Maersk, the world’s largest shipping company, is moving further into the world of trade finance, having invested in a technology platform that provides digital import and export finance solutions for SMEs.

The platform, called Modifi, was launched in November last year, allowing SMEs to apply for financing digitally and raise working capital within 48 hours.

Having now raised €5.5mn in a funding round, Modifi will look to expand the reach of its seller and buyer financing products. The round was led by Maersk Growth, the corporate venture arm of AP Moller-Maersk, together with international investor Global Founders Capital.

“The old ways of performing trade finance is still reliant on slow, paper-based and complex processes,” says Jeppe Hoier, investment partner at Maersk Growth. “Technology and digitalisation will be a driving force in setting future standards by changing the legacy systems of doing risk assessment, and we believe Modifi has the right team and product to do so.”

Maersk officially launched its trade finance business in 2017 to give customers the option to finance their shipments or to invest in new orders. Maersk Trade Finance offers a range of products, including pre-shipment and post-shipment credit facilities for both importers and exporters.

Maersk and Modifi will now “explore synergies of collaboration to the benefit of current and future Maersk Trade Finance customers”, says Maersk’s global head of trade finance, Vipul Sardana.

Speaking to GTR, Nelson Holzner, Modifi’s CEO, says it’s still too early to be specific about the projects of collaboration, but says the two are currently discussing how Modifi can help Maersk within the SME space.

“Maersk has very ambitious growth plans over the next few years for trade finance and now we have to figure out how can we work together,” he says. “They struggle a bit on the SME side of the trade finance business, including how to onboard and process it efficiently. So we are now thinking about projects where we might help them with our SME know-how. We have identified a couple of areas of co-operation, which hopefully will help them and us over time to get a better user experience and more volumes.”

Modifi’s founders – Holzner, together with Sven Brauer and Jan Wehrs – was the team behind BillPay, an SME-focused payments company that was bought by Swedish bank Klarna in 2017 in one of Europe’s largest fintech acquisitions. The trio then decided to pursue new ambitions within trade finance.

Modifi has two offerings: a buyer and a seller financing solution. The first portfolio is being financed by solarisBank, a German bank, but the fintech company will look to work with other financial institutions in the future.

The platform first launched the buyer finance solution for SME importers looking for an alternative to conventional reverse factoring. As opposed to traditional programmes, Modifi does not require buyers to bring in large pools of suppliers, who in turn need to agree to join the programme. Instead it operates an on-demand model, which Holzner has previously compared to the concept of Airbnb.

Following a successful six months with this product, the company has now also launched its seller finance solution in India. It enables SME exporters to offer attractive payment terms to their buyers while getting paid early.

“There is a lot of trade happening in India and access to capital is a bit difficult for SMEs, so it was a good starting point,” Holzner says. “The banks are reluctant to extend lines of credit, plus it’s typically a fairly burdensome process, which takes a long time and requires exporters to provide a lot of securities and collateral. We try to be light on that side.”

Apart from being a fully digital offering, Holzner says the product is different from conventional trade financing in that it leverages alternative data to assess the creditworthiness of the exporters.

“We try to be smarter with new data sources to assess the quality of exporters and understand whether a company is for real or might be fraudulent,” he says. “There is a lot of data available which traditional banks hardly use. We work a lot with transaction data, such as customs data, because it gives a good idea of how many times certain exporters have shipped goods to a particular counterparty. A traditional financial services firm is probably more worried about the counterparty risk and the contracts.”

While the Modify platform is designed to support companies anywhere in the world, the company is initially focusing on Asia-Europe trade. The buyer finance solution was first launched in Europe; the seller finance solution will be expanded to another Asian country this year, before launching in Europe.