Berlin-based fintech Modifi has secured US$145mn in debt financing from two existing bank partners, as it looks to deepen its presence in key markets and build out its digital trade finance platform. 

The funds are provided by Silicon Valley Bank (SVB) and Solarisbank. Both lenders have previously provided financing to Modifi, including through a September series B funding round that raised US$24mn. 

The injection of capital, announced today, comes as Modifi announces rapid growth. The company, which provides buyer and seller finance, says it has quadrupled its business year-on-year. 

Though India, China and the UAE remain its largest markets, the company has undergone significant expansion into new markets over the past year. 

A foray into the US market was backed by a US$60mn debt facility from SVB’s German branch, while Solarisbank partnered with Modifi to launch its services in the Netherlands – where SMEs lag behind European counterparts in terms of access to credit. 

Co-founder and chief executive Nelson Holzner tells GTR that rather than continue that rate of expansion, Modifi is now “starting to focus more on going deeper into our existing markets, rather than just broadening into new markets”. 

Its US business, in pilot stage over recent months, is now starting to see “some sizeable business coming through”, Holzner says.  

The company has also been surprised to see higher demand for seller finance products than for buyer-focused facilities during its Netherlands expansion. 

“Every now and then you will see interesting opportunities that might lead you into a new market, but we are already active in quite a few places and I think the focus now is more building out the core business,” Holzner says. “That means growing the buyer finance and the seller finance products, and ultimately helping SMEs with their growing pains.” 

SME importers and exporters have been negatively impacted by the Covid-19 pandemic, Modifi’s announcement says. Logistics issues and skyrocketing freight rates, in part driven by a mismatch between consumer demand in the US and Europe and supply from Asia, have dramatically increased costs for smaller firms. 

At the same time, demand for trade finance continues to outstrip supply, with research by the Asian Development Bank estimating the trade finance gap grew 15% in 2020, reaching a record US$1.7tn. 

“There is a growing need for innovative solutions that remove barriers, increase transparency and enable small and midsize businesses to trade on a par with larger corporates,” says Nicolas Knecht, managing director for lending at Solarisbank. 

Modifi hopes to address those issues by developing a global digital hub for trade management, enabling its SME customer base to manage all trade-related activities on a single platform. 

“Looking ahead, we will continue in the platform game, building up the suite of tools available for trade management, and next year there will be lots behind the scenes to keep us busy,” Holzner says. 

In February, Modifi acquired PrimaDollar’s SME-focused export finance business, with PrimaDollar looking to focus more on larger customers of its supply chain trade finance product.