This successful funding round allows us to significantly accelerate Tradeteq’s development and to secure our position as innovation leader in the digital transformation of trade finance.”
Previous investors include GTR Ventures (trade industry experts), which in invested in the company in March 2018 and since then Tradeteq has opened an office in Singapore to lead its expansion into Asia Pacific.
This article first appeared at Accelerated.Ventures
By Christoph Gugelmann
A new study by Technavio came out at the end of May, stating that the global trade finance market would grow at a compound annual growth rate of 3.75% between 2018 and 2022. The prediction is based on market analysis with inputs from industry experts including key financiers like BNP Paribas, Citigroup and HSBC, amongst others.
Despite an increase in protectionist rhetorics, trade flows are forecast to grow by 4.3% a year, reaching nearly US$19tn by 2020, according to the 2017 ICC Trade Register. In the same report, the ICC points out that trade finance revenues are expected to reach US$44bn by 2020, based on growth projected in markets where trade is conducted to a significant degree on the basis of traditional trade finance.
The numbers are clear: the trade finance market is on an upward trajectory – one that no one in the financial sector can afford to miss.
Unsurprisingly, the trend of rapid technological advances has been identified as a key trend driving this market growth. “Technological advances boost the increased automation and standardisation of trade financing transactions. This reduces the risk of manual transactions,” a Technavio analyst comments in the firm’s study.
In particular, the involvement of clearing houses as intermediaries between buyers and sellers of financial instruments are seen as crucial to growth by the authors. Such intermediaries are making transactions safer, but also more investable.
More and more trade finance players are investing in fintech platforms that can streamline and facilitate their processes, but also allow them to distribute parts of their trade finance portfolios to other banks and institutional investors, as a way to maximise the opportunity.
There is a recognition in the market that trade finance assets are attractive to investors, since they present a lower default risk than many other asset categories. Yet, distribution to institutions other than banks remains rare. Why is that? Various surveys cite a lack of standardisation, fear of non-compliance to regulations and the low efficiency of transactions (which so far have mainly been conducted on an isolated basis) as reasons why investors are still rarely present in transactions.
All these obstacles can be overcome with the use of technology such as artificial intelligence and machine learning, which are already operational in many sectors – including credit analytics. The emergence of new platforms increasing the transparency and efficiency of trade transactions, combined with the expected growth of the sector in coming years, means there has never been a better time for institutional investors to get involved.
To learn more, visit https://www.tradeteq.com/insights
The industry’s unregulated nature renders investors vulnerable as revealed by a massive S$6.9m fraud case.
Investors are treading more cautiously after an unravelling $6.9m sham at a Singapore crowdfunding site laid bare the vulnerabilities and risks associated with an industry promising quick returns to growth-hungry SMEs.
The move comes as a local news report revealed that invoice financier Capital Springboard sold around 60 fake invoices worth $6.9m to investors from Vangard Project Management (VPM), an SME specialising in interior design.
As the lion city throws open its doors to SMEs with the hopes of driving innovation and attracting international talent, a number of financing methods have similarly cropped up to meet the various capital needs of growing businesses. Obtaining financing has been cited as the fourth greatest growth challenge hounding startups, ceding only the top spots to chronic manpower problems and limited market size, according to a report from NUS Enterprise.
From venture capital and angel investing to traditional business loans to various incubator and accelerator programmes, invoice financing has emerged as another viable funding method for cash-strapped SMEs.
Invoice financing enables businesses to secure cash by leveraging against the value of payments they are owed from their customers for an agreed return to investors, providing them with instantly available capital to pursue further growth opportunities. Investors assume the cost of between 70 to 90% of a business’ total invoices which works best for short period of time ranging from two weeks to a year.
Higher flexibility, easier access to funding and speedier funds provision as opposed to traditional banking loans are invoice financing’s greatest strengths, Dimitri Kouchnirenko, founder and CEO of online multi-currency invoice exchange platform Incomlend told Singapore Business Review.
“Businesses with tight cash flows due to large receivables or long credit terms from customers usually utilise this product. Historic or existing cash balances do not matter as much as repayments are secured via payment on invoice,” added Pawel Kuznicki, CEO of peer-to-peer and invoice financing platform Capital Match.
Whereas it would take months for a traditional lender to review a facility limit, invoice financing can disburse funds often within 24 hours and borrowers often have little to no collateral to provide, Kouchnirenko added.
“A rising rate environment also makes it difficult for SME’s to acquire funding through traditional methods such as the banks and the scrupulous vetting procedures generally expose fundamental flaws in the SME’s structure,” explained Oriano Lizza, a sales trader at CMC Markets.
This means that the method arguably carries less risk of default for lenders than short-term financing as the borrower has already delivered to its customers amidst reasonable expectations of being repaid.
However, the method is not entirely without risk as the unraveling fraud with Capital Springboard revealed, especially as VPM’s invoices with CS were non-notified in nature. An invoice financing of this type means that the SME did not inform its customers of its working relationship with platforms like Capital Springboard including the fact that it was tapping the financier for its funding needs.
This method of invoice finance inherently raises the risk premium, noted Kouchnirenko, as the lender is left with little option to verify the authenticity of the invoice as it is not able to confirm it directly with the buyer.
“Most often this could lead to the lender being exposed to fraud. Due to its highly risky nature, not only does it increase the probability of fraud but it also raises the risk premium hence the cost of financing for the borrower,” the Incomlend founder pointed out.
Capital Match’s Kuznicki similarly suggested that, whilst non-notified invoice financing is more troublesome in terms of verification, the platform is able to verify invoices as well as provide supporting documents including certified delivery orders and progress claims with the buyer to guarantee that the financing is backed by a legitimate invoice where the work has already been completed, although this is not necessarily practiced by all lenders in the market.
Regulation and risk management
The recent fraud that took place calls attention to the relatively unregulated nature of the industry that has allowed fraudsters to slip to the cracks and take advantage of a legitimate funding method that has provide the necessary financing fuel for countless businesses in the past.
Although demand from SMEs for invoice financing has not dampened significantly, investors are proceeding with more caution amidst calls for greater oversight to prevent similar lapses in the future.
“It could be argued that a Monetary Authority of Singapore regulated company would not have got[ten] this far or even set up in the first place,” explained Lizza. “The market is somewhat regulated but not completely so this leaves it open to exploitation and abuse.”
With this case as the catalyst, MAS could possibly proceed to reduce the number of new market entrants or intensify its regulatory reach and set more stringent risk management standards to set a precedent for similar cases in the future.
Although the number of approved funding applications may diminish in the short term as a result of intensified regulatory scrutiny, the industry is poised to benefit in the long run from common basic standards and practices in place to ensure the stability and transparency of the funding process, Kouchnirenko added.
Crowdfunding platforms are similarly doing their part by ramping up their risk management capabilities. Carrying out regular background checks on borrowers, scrutinising new applicants and creating a shared database of blacklisted borrowers between platforms and traditional lenders can also do wonders to avoid multiple finance for the same receivable title, he added.
“Different lending platforms are communicating, albeit unofficially, to ensure errant SME owners are blacklisted by the various credit teams,” said Kuznicki.
For Kouchnirenko, the case is not only a timely reminder of the pitfalls of investing but also an opportunity to improve funding methods for SMEs.
“We think that the industry will be called upon coming together to improve collaboration, risk management measures and common standards. This event is an opportunity for everybody to re-think and improve the industry’s working practices and we are confident this will happen.”
This article first appeared in Singapore Business Review.
By Global Trade Review
GTR Ventures is a new investment firm formed in partnership with GTR, investing in the equity of trade technology companies and underlying trade finance debt. Here, Kelvin Tan, CIO of GTR Ventures, discusses the global opportunities in trade investment and how he hopes GTR Ventures will create value.
What does GTR Ventures bring to the table that’s different?
Tan: We saw an opportunity to leverage GTR’s unique and huge global trade finance intelligence hub to bridge the gap between capital, technology and investment. As a global funnel for origination, information and distribution, GTR Ventures addresses two big challenges for investors and bankers: we can find good deals and are also able to sustain a pipeline of good deals to match optimal capital deployment.
Tan: The global trade game is changing for all stakeholders and at a pace faster than we in the trade world ever anticipated. We see the governments, corporates, banks, insurers and investors we deal with globally coming to terms with disruption in an industry that has not meaningfully changed for decades. The unified system built around established rules and relationships is giving way to decentralisation, digitalisation and derisking; technology solutions are blooming, new sources of capital are emerging and trade corridors opening.
There’s a huge amount of innovation in this environment and opportunities for those playing it smart. Since our debut, we’ve set a blistering pace when it comes to engaging innovative companies in the trade sector. We’ve taken strategic stakes in some of them and are forming new partnerships and alliances.
How are you approaching your goal to bridge the gap between capital, technology and investments in trade? Where are you seeing opportunities?
Tan: We have been actively tracking non-bank trade lenders and platforms and shortlisting the ones who have sound credit assessment processes, good governance and potential to scale through the astute use of technology. In particular, digital lenders from markets such as the UK, France, China, Hong Kong and Singapore present interesting opportunities for investors and banking capital to access attractive returns from SME trade lending.
Post Brexit, we expect UK firms and entrepreneurs – as well as the government – will look to Asia’s fastest growing economies. After the 9th UK-China summit in December last year, the two countries announced plans for a UK-China US$1bn private equity fund, focused on connectivity deals under the Belt and Road Initiative.
What broader trends do you think are important in global trade?
Tan: We’ve thought a lot about this as we curate deals for our stakeholders in the global banking and investment community. We have five core beliefs about the future that guide our actions today.
First, the future of trade is digital, automated, backed by analytics and increasingly real time.
Second, technology and innovation can liberate liquidity within supply chains, lower credit risk for suppliers and improve global financial inclusion.
Third, bank lending is here to stay, while non-bank lending will play an increasingly large role – we see that with shipping lines and e-commerce now providing trade finance loans. Beyond equity capital, trade finance startups need debt capital to grow. This is particularly pertinent for digital non-bank lenders as they grow their loan books and diversify their base of borrowers, particularly to SMEs.
Fourth, private debt, comprising trade finance loans, will rise as an alternative asset class for investors looking for stable returns, portfolio optimisation and low volatility akin to investment grade bonds.
Finally, blockchain has potential multiple use-cases for trade, and can be disruptive; however, it should not be the starting point and raison d’être for any trade product offering, but as an enabler.
Kelvin Tan is the CIO of GTR Ventures following a career spent at IFC, Singapore’s ministry of trade and the Monetary Authority of Singapore (MAS). Visit www.gtrventures.vc
This article first appeared on Global Trade Review.