Being a digital platform offering export finance to small and medium-sized exporters in India, the company plans to deploy $1 billion of trade financing to SMEs in India by the year 2022. Nelson Holzner, CEO, MODIFI explains to Aparajita Gupta about why companies should not be penalised for being successful.
MODIFI aims to bridge a $1.5-trillion trade finance gap with more flexible and digitally driven solutions.
MODIFI is a digital platform offering export finance to small and medium-sized exporters in India, allowing them to thrive and offer attractive payment terms to their international buyers. Our product is fully digitalised, so customers located throughout the country can get access to the finance they need by using our online platform.
Our endeavor is to help Indian exporters as much as possible, which for us means being available, irrespective of their location. Currently our office is in Delhi, so we can provide support in person to clients in its surrounding areas and beyond. To further help our operations, we will further increase our presence in other regions with a focus on Tier I and Tier II cities.
We plan to deploy $1 billion of trade financing to SMEs in India by the year 2022. Our efforts in India are currently focussed on spreading awareness of the platform among Indian SMEs and serving them with digital export financing.
Being a fintech platform for digital trade finance, which kind of Indian companies will be your target clients?
When it comes to size, our clients would have export volumes between $500,000 per year and $450 million, with three years of export history and buyers from abroad (with a focus on Europe and North America).
Though we would happily take clients from all relevant industries, there are some that look like the perfect fit for us, like textiles and apparel. This is a huge industry, equating to 15% of total export earnings and around 2% of GDP.
Not only is the capital requirement large, but the industry is under threat from increased competition from developing economies like Cambodia and Bangladesh. Our finance can help textile exporters stay competitive in this global market.
Pharma, too, is another interesting vertical for us. Working capital solutions like MODIFI’s export finance are perfect for companies that are growing quickly. In these situations, demand often outstrips supply and cash is scarce.
The pharma industry is one of the fastest growing in the country, with exports expected to reach $20 billion by 2020, so we are well positioned to address their working capital needs.
The platform allows SMEs to apply for financing and raise working capital digitally within 48 hours. What is the risk in giving collateral free loans?
Collateral free finance certainly increases the overall risk for us, the lender.
However, we believe that collateral free financing is the best way to provide capital to our customers. Exporters need fast capital; not requiring collateral to register on our platform means we can get much needed cash to our customers much more quickly.
Not only is it simpler this way, but exporters that are growing quickly may not have the collateral required for a loan even with strong financials. We don’t believe these companies should be penalised for being successful!
We have been operating in Europe since November 2018 providing buyer finance for SMEs, which source goods globally. However, we are building a truly global and unique platform to support both sides of the trade (buyers and sellers). Having a single platform for all customers ensures maximum efficiency and ease of use, as well as building up a trading network with benefits to all parties.
We do recognise though, that reaching our global vision requires concrete steps. Therefore, we want to be in operation in other Asian markets and expand further in Europe in 2020.