40Seas is a new cross-border trade financing solution launched out of stealth following the close of an $11m seed funding round.
Team8, a global venture group focused on technology, served as the lead investors. Other contributions to the seed round came from ZIM Integrated Shipping Services Ltd.
Alongside the equity, 40Seas received a $100m credit facility for exporters and importers. ZIM provided 40Seas with the three-year, account receivables based, senior secured, revolving credit facility of approximately $100m. It has an option to extend it to $200m.
As part of the deal, ZIM will embed 40Seas into the freight forwarding services offered by Ship4wd, its digital freight forwarding subsidiary. Through this, ZIM’s SME customers will have access to the digital financing solution.
40Seas was created in conjunction with Team8’s Fintech Foundry. Its aim is to close the $1.7trn global trade finance gap by providing a solution that enables digital B2B payment functionality while facilitating cross-border trade between SMEs.
The Organization for Economic Cooperation and Development (OECD) claims that SMEs account for 43% of cross-border trade volume. Despite this, they are seven times more likely to be denied access to trade financing than multinational companies, according to the World Trade Organization.
40Seas added that the SME cross-border trading industry has been hindered by siloed banking jurisdictions, working capital constraints, trust issues, legacy processes, interest rate gaps and FX volatility.
Through AI and data-driven technology, 40Seas can offer flexible payment options that are primed to disrupt legacy trade-financing solutions. It can also extend the accessibility of working capital for SME importers, exporters, freight forwarders and sourcing agencies.
Since it went live in October 2022, 40Seas has financed transactions for dozens of SMEs and is slated to finance tens of millions of dollars in the coming months.
40Seas allows exporters to get paid immediately upon shipment so they can get a head start on their next production cycle. Importers can use 40Seas to access deferred payment options to help them free up working capital and grow their business without tying up available lines of credit.
Freight forwarders and sourcing agencies can also leverage the platform to increase cross-border trade volumes, generate new revenue streams and digitise B2B payment processes.
40Seas co-founder and CEO Eyal Moldovan said, “As a kid working in my father’s warehouse, I recall watching him routinely struggle with suppliers and banks to get extended payment terms and financing for his import business. In the 25 years since, the trade financing landscape hasn’t evolved in any meaningful way or kept pace with the needs of SMEs operating in the digital era.
“Given today’s harsh macroeconomic conditions, now more than ever, SMEs need easy access to financing to have the best chance of survival. 40Seas wants to drive a sea change in how companies access finance, with a unique solution that makes life easier for importers and exporters, serving both directions of a cross-border trade.”
Late last year, Loop, a San Francisco-based shipping and logistics payments platform, exited stealth after it raised a total of $30m through its seed and Series A funding rounds.
Copyright © 2023 FinTech Global
