Stenn bets $50 million on a $900 million valuation for a platform for financing SMEs that trade internationally – TechCrunch – Natural Self Esteem

Globalization has been one of the biggest trends in e-commerce over the last decade: Internet rails allow a much broader marketplace for potential consumers and a range of items to buy; In order to meet this demand, manufacturing and logistics have also made great geographical leaps. Now, a startup that has built a platform to provide financing to companies operating within this supply chain is announcing its own funding.

Stenn — which applies big data analysis by taking a few data points about a company (the two most important being how much money it’s going in and going out based on bills) and matching them with an algorithm that looks at about 1,000 other factors will consider his eligibility for a loan of up to US$10 million to determine this; and on the other hand, it’s drawing on a network of institutions and other large lenders to provide the capital for this financing — has raised $50 million in equity to expand its business after experiencing accelerated growth.

The funding comes from a single investor, US private equity firm Centerbridge, and values ​​Stenn at $900 million, the company said.

Stenn has been around since 2015 and has since funded about $6 billion in loans from 74 countries, including $1 billion in 2022 alone, with an approach that brings technology to an area previously largely dominated by lenders was untouched, he said in an interview with Stenn’s founder and CEO Greg Karpovsky.

“Accenture estimates that financing demand in this business segment is $3.6 trillion and will grow to $6.1 trillion over the next four years,” he said. And yet, “the main source [of funding] For them, this is currently the traditional banking system. Banks in developed countries focus on supply chain finance for large countries, and banking systems in developing countries are still underdeveloped. Companies in this segment are simply left without a bank. No one else is using technology to facilitate funding [for them].”

In the fintech world, there are a number of companies in the market that cater to the needs of small businesses that need capital, either to bridge them between invoicing and receiving payments; or to fund projects or activities outside of the normal business plan that will help them grow longer term; or for something completely different. Lending platforms and neobanks for domestic SMEs include Kabbage (now part of Amex), Endlich, Brex, Rho, June, NorthOne, Lili, Mercury, Hatch (now renamed Nearside), Anna, Tide, Viva Wallet, Open, Novo , MarketInvoice and many others.

The gap in the market that Stenn is addressing, however, is not that of a typical SME, but of companies that specifically run businesses that eventually flow into larger, cross-border businesses.

This can be international sellers on marketplaces or a company that supplies these sellers with products or services. What they have in common – and what sets them apart from typical SMEs served by your average fintech lending to SMEs – is that they tend to be significantly smaller than large multinationals, but much larger than a typical SME, with scope and capital must fit.

“Domestic SMEs are usually much smaller,” Karpovsky said. “They could be a hair salon.” He said the typical commitment — the amount borrowed — could be in the $30,000 to $50,000 range. For the SMBs that Stenn is targeting, it uses the World Bank’s definition, which amounts to a company with annual sales of up to $120 million. Using what Karpovsky described as “very limited information” — a company’s name and location, and details of bills being paid — it awards up to $10 million, with a turnaround time of no more than 48 hours between applications and approval. Typically, the loans are more in the $500,000 to $1 million range.

The opportunity gap is simple: it’s bringing to this segment of the market — and the larger sums they lend — the kind of approach that domestic SMEs have been taking for some time. “Risk management here is very different,” he added.

Those raising the money for loans include banks like Barclays and HSBC, he said, as well as family offices and other large financial institutions like insurance companies. And a side note on funding sources: Karpovsky is himself of Russian descent, and he said the company had drawn a red line from the start, “a very strict rule” on entering into any funding partnerships with money with Russian ties. (He left the country after the Crimea invasion, he said, and so it was “a decision we made many years ago.”)

“We are professionals in KYC and anti-money laundering, so we conduct due diligence on all our partners,” he added.

As for competitors, those lending to SMEs in domestic markets might try to move to internationally active companies – Amex, for example, has a large enough international profile to potentially consider doing so – but some of them the greater competitive force could prove to be the marketplaces where these SMEs already do most of their business.

In fact, Alibaba (via Ant Financial and Alipay) was keen to do more in international markets before regulators stepped in. Amazon has yet to make big strides here, but it could well be doing so in partnership with other financiers and present an opportunity for a company like Stenn. The banks themselves, for now, seem happy to be partners, referring customers to Stenn and acting as lenders on its platform.

Of potential players in this area, Karpovsky noted: “They are very far, more than 10 years away from focusing on solving the problem we are solving now. Their existing customers have more immediate issues, so we don’t see much competition now, and maybe not for many years to come.”

It’s an opportunity that investors are also interested in supporting.

“We are impressed with Stenn’s pioneering approach to addressing the challenges of the global trade finance offering and believe Stenn has a highly scalable offering,” said Jed Hart, co-head of Centerbridge’s European business and chief executive officer, in a statement. “We are pleased to support the growth of Stenn at an important time in its development and during a time of world uncertainty.”

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