M1xchange is one of only three holders of the TReDS (Trade Receivables Discounting System) licenses issued by RBI.
M1xchange, run by Mynd solutions Pvt. Ltd., has raised a Series-A round of venture capital from Mayfield India and SIDBI Ventures. This investment will enable M1xchange to invest further into technologies like blockchain, enhance its network and boost business growth for the company.
M1xchange is one of only three holders of the TReDS (Trade Receivables Discounting System) licenses issued by RBI. The technology platform acts as an exchange to facilitate the financing of trade receivables of MSMEs from corporate buyers through ‘factoring’ or ‘invoice discounting’ by external financiers. In a relatively short span of time, M1xchange has onboarded 25 banks, close to 100 large corporate customers and have facilitated over Rs 1,800 crores of factoring for the vendors on its exchange.
“The volume growth on M1xchange in past 12 months reflects its successful adoption by all the participants – MSME vendors, large corporates and banks. M1xchange team feel blessed to participate in the journey to set up the digital payment eco system in India and support the growth of MSME businesses across the country. We are thankful to RBI and Ministry of Finance for their support to bring this digital network to reality”, said Sundeep Mohindru, CEO of M1xchange.
“The MSME sector is the backbone of our economy and is most in need of financing options. The RBI and the Government, through TReDS, has created a highly innovative platform which will allow the MSMEs to secure financing at the lowest possible cost. We are excited to partner with Sundeep and the entire team at M1xchange which has emerged as the market leader in the TReDS space. This investment continues to be in line with our focus on the Fintech sector in India”, said Vikram Godse, Managing Partner, who will join the Board of Directors to represent Mayfield.
This Series A transaction is supported by investment banking firm Maple Capital Advisors, as a financial advisor.
MSMEs, despite their vastly important role in the Indian economy, continue to face constraints in obtaining adequate finance particularly in their ability to convert trade receivables into liquid funds. Further, those MSMEs that have access to credit do so at very high interest rates. The TReDS system allows for these MSMEs to receive money upfront which enables them to solve their collection-related and working capital issues. Most importantly, it helps MSMEs boost their ability to re-invest in their businesses faster to increase turnarounds, overall scale and financial wellbeing. All this comes at discounting or interest rates that are as low as what their large high-credit rated corporate customers would ordinarily be accustomed to.
In the recent past, there have been multiple initiatives by the government for these exchanges. Ministry of Finance has mandated all PSUs to join TReDS, advances under TReDS are categorised as Priority Sector Lending for all banks who participate, widening eligibility of MSMEs; and the Prime Minister’s latest significant announcement that all Corporates with a turnover exceeding Rs. 500 crore must register on TReDS.
M1xchange is an RBI approved TReDS (Trade Receivable Discounting System) platform. TReDS is an institutional mechanism set up in order to facilitate the financing of trade receivables of MSMEs from corporate buyers through multiple financiers. TReDS will boost the Indian economy by solving the erratic cash flow problems of MSMEs caused due to slow paying invoices. M1Xchange has digitally transformed the vender payment ecosystem and the way MSMEs generate working capital. This has been achieved through seamless presentation of bills, their validation, discounting, and approval of funds on a single platform. There is no need for additional collaterals to raise money through the platform.