M1xchange Raises $10 MM Led by Amazon

M1xchange brings down the cost of borrowing for all participants, thereby making MSMEs more competitive.

M1xchange has raised $10 million in its current funding round, which was led by Amazon and had participation from BEENEXT and existing investor Mayfield.

 “Over the last decade, India has gone through a sea change in the enormous number of MSMEs now selling their wares online. 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. 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 Sundeep Mohindru, CEO of M1xchange.

M1xchange is the leader amongst the holders of the three Trade Receivables Discounting System (TReDS) licenses issued by RBI, in terms of cumulative value of invoices discounted. Since the launch of the exchange, a little over 3 years ago, M1xchange has discounted invoices totaling US$ 1.7 billion across 10,000 MSME suppliers. These suppliers access the website from 352 cities digitally to finance their receivables and enjoy a rate of interest that is 6%-10% per annum; which is lower than the bilateral funding rate available outside M1xchange.

M1xchange brings down the cost of borrowing for all participants, thereby making MSMEs more competitive. The digital process enables seamless presentation of bills, their validation, discounting, and disbursement of funds in an average TAT of 2 days. Amongst options available, M1xchange allows the shortest time for MSMEs to receive funding.

“We are existing investor in M1xchange and witnessed TReDS solving the challenge of delayed payments to MSMEs. We welcome Amazon in this journey to enhance the cause of MSME supply chain finance,” said Mahendra Lodha, Vice President & CS, SIDBI Venture, managing VC Funds & AIF primarily focused on MSMEs.

M1xchange is the only TReDS exchange wherein the assignment of receivables under Factoring, is done digitally for every transaction, in favour of the financing bank. The internal risk and repayment scoring algorithm of M1xchange has mitigated risk of fraudulent bills with zero exceptions in past 3 years. Another USP of M1xchange is that it is a bank agnostic exchange with 36 banks on-board.

"Sundeep is a visionary who has built a good quality service in M1xchange which has the potential to immensely benefit MSMEs in India. MSMEs are the backbone of India’s economy. Today over 7 lakh sellers sell on the Amazon India marketplace, a majority being MSMEs. 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,” says Amit Agarwal, SVP and Country Head, Amazon India.

The numbers of corporates that are approving invoices on M1xchange are by far the largest amongst all exchanges, thereby giving an opportunity to MSMEs to discount 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 website. This paperless and digital onboarding enables them to complete their digital onboarding journey within 15 minutes, without usage of courier for delivery of documents. Maple Capital Advisors from Delhi has helped M1xchange in this round of investment.

“As a regulated TReDS, M1xchange is accelerating MSME digitization, simplifying B2B payments, and deeper commerce penetration across India. We are still in early innings and next decade will be a golden age for Bharat MSMEs. M1xchange is ready to support them through technological solutions. Amazon’s investment will help accelerate this journey,” said BEENEXT partner Hero Chaudhary.

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