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Latin American supply chain platform Finkargo has raised US$20mn in a series A funding round, as it looks to meet growing demand among the region’s SMEs to connect to global value chains.

The round was led by QED Investors, with the participation of new investor Nazca and existing investors Quona, Flybridge, Maya Capital and One VC.

Founded in Colombia in 2021 by Santiago Molina, Andres Ferrer, and Tomas Shuk, Finkargo aims to accelerate and fund international trade operations for SMEs in Latin America, with a focus on import finance. The company’s platform offers an automated credit scoring model, access to capital and logistics and financing processes, enabling small and medium-sized importers to boost sales and control logistics.

In April 2022 it received a US$7.5mn seed investment in which Quona, Flybridge, Maya Capital and One VC participated, followed by a US$75mn structured credit line from impact investment fund Community Investment Management in November.

So far, Finkargo is focused on the Colombian and Mexican markets, where it says it has “empowered over 250 customers to partake in global commerce”, extending financial support to over 2,000 import operations valued at US$200mn across a network of 430 suppliers spanning 40 countries.

“Because these are SME importers, they often don’t have credit terms with their suppliers because they don’t have any negotiating power,” Molina, the company’s CEO, tells GTR. “We give them the working capital to execute purchases, optimise their supply chains, negotiate better conditions, meet minimum order quantities and achieve a better negotiating position with suppliers all around the world.”

He adds that Finkargo provides lending directly, rather than acting as a broker, although it also offers third-party cargo insurance to importers through the platform, as well as additional services such as verifying suppliers and shipments.

“We have the merchandise as collateral, and we understand each one of the transactions and the logistics behind them because, unlike other specialty lenders, we’re logistics experts. We’ve brought together these two worlds to offer everything an importer really needs in order to operate efficiently,” he says, adding: “These are also not just net importers. In fact, 30% of our importers transform and export again, so we’re basically providing the oxygen to keep them connected to global value chains.”

With the new capital raised in this round, Finkargo now plans to further expand its operations in Colombia and scale up in Mexico.

Discussing the investment, QED Investors principal Camila Key Saruhashi points out that SMEs in Colombia and Mexico import over US$30bn in volume from Asia yearly but struggle to access capital to manage the 60- to 120-day gap it takes from payments to shipment arrival.

“The limited number of banks that have trade finance practices almost exclusively focus on large traders, given the historically manual processes associated with underwriting these types of loans,” she says. “Finkargo is bridging the gap by leveraging data and technology to offer an essential import financing product.”

“Demand is huge,” Molina says. “Mexico represents almost half of international trade for Latin America, but eventually we want to create an ecosystem for the entire region. There’s a lot to do beyond just giving access to capital, which is where we are starting to focus. Beyond insurance, we have business intelligence and data so that SMEs can make better decisions, and we are starting to partner with other players in the ecosystem like freight forwarders and customs agencies, to better optimise the flow of money and data.”