Startup Circle: How is PrimaDollar changing the terms in the supply chain trade finance?

Globally, exports and imports have slowly begun to open up after the huge pandemic encounter. In such a time, having a working capital is crucial and players like PrimaDollar helps the companies to produce and sell without looking for cash to continue. The conversation with Tim Nicolle, PrimaDollar share insights on how the company is shifting credit focus on export-import industry.

1.What is PrimaDollar? Tell us about the team.

PrimaDollar’s business is defining a new financial industry – which we call “supply chain trade finance”. Our platform has all the scope and the reach of traditional trade finance products, but all the simplicity, convenience and cost savings of supply chain finance. And this is important because we are a hybrid of several traditional banking products. It reflects in our teams and our DNA. PrimaDollar is a combination of trade finance, factoring and supply chain finance – and we have specialists from all three areas working in the company – people who might not normally be talking to each other were they to be working in a bank.

So with around 50 people across 12 offices, we have a diverse group of entrepreneurial and talented individuals from different nationalities, cultures, backgrounds – and we speak many languages across the teams.

2. How did you come up with the idea?

Trade finance is the holy grail of fintech – probably the largest addressable market space which is very poorly served by existing banking products. As the founder, I already had many of the skills needed to devise a new working solution that solved the main challenges – with approaching 30 years’ experience in international corporate finance and working with cross-border financial technologies.

3. What is your business/market growth?

The main problem with trade finance is in the customer journey. The banking products (eg: letter of credit) work. But they are complicated, expensive and difficult to access without deep technical knowledge.

We are fixing that customer journey in the same way the Uber or Ola fixed the customer journey in the taxi business. We provide the same outcome. Exporter gets paid at shipment, his buyer can pay later. But we do it in a much easier, simpler and lower-cost way than the traditional banking products.

4. Who are your consumers?

Our customers are large corporate importers and their exporting suppliers.

5. The fintech sector took a deep hit, how are you managing your business in such tough times?

We do not take the credit risk on the trade finance that is provided over our platform. Thus, we have not suffered the setbacks that many credit businesses are now suffering. The pandemic period has allowed us the time to invest further in our platform. We are now bringing our supply chain trade finance solution into India to help India’s large corporate importers take control over how their exporting suppliers are funded and paid.

6. What are your Post-Covid plans?

The pandemic has created a perfect storm in the trade finance ecosystem for our solution – collapsing many years’ of behaviour change into months. We are well-positioned now to offer viable and efficient solutions to importers and exporters that can support their recovery as the virus comes under control and business starts to return to normal.

7. What is the current scenario of global trade? Will it improve?

We believe that the main problems are still ahead of us, as a large number of businesses have major credit challenges that are yet to be visible. We would be very cautious on the outlook at this point – and would be very happy to see appropriate social, fiscal and government supports to the business continuing well into next year.

8. What are the budding industries and how will supply chain finance help it become better?

The real point is that the market needs “supply chain trade finance” – a viable and efficient way to get supply chain finance to work cross-border. This brings significant efficiencies, cost savings and benefits to both importers and exporters – and for all industries. Supply chain finance, by itself, is not enough – since it is largely a domestic financing technique.

9. How is PrimaDollar bridging the gap and providing trade credit to suppliers?

Our supply chain trade finance platform is changing the way that trade finance works. The outcome is still the same: the exporting supplier still gets paid at shipment, and the importing buyer can pay later. And this works for both Indian exporters and importers. And the typical cost savings are around 2% in the landed cost of goods; a compelling reason to look at and implement this new way to get trade finance into the international supply chain.

10. What is your opinion on the "Make In India" and "AtmaNirbhar Bharat" as global players?

This is a good and strong initiative – and will benefit India over the medium term. But it is causing some stress in supply chains already. As importing supply chains get more complex and exporters find that there is not always enough capacity (i.e. containers) to get their products shipped out. So this should be implemented as a gentle change in the course of the country, not as a sharp turn.

11. Funding

Banks and money markets have plenty of liquidity. But the issue is finding credits resilient in the face of the economic challenges we all face. PrimaDollar does not take the credit risk on trade finance that we provide – as we always lay off our risks into the market. This will continue to be our strategy. So, we do not see major challenges in our own funding going forward.