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HSBC is making a US$35mn investment in B2B trade platform Tradeshift as the two work to create a trade and financial technology joint venture set to launch early next year.

The tie-up marks HSBC’s latest foray into the trade tech space following the closure last year of the bank’s own start-up Serai, which, like Tradeshift, offered a trade finance marketplace platform and ancillary digital trade products. It also comes as banks including HSBC seek to harness customer data to improve the trade finance experience.

The joint venture will focus on enmeshing fintech and payment functions into firms’ existing trade processes, Tradeshift says, tapping into growing appetite for providing so-called embedded finance solutions.

“Access to financial services remains a key challenge to companies everywhere in the world,” Tradeshift co-founder Gert Sylvest tells GTR. “We believe that the next generation of financial services in the B2B space requires those [financial services] to be made accessible within context of the actual trade taking place.”

“Making this happen at a global scale requires players within both trade and financial services to come together and bring that next generation of products to market, and we believe this is what the joint venture enables, which we couldn’t execute on our own.”

The duo is betting that marrying Tradeshift’s customer network and data with HSBC’s financing heft and global reach will be a success story among the many bank and fintech tie-ups in trade.

“In this relationship, we are bringing together the world’s biggest trade bank and the world’s largest trade network,” says Sylvest. “We each have a clear contribution to make and role to play for the joint venture, which enables both companies to go beyond where they could individually go.”

“Enabling and growing global trade has been in HSBC’s DNA for almost 160 years,” says HSBC global commercial banking CEO Barry O’Byrne.

“We are very excited to partner with Tradeshift to help businesses and their suppliers trade more smoothly using world-class technology and solutions that the joint venture will deliver.”

HSBC called time on B2B trade provider Serai just over a year ago after seeing little return on what one former employee said was a US$70mn investment.

This time, HSBC is banking on a lower risk strategy by joining forces with a well-established trade tech brand.

“We are investing into what is already an established business with a significant existing product offering and extensive client base,” says an HSBC spokesperson. “This is a unique opportunity to create a new, jointly owned business focused on the development of embedded finance solutions and financial services apps.” HSBC also launched an integrated platform, HSBC Trade Solutions, for its customers last year.

More details on the joint venture, including where it will be incorporated, will be released closer to its expected launch in the first three months of 2024.

HSBC’s investment in Tradeshift, through which it will also join the fintech’s board, represents half of US$70mn secured by the company in a fundraising round which also closed on August 1.

Other investors include AYTK Limited, LUN Partners Group, Fuel Venture Capital, Doha Venture Capital LLC, Notion Capital, IDC Ventures and the Private Shares Fund.

Tradeshift says it will use the capital injection to enhance its product range across software-as-a-service, its B2B marketplace and embedded finance. It also says it “plans to explore” possible mergers and acquisitions “to expand its value proposition for buyers and suppliers”.

“We’ve been overwhelmed by the belief expressed by investors in our vision and execution strategy,” says CEO and co-founder Christian Lanng. “We’ve proven the value we can unlock by bringing digital trade and financial services together on a single platform.”

The company has struck a wide range of partnership deals over the years with the likes of Santander, supply chain finance provider Raindew Trade and Denmark’s export credit agency. HSBC and Goldman Sachs were among investors in its 2018 series E funding round, which netted US$250mn.