If the pandemic has taught traders anything, that’s it Supply chains are only as strong as their weakest link – and motor carriers are among the most essential of those links. And in Mexico, as in other countries, the trucking industry is dominated by small companies: more than 95 percent of the country’s approximately 200,000 carriers have fewer than five trucks.
It is notoriously a capital intensive business: Cash is needed upfront to purchase and maintain vehicles, to keep them on the road, and to pay expenses. a delivery it may take weeks or months to arrive. But like Jaime Tabachnikco-founder and CEO of Mexico FinTech Solvento“Demand is growing at a much faster rate than capacity,” Karen Webster said, especially as there is a shortage of drivers and U.S. retailers are in the midst of reshoring and near-shoring efforts.
It is essential to retain carriers. One of the best ways to do this is to step in and close the cash flow gap that exists for these carriers, poorly served by banks and FinTechs, by streamlining and speeding bill payments and financing for third party logistics providers, in particular transactions carried out cross-border.
The cross-border carrier/shipper relationship can be more complex than maybe seen in a domestic context, but as Tabachnik points out, “Sometimes complexity means greater opportunity. »
As he noted to Webster, to grow a business marked by “negative cash flow, it’s difficult to develop significant working capital.”
End-to-end solutions
Solventowhich provides immediate payment solutions to the freight sector, particularly in Mexico, leverages artificial intelligence (AI) and a from start to finish accounts payable process to solve the challenges of doing business in multiple currencies and exchange rates And legal frameworks country by country.
Late last year the company launched its Solvento Audita Powered by AI software that allows shippers and brokers to offer fast payment to trucking companies, which in turn allow drivers get paid faster.
And even though, a few years ago, FinTech made its debut by targeting small operators directly, offering working capital loans for each business, Solvento’s vision is to be “the financial platform… for everything related to the movement of money”, in the context of freight payment. Solvento targets freight industry aggregators (e.g. Uber Freight and Redwood Logistics) who are make forays into Mexico, to help increase their scale as they pay their own carriers.
Aggregator customers doing business cross-border must be able to pay Mexican freight players in their markets and in their national currencies. “Many U.S. businesses don’t know where to start – and the payments infrastructure they currently have doesn’t allow them to send payments to a Mexico-based bank account. » SolventoTabachnik said, offers a “plug-and-play solution that allows them to start paying Mexican carriers in 24 hours.”
Solvento Audita uses APIs to integrate into any existing software, capable of reading, detecting documents and validating them – providing proof that delivery has been made and payment is guaranteed, including for this which he says are “incidental” or unforeseen expenses that must also be paid.
“This audit process is mainly done manually in Mexico and the United States,” said the CEO of Solvento, “and if you have already audited the invoice and proof of delivery, then you have taken on the greatest risk in factoring, that the invoice is going to be paid. This is why the combination of freight auditing, payment and factoring is extremely powerful,” he added. what he called a ” magnificent corner” to continue to verticalize its product range. And transform the freight market And also continue to differentiate Solvento from banks and other FinTechs.
“By fulfilling our mission to make payments immediately – after delivery and within minutes of audit,” Tabachnik said, “this will be a game-changer for the industry” and even attract more drivers as the money is coming. more quickly, alleviating at least some supply constraints.
$12.5 million in hand
On Tuesday, November 19, the promise of Solvento’s Mexican and cross-border efforts received a $12.5 million vote of confidence through a Series A funding round led by Cometa. Investors included Quona Capital, Ironspring Company, Dynamo Adventure And others, via instant bank transfers.
The current influx of capital comes after an initial pre-revenue round in 2021 and a $5 million seed round in 2022. This time around, Tabachnik said, the funding environment is markedly different, since it took about five months from start to finish in a higher rate environment. the capital more expensive. “A Series A,” he told Webster, “would have always been about (company) traction and product-market fit.” »
Looking ahead, he said that with Series A funding in hand, Solvento is strengthening its sales team and plans to launch a new product, Rate Insights, which will help businesses compare rates. that they pay truckers compared to industry benchmarks. It is also possible to create a sort of “scoring” product for both sides of the platform (supply and demand, i.e. truckers) to help carriers make informed decisions on which shippers they do business with and who they do business with. pay on time or not.
“We hope to collaborate with different markets who are being built with different strategies and angles,” including traditional brokerages. THE the next two years will be be focused on modernizing the Mexican freight industry before expanding geographicallyTabachnik said..
“Mexico is big enough that we can build something gigantic,” he said.
