Startup Series: Marco Financial—Latin America’s first tech-enabled financing platform for SMEs
Marco Financial, "the first tech-enabled financing platform built for small and medium-sized Latin American exporters," announced in TechCrunch that it has secured $26M in funding and credit that will enable the company to address the $1.5T global trade finance gap that disproportionately impacts small-and medium-sized (SME) businesses. Marco supports SMEs based in Latin America, where a $350 billion trade finance gap blocks many exporters from participating in the US market. The funding includes an equity round, led by Antler and Struck Capital, and a credit facility underwritten by Arcadia Funds, LLC.
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September 22, 2020
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The team behind Marco
Marco co-founders Peter (Pete) Spradling and Jacob (Jake) Shoihet met in September 2019 through Antler in the US. The idea for Marco came together as Pete, a serial entrepreneur from Uruguay, outlined the pain points he accumulated scaling several international trade businesses. Jake, a former sales and business development executive, listened intently. Jake recalls, "Pete grew his last business to around $10M gross merchandise value. He landed contracts with Kraft Heinz, Newman's Own, General Mills, and Schreiber Foods, and his company was growing quickly enough - with a balance sheet healthy enough - to secure a $1.5M asset based loan from a regional bank in South Florida. But Pete still struggled to obtain the short-term working capital he needed to bid on new contracts and open new markets. That's the massive pain point and a typical problem for the businesses we're trying to finance."
Jake, who'd also conducted market research on a software banking concept geared towards commercial and regional lenders, understood the challenges on the other side of the coin too: smaller banks that originate and underwrite non-real estate loans can't systematically process large volumes of documents, are encumbered by analog workflow processes, and struggle with overwhelmed underwriting committees. SMEs account for 40% of global trade, but banks reject 50% of SME applicants. Pete explains, "Democratizing access to finance is crucial because banks aren't operationally built to help the smaller guys. They'll happily hold onto SME cash, but unless substantial business is generated, they won't underwrite short-term working capital. It just doesn't make sense. And that's really why the need for a solution like ours comes in."
How Marco works
Marco addresses the operational risks associated with providing trade financing to Latin American SMEs by factoring their trade receivables from US buyers and leveraging technology that innovates the underwriting process. Marco honed in on the Latin American market not only to access Pete's existing regional network connections, but also take advantage of the market's pioneering e-invoicing and trade document digitization. E-invoicing harnesses technology like optical character recognition and robust robotic process automation to create templatized documents which expedites the otherwise archaic process, making it easier to prove financing and underwrite assets effectively. These centralized databases validate invoices and mitigate instances of fraud. For more detailed information on Marco's platform, check out this recent profile in PYMNTS.
Jake and Pete are motivated by Marco's potential global economic impact. SMEs, the base of the supply chain, drive job creation. SMEs account for 60% of total employment in advanced economies and 80% in developing countries, including those in Latin America. According to PROCOLOMBIA, an organization that promotes foreign investments and non-traditional exports in Colombia, a 1% increase in exporter productivity would generate 500,000 new jobs in the country. "I joined Antler with an interest in serving rural communities, and here, we're not only creating new jobs, but we also stand as an alternative to predatory lenders that take advantage of smaller companies at multiple points along the supply chain. Our focus on impact is a core element of us and our narrative; we're driven by this mission," says Pete.
If you're looking to raise venture capital as a first time founder, it's a challenging endeavor, regardless of your background or pedigree. Statistically, it's one of most difficult things that you can pursue. Being attached to Antler de-risked our team as we raised our round and encouraged us to pivot quickly when necessary. They had worked alongside us for months and had seen the conviction we had for this concept and the progress we made from a traction standpoint in a relatively short period of time.
And in venture time is a crucial element. Through Antler, Pete and I moved the needle effectively. Pete and I grew our company rapidly because of Antler: we worked on securing a credit facility, hired talented individuals, and built a true venture-backed business.
Antler wasn't a stepping stone to another accelerator, or incubator, or another learning opportunity. Antler really did accelerate Marco's trajectory: we created a broad network of VC connections and raised a material amount of additional institutional cash. This allows us to make the impact that we want to achieve: we’re building the premier tech-enabled trade finance platform in Latin America. Antler has been an integral partner in powering us forward.
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