How this startup is helping MSMEs with its digital financing platform

The COVID-19 pandemic had a devastating effect on the supply chain ecosystem, hitting micro, small and medium enterprises (MSMEs) heavily, and leaving them struggling to survive and build capital.

It was at this time that Noida-based business-to-business (B2B) industrial goods ecommerce marketplace Moglix, felt the need for a financing platform, and launched Credlix. A digital supply chain financing platform, it provides quick collateral-free working capital solutions for the entire supply chain.

“Unless MSMEs got paid, how would they produce goods to supply? Dwelling on this, we reached the point of realisation that working capital is something which can only accelerate our journey to become the B2B operating system,” says Pramit Joshi, Director, Credlix.

Moglix launched the platform in February 2021. It is a separate vertical of the company and provides quick collateral-free working capital solutions for enterprises and exporters.

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“Given the specifics that a financing business calls for, it was best to have it as a separate division, which leverages on the synergies that Moglix internally has as well as goes out independently and builds its own financing infrastructure to meet the unmet demand,” Pramit says.

Unlike listed companies, MSMEs don’t share quarterly financial updates; they share these details either semi-annually or annually, which does not help them much with creditworthiness.

But, that is not a hinder for Moglix, as it already has an end-to-end supply chain platform, which brings together 700 enterprises and 16,000 small and medium enterprises who mainly make in India and South-East Asia.

From a vantage point

“As a supply chain tech company, we are sitting at a vantage point where we actually see the demand and supply, and that information can help meet the gap on the financing side as well,” remarks Pramit.

Credlix, with this information, reaches out to MSMEs to bridge the financing gap. Suppliers can request for early payments from enterprise buyers at affordable discount rates to keep their supply chain up and running, staying in control of their cash conversion cycle.

Vendors and suppliers can do everything from credit application and credit risk assessment to payment approval and final disbursement, on a single platform.

The flow-based financing model provides services like early payments or invoice-discounting, which relies on almost daily updates on what MSMEs are buying, what they are selling and monthly updates of GST data points.

“We use our tech and commerce knowledge to bring in the information asymmetry and address information asymmetry to match the needs,” says Pramit.

While Credlix uses Moglix’s network, it is also reaching out through digital modes to MSMEs in a bottom-down approach.

The company claims it has already crossed the annual run rate of credit disbursal of $100 million in November this year, and has thus far financed 26,000+ invoices for 2,500+ MSMEs across 120 cities.

Since it started its operations in February, “we have only realised that the landscape is much larger than what we had imagined initially,” Pramit remarks.

Building synergies

In November 2021, Credlix made its first acquisition and entered the EXIM (Export-Import) financing space, with the acquisition of NuPhi, a Singapore-based startup which offers invoice factoring solutions to MSME exporters in India and SouthEast Asia.

Pramit, who is the co-founder of NuPhi along with Mayur Totla, joined Credlix after this deal. The startup offered border financing and SaaS applications to digitalise and automate EXIM workflows. NuPhi, with Credlix, hopes to grow much faster and at an industry level.

“The important synergy here was the mindset and the culture alignment that we had in terms of what Moglix offers, as an organisation and as a platform, to work with great leaders, access to capital and access to technology,” informs Pramit, talking about the acquisition.

Currently, Credlix is focused on the manufacturing segment from textiles to chemicals to pharmaceuticals.

“These are the industries where there are long supply chains. The Original Equipment Manufacturers (OEMs) would have two or three different layers of vendors who supply to these types of networks, and this is where we are penetrating deeper,” says Pramit.

In the next two to three years, Credlix aims to be twenty times of what it is in terms of size of the disbursement.

“We have just started scratching the surface in terms of reaching the supplier base of Moglix itself as well as the larger MSME base,” signs off a very optimistic Pramit.