Filter Capital invests $10 mn in M1xchange for MSME financing

Filter Capital has invested $10 million in M1xchange, a trade receivables discounting platform. This investment highlights Filter Capital's belief in digital supply chain finance's potential to drive financial access for India's micro, small, and medium-sized businesses. M1xchange facilitates invoice financing of nearly Rs 10,000 crore each month, enabling faster working capital access for MSMEs.

Filter Capital has recently invested $10 million in M1xchange, a trade receivables discounting platform that facilitates invoice financing for micro, small, and medium-sized enterprises (MSMEs) in India. This investment underscores Filter Capital's belief in the potential of digital supply chain finance to drive financial access for MSMEs. M1xchange, founded by Sundeep Mohindru and Vivek Misra, has a network of over 65 banks and 50,000 MSMEs, and it has discounted invoices and bills worth INR 1.7 Lakh Crore so far [1].

The investment will be used to enhance M1xchange's digital supply chain financing capabilities, aiming to provide faster working capital access to MSMEs. The platform, which operates as a TReDS (Trade Receivables Discounting System) platform, enables MSMEs to discount their trade receivables through multiple financiers on an electronic platform. This fosters transparency, ensures timely payments, and improves liquidity for small businesses [1].

Filter Capital's investment comes after a series of strategic moves by M1xchange. In October 2023, Jindal Stainless acquired a 9.62% stake in M1xchange, while IndiaMART and BEENEXT acquired additional stakes of 3.4% and 1.99%, respectively, for a total of INR 38 Crore in 2022 [1]. These investments highlight the growing interest in the digital supply chain finance sector, which is crucial for managing complex cross-border trade and boosting global trade by 7.5% to $11.3 trillion by 2030 in Asia, Africa, and the Middle East [1].

M1xchange is one of several TReDS platforms operating in India, including RXIL, Invoicemart, C2treds, and KredX. KredX recently secured the license to operate as a TReDS platform, receiving Reserve Bank of India's (RBI) final approval in January [1].

The investment by Filter Capital is a significant milestone for M1xchange and the broader digital supply chain finance ecosystem in India. It demonstrates the potential for digital platforms to transform the financial landscape for MSMEs, thereby fostering economic growth and innovation.

References:
[1] https://inc42.com/buzz/m1xchange-raises-10-mn-to-boost-supply-chain-financing-for-msmes/