The heart of Indian commerce rests in the thousands of bustling markets and streets across India teeming with millions of retailers mostly selling fresh produce. However, within this vibrant ecosystem, a silent struggle persists that has been plaguing retailers and wholesalers for decades: access to working capital. For millions of them, a few thousand rupees can be the difference between a healthy month and their livelihood going bust.
It is in this ecosystem that we are excited to talk about the latest addition to the roster of our investments in India: TradeCredit. TradeCredit is a startup setting out to bridge the gap between formal credit and underserved retailers, especially in the fresh produce supply chain.
The Origin of TradeCredit at Antler Residency
TradeCredit is a true Antler Residency original. Ashwin Jain joined the Residency to explore ideas in the Fintech space, particularly those addressing the pain points he had experienced firsthand. He has deep roots in the agri-supply chain and firsthand experience of the challenges faced by retailers and wholesalers as the founder of a fresh produce procurement platform. He has also worked with industry giants like Ninjacart and Swiggy, gaining valuable insights into the fresh produce market and supply chain dynamics.
Shubham Matah, on the other hand, joined the Residency with a prototype for a different idea but was open to pivoting if he found a more compelling problem to solve. Shubham is a seasoned product builder in Banking and Fintech with a sharp focus on credit products and risk management. Shubham's experience, honed at institutions like Capital One and various fintech startups, equips him with the technical know-how to navigate the complex world of financial services.
It was during the initial weeks of the Residency that Ashwin and Shubham connected. They quickly realized that their complementary skills and a shared passion for solving real-world problems and identified fresh produce financing as a target market. Throughout the Residency, the duo conducted extensive market research, interviewing over 100 wholesalers and retailers to validate their hypotheses of the need for financing in the sector and what a solution would look like.
Together, they identified a critical gap: while the fresh produce market in India is massive and growing at a 5-7% CAGR, the coverage of formal credit remains below 15%. This realization led to the birth of TradeCredit, a venture aiming to revolutionize supply chain finance for retailers of fresh produce. As the Residency came to a close, we decided to back the duo in their mission to build TradeCredit.
Tapping into India's $250B Fresh Produce Market
Our decision to invest in TradeCredit was driven by several compelling factors:
- The $250 billion+ fresh produce market in India, growing at 5-7% annually, presents a significant opportunity for disruption and value creation.
- Ashwin and Shubham's complementary skills and deep domain expertise are crucial for navigating the complexities of both the agri-supply chain and fintech sectors.
- TradeCredit addresses a critical pain point for retailers while ensuring strict end-use control. This ensures higher than industry approvals while addressing the pressing needs of both retailers and wholesalers.
- TradeCredit offers a truly tailored product that helps align the cash flow cycle of small retailers and real-time settlement for wholesalers.
- Recent regulatory changes have created opportunities for ventures like TradeCredit, including the introduction of PM SVANidhi in 2020 and the Reserve Bank of India's removal of the pricing cap for microfinance lenders in 2022.
- Many businesses in this segment are new to formal credit, TradeCredit helps them build a credit history and accelerate financial inclusion.
Unlocking Value For Millions of India’s Retailers
In the short time they have been operating, the team has built an MVP for their first pilot city, Bangalore. They have onboarded 60+ wholesalers and are poised to begin retailer onboarding. Additionally, they have secured soft commitments from multiple NBFC partners, indicating strong interest from the lending ecosystem.
Looking forward, TradeCredit aims to onboard approximately 10,000 retailers in their first year of operations. This will allow them to de-risk their underwriting and collections processes while achieving the scale necessary for geographic expansion.
The team envisions expanding to the largest Tier 1 and Tier 2 cities in India over the next 4-5 years. As they establish a foothold in each new geography, they plan to diversify their product offerings, potentially evolving into a comprehensive financial services platform for the urban unbranded retail sector.
Rajiv Srivatsa, Partner at Antler India, shares his perspective on backing TradeCredit: "What struck us about TradeCredit was not just their innovative approach to a long-standing problem, but the depth of understanding Ashwin and Shubham brought to the table. Their solution isn't just about providing credit; it's about reimagining the entire ecosystem of fresh produce trade in India. We believe TradeCredit has the potential to become the financial backbone of India's agricultural retail sector, driving efficiency and growth in a market that touches millions of lives daily."
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