During my upbringing in India, I’ve been privy to the constraints and problems faced by MSMEs, suppliers and exporters. Observing a problem from close quarters often motivates you to find ways to solve them. In the 3rd year of my engineering at IIT-Bombay, Mr. Nandan Nilekani had visited our campus for a talk, where he stressed on the purpose of being an IIT-ian.
He said, you’re not made to work for others, but to create employment and move the country forward! Post my education from IIT-Bombay, I spent almost a decade working in the trade finance space with large corporates like Societe Generale, Kitara Capital and Amicorp. In 2014, I set up my own receivables finance business.
Over the years, we financed invoices worth over US$ 500 m and onboarded 5000+ customers. With the onset of Covid, the trade finance space demanded an acceleration in transformation. Owing to my background and education in technology and my keen interest in new-age tech, I saw an opportunity for the role of blockchain in trade finance where the unmet demand was to the order of $ 1.6 trillion.
This was motivation and inspiration enough to kickstart Polytrade!
In layman terms, can you tell our readers what Polytrade does?
In a nutshell, Polytrade fuels the working capital for SMEs, which helps them fulfil their orders to global corporations. As at 2018, the WTO reported that over 60% of trade finance requests by SMEs were rejected. As a result, trade finance is regularly listed as one of the top three obstacles to exporters. Indeed in many cases, if the request is not accepted by the financial institutions, the transaction will not take place.
By harnessing the massive liquidity of the crypto world, we are able to open a supplementary source of liquidity for SMEs. For our crypto lenders, we are able to open a whole new asset class to invest in i.e. real-world invoices from credible grade A buyers like IKEA, Walmart etc. that are also backed by credit insurance.
How will blockchain technology impact the real-world in your opinion?
Blockchain brings transparency to any industry, that’s the impact of blockchain that I see in the real world. Blockchain technology will gradually find application in mainstream, real-world businesses and use-cases. We’ve started seeing it already in areas like logistics, supply-chain and omni-channel digital supply networks. In our case for instance, the crypto liquidity is being tapped in to for financing SMEs in the areas of textile, handicrafts, mining & metals, paper production, fisheries etc.
This is as real and tangible as it gets. There is direct value being created and delivered. The GDP and per capita income of economies are directly impacted since the SMEs are also one of the largest source of employment for unskilled labour.
As more and more people start indulging in DeFi, the calls for regulations have been louder than ever. Could you give us your thoughts pertaining to this?
DeFi is a natural evolution of how value and monies will get transferred and transacted. The same way a bank evolved to an ATM and the ATM becoming redundant to QR codes, this evolution too shall come and pass. Regulation should and will come in this space. While it’s a contrarian view that regulation stifles ideas, it also provides a space for good ones to grow.
The only expectation from regulators would be to understand, interact with the industry, jointly arrive at new rules. That and that alone is the difference between a leader country and a laggard. We would welcome regulations that protects investors, while it promotes implementation of new ideas. We would be happy to work with them, anytime!
Describe your journey with Polytrade from a dream to a reality
When I started in 2014 with Riqueza Capital, I wanted to make a difference to an industry that was poorly catered. We were the early movers in this field. Our dream was to become a trade finance fund eventually. We gathered experience, created a brand, finally the dream of becoming a lender is being fulfilled.
The metamorphosis is now well and truly complete with Polytrade.
In a concise manner, could you explain how Polytrade works in catering to the working capital needs of MSMEs?
Polytrade opens up a supplementary source of financing for these SMEs by creating a blockchain-based decentralized protocol aiming to transform receivables financing connecting buyers, sellers, insurers, & investors for a seamless experience. It brings safe and insurance-backed real-world assets to the crypto world.
Polytrade will provide SMEs access to low interest and swift financing to free up critical working capital tapped from crypto lenders. While the project will start with a focus on trade finance, eventually, it would evolve into a full-stack lending protocol for small businesses. From a crypto lenders perspective, there are several key USPs that Polytrade offers –
i. Access to an asset-class that only banks and financial institutions were privy to
ii. Insurance backed, real-world invoices from grade A buyers (like Walmart, IKEA, etc.) which carry an extremely low risk of default
iii. Bear market or crypto winter proof investment vehicle, as the protocol bridges the worlds of CeFi and DeFi
iv. Flexibility and transparency with great rewards and % returns
What does the journey ahead look like for Polytrade?
We’re on track with our promised roadmap that you can see on our website. We’re going to release our MVP very shortly, post which our community can access and review our codes on testnet. We’ll be doing some trial transactions on our platforms in Nov-Dec, before launching on the mainnet early in 2022.
We should be able to process our first set of invoices in Q1 2022, post which we’ll go aggressive on business development to source newer clients. Our team continues to grow with hires for credit risk and blockchain development already on board. Though our current focus is receivables finance, we will scale up to become one of the largest trade finance protocols in the world.