Macro Financial Raises $82M In Debt, Equity Seed Round To Support Small Latin American Exporters
Macro Financial raises $82M in debt, equity seed round to support small Latin American exporters
Small and medium-sized businesses in Latin America may struggle to obtain the financing necessary to export their products to the United States. Marco Financial is attempting to close this gap with its technology-enabled risk assessment platform, which can provide more insight into who should receive loans.
To continue its mission, the Miami-based trade finance company raised $7 million in seed funding and $75 million in a credit facility led by Arcadia Funds LLC and Kayyak Ventures. The credit facility increased the company's credit line to $100 million. Marco received funding in September from Struck Capital and Antler, as well as over $20 million in a credit facility underwritten by Arcadia Funds.
Additionally, Village Global VC, Flexport Ventures, Tresalia Capital, 342 Capital, Struck Capital, Antler LLC, Antler Elevate, Florida Funders, and Fox Ventures participated in the latest seed round and expanded credit facility. Phil Bentley, CEO of Mitie, and Naman Budhdeo, co-founder and CEO of TripStack and FlightNetwork, are among the strategic angel investors.
Not only is there a roughly $350 billion trade finance market to pursue, but according to Javier Urrutia, director of Foreign Investments at PROCOLOMBIA, an organization that promotes foreign investment and nontraditional exports in Colombia, a 1% increase in export productivity can result in the creation of 500,000 new jobs.
“For small and medium-sized businesses in trade, this is critical for companies to grow at a rapid rate and reduce poverty,” Shoihet told TechCrunch. “By making it easier for businesses to overcome the 30-, 60-, 90-, and now even 120-day wait period for payment for supplies, we can close that gap and unlock billions of dollars in value for businesses to scale.”
Shoihet met his co-founder and chief operating officer Peter D. Spradling at the Antler accelerator, a Singapore- and New York-based early-stage investment and advisory services program that connects entrepreneurs and technology operators looking to launch new businesses. They founded Marco in 2019 and have since expanded to include offices in New York, Dallas, and throughout Latin America.
Spradling was born in Uruguay and has firsthand knowledge of the difficulties associated with importing and exporting, having worked in his family's slaughterhouse and later founding three of his own businesses. Indeed, one of his businesses imported electronic cigarettes — his mother had been a lifelong smoker, and he wanted to assist her in quitting. He recalls pre-selling his inventory at a discount to raise funds for the importation.
“Because banks dislike risk, businesses spend the majority of their time pursuing financing rather than growing sales,” Spradling told TechCrunch. “In Latin America, banks have a saying: 'They lend money to people who don't need it.' Families with money can access banks, but businesses cannot be launched without capital, and many business owners lack access to banks.”
Marco's factoring product enables new businesses to get started without having to post the substantial collateral required by banks. Banks typically examine the business's financial statements for the previous two years before approving a line of credit. Reduced collateral requirements also enable more women in Latin America to become business owners, as they frequently lack collateral, Spradling explained.
By contrast, Marco mitigates risk by basing credit lines on an analysis of the business's future potential, thereby freeing up cash for small and medium-sized exporters to continue operations and invest in growth. The company can demonstrate the type of financing that can be obtained based on the amount of data provided by customers. Additionally, Marco stated that it can shorten the loan origination process from two months to one week and fund approved exporters within 24 hours.
According to Cristóbal Silva Lombardi, general partner at Kayyak Ventures, Marco enables small and medium-sized exporters to access capital that they previously had to obtain from friends and family.
In countries such as Chile, electronic invoicing innovation has facilitated the growth of the factoring industry, which has resulted in companies like Marco becoming leaders in supply chain financing and reducing the high interest rate differential between small and large businesses.
“Marco wishes to expand that globally,” Silva Lombardi stated. “There is a great deal of value to be addressed. Factoring is one of the untapped markets in the finance industry, and by leveraging technology, Marco is building and creating value for the entire society. This is where venture capital firms should invest their money — in businesses where technology and talent combine to create enormous value.”
Since launching its product in January 2020, the company has processed thousands of invoices totaling more than $18 million across 20 countries.
However, according to Shoihet, it was not easy at first. Marco initially faced difficulties accessing the market during the global pandemic, as exports and supply chains were strained.
Today, Marco has established a rhythm and is lending as little as $25,000 per month up to $10 million, Shoihet explained.
As such, the new funding will be used to streamline cross-border payments, assess risk, and productize methods for utilizing unstructured data, processes, and work to improve the customer experience. Additionally, the company stated that it intends to enable large logistics providers to finance exports on their own.
In Conclusion
Marco was also able to recruit new leadership, including Chief Product Officer Prajwal Manalwar and Chief Growth Officer Sabrina Teichman. Manalwar previously worked at PayPal for 13 years, most recently as a product lead responsible for debit card authorization rates and in-store payments. Teichman joins after serving in the US government for 11 years, most recently as managing director of the US International Development Finance Corporation.
“Now we can work on a larger scale solution by developing infrastructure and information through the underwriting process and through partnerships with larger players in shipping, trade services, and insurance — all incumbent industries with clients who require working capital,” Shoihet explained. “By innovating the underwriting process, we can reach more accurate conclusions and become the leading provider of trade finance as a service to emerging market clients.”
