Marco Financial, a new Miami-based startup, is looking to take a piece of the roughly $350 billion trade finance market for Latin American exporters with its novel factoring services business.
Small and medium-sized businesses in Latin America can have trouble getting the financing they need to launch export operations to the U.S. and Marco said it aims to bridge that gap with new risk modeling and management tools that can make better decisions on who should receive loans.
“For smaller businesses in Latin America, accessing trade finance to export their goods is a major concern and a top reason why many don’t succeed,” said Javier Urrutia, director of Foreign Investments at PROCOLOMBIA, an organization that promotes foreign investment and non-traditional exports in Colombia, in a statement from the company. “In Colombia alone, a 1% increase in exporter productivity in our textile industry would result in 500,000 new jobs for the country.”
The company is backed by a small seed round from Struck Capital and Antler and over $20 million in a credit facility underwritten by Arcadia Funds.
“As a former owner of a small business in Latin America, I saw firsthand how difficult it is for SMEs in this region to access trade financing that will let them export their goods while retaining enough capital to keep their business running,” said Peter D. Spradling, COO and co-founder of Marco, in a statement. “Access to trade finance is one of the greatest hurdles in business operations and the traditional system dominated by banks is simply not working anymore, disproportionately hurting SMEs and further restricting economic mobility and job creation in emerging markets. Equity funding and a material credit facility let us serve this underserved market in Latin America and help build a healthier, more equitable trade ecosystem reflective of an increasingly borderless global economy.”
Spradling met his co-founder Jacob Shoihet through the Antler accelerator, a Singapore and New York-based early-stage investment and advisory services program that connects entrepreneurs and tech operators to launch new businesses.
Shoihet, a classically trained musician who fell in with the startup scene in New York through work at Yelp, was eager to launch his own company and connected with Spradling over shared interests in intermittent fasting and sports.
Small and medium businesses have a hard time receiving loans from traditional lenders thanks to tighter regulations and capital controls dating back to the 2008 financial crisis, according to Marco's founders. And the long periods that companies have to wait between when goods are shipped and orders are payed can put undue pressure on business operations. Factoring solves the gap by lending to merchants based on their receivables.
Marco said that it can reduce the length of the loan origination process from over two months to one week and provide funding to approved exporters within 24 hours.
The company is initially focused on Mexico, Uruguay, Chile, Colombia and Peru, and chose those markets because of Spradling's previous experience as an importer and exporter across the region.
“We look for companies that not only target massive, sleepy industries but also for ones that are led by management teams with fresh perspectives and asymmetric information that position them to upend incumbents,” said Yida Gao, partner at Struck Capital, in a statement. “In short order, Marco has assembled a world-class team to tackle the multi trillion-dollar trade finance market in a post-Covid time when SMEs around the world need, more than ever, reliable capital to fund operations and growth. We are excited to be part of Marco's journey to support the suppliers that are the backbone of global trade."