MSME invoice discounting platform M1xchange raises $10M from Amazon’s new $250M Smbhav Fund, others

M1xchange has discounted invoices worth $1.7 billion across 10,000 MSME suppliers so far in India.

Credit and Finance for MSMEs: Trade receivables discount platform for MSMEs M1xchange has raised a $10 million round led by Amazon along with participation from BEENEXT and existing investor Mayfield. The investment was the debut deal for the $250 million Smbhav Venture Fund launched by Amazon on Thursday at the company’s annual Smbhav event. M1xchange was among the three Trade Receivables Discounting Systems (TReDS) including RXIL and Invoicemart that received approval from the Reserve Bank of India (RBI) in 2017 for facilitating the financing of trade receivables. M1xchange connects MSMEs with banks through its marketplace exchange where former assign invoice dues to a bank or financier to unlock working capital tied up in unpaid invoices.

Launched a little over three years back, M1xchange has discounted invoices worth $1.7 billion across 10,000 MSME suppliers so far in India at an interest rate of 6-10 per cent per annum. The average turnaround time right from the presentation of bills to their validation and disbursement of funds is two days, according to the company. M1xchange has 36 partner banks on its platform.

“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.

Also read: Amazon announces $250M venture fund focusing on SMEs; aims to bring 1M offline retailers online by 2025

To ease the working capital crunch for MSMEs in the absence of clearance of dues, the government had also urged large enterprises last year to onboard the TReDS platform. Central Public Sector Enterprises (CPSEs) and other companies with turnover of over Rs 500 crore were mandated to join the platform as buyers along with MSMEs as sellers and banks, NBFCs, and other financial institutions permitted by RBI to participate as financiers. In February last year, the government’s public procurement portal GeM had announced a partnership with RXIL to help government departments, public sector units, CPSEs, etc. to finance their payments to MSME sellers of goods and services.

The challenge of uncleared invoices or delayed payments continues to haunt MSMEs. According to the delayed payment monitoring portal MSME Samadhaan, the number of delayed payment cases filed in the MSE Facilitation Councils (MSEFCs) by micro and small enterprises (MSEs) has nearly doubled from 13,091 as of April 27, 2020, to 25,705 as of April 13, 2021. The amount payable in the number of cases filed also increased 125 per cent from Rs 4,112 crore to Rs 9,250 crore during the said period.