Twinco Raises $12M to Tackle $1.7T Trade Finance Gap

Twinco Capital has raised $12 million to close a $1.7 trillion trade finance gap.

The Madrid company announced the Series A round on its LinkedIn page Tuesday (Jan. 24). It was led by Quona Capital with help from existing investors Finch Capital and Mundi Ventures, along with a venture debt portion by Zubi Capital.

“With this major milestone, we want to accelerate our expansion within the major sourcing countries and strengthen our technology and data capabilities, in particular in relation to ESG,” the company said.

The $1.7 trillion gap — a widely reported estimate — represents the gulf between the demand for trade finance and the supply of that funding. Small and medium-sized businesses (SMBs) tend to be the hardest hit by this gap, often finding it difficult to find funding.

Twinco co-founders Sandra Nolasco and Carmen Marin discussed this issue in an interview with PYMNTS in 2021.

Their company works with corporate buyers that want to start a financing program with their vendors and offers those suppliers financing on their purchase orders instead of their invoices.

“Traditional supply chain finance methods are to fund the invoice, and therefore, only the payment terms,” Nolasco said.

“Funding the purchase order means reducing the financing costs embedded within the whole chain, not just shifting the burden from the buyer to the supplier.”

By financing at the point of purchase order, she argued, smaller vendors get the funding their need to access raw materials and produce goods to fulfill their orders.

Relieving working capital pressure at the start of the production cycle can strengthen their financial position before a business sends out an order and risks delayed payment.

This kind of financing can work in tandem with other financing methods, added Nolasco, but SMBs, particularly in emerging markets, are often faced with a dearth of options when traditional banks are unable to underwrite small-scale borrowers.

Twinco’s new funding round comes at a time when digital technologies are fueling innovation in the trade finance field, leading to faster decision-making and streamlining the process.

“In the past, trade finance was bogged down by lengthy risk assessment and underwriting processes, and accessing credit could take days or weeks, especially if it was a business’s first time doing so,” PYMNTS wrote earlier this month. “But as the digital toolkit deployed by banks and their partners has grown, the lending process is increasingly accelerated and many trade finance loans can now be approved and paid on the same day.”

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