Twinco Capital Secures €3M Funding for Supply Chain Finance

Twinco Capital Secures €3 Million in Funding for Supply Chain Finance

Twinco Capital, a startup headquartered in Madrid and Amsterdam, has successfully raised €3 million in a funding round aimed at streamlining access to supply chain finance.

Investment Details

The investment round was led by Mundi Ventures, a prominent Spanish venture capital fund. Finch Capital, an existing investor, also participated, alongside contributions from several undisclosed angel investors.

In addition to equity funding, Twinco Capital has established a debt facility with EBN Banco de Negocios, a Spanish investment bank. This type of financing is standard practice for companies engaged in lending activities.

Twinco Capital’s Solution

Founded in 2016 by Sandra Nolasco and Carmen Marin Romano, Twinco Capital provides a supply chain finance solution that incorporates purchase order funding.

The company achieves this by integrating directly with large corporations on the purchasing end. Subsequently, it offers funding to suppliers, providing up to 60% of the purchase order value in advance, with the remaining balance paid upon delivery.

A Digital and Data-Driven Process

Twinco Capital’s process is entirely digital, facilitating rapid decision-making and swift fund disbursement.

This efficiency is driven by the company’s proprietary supply chain analytics and the data obtained through partnerships with both buyers and suppliers within the chain.

Addressing a Critical Market Need

“The financing of global supply chains is often costly and inefficient, with suppliers, particularly SMEs in emerging markets, bearing the brunt of these expenses,” explains Sandra Nolasco, co-founder and CEO of Twinco Capital.

She elaborates, “Consider global supply chains in sectors like apparel, automotive, or electronics. Exporters in countries such as Bangladesh, China, or Vietnam, who have long-standing relationships with European companies, often face challenges accessing competitive liquidity due to creditworthiness assessments based solely on annual financial statements.”

Providing Liquidity Throughout the Supply Chain

By gaining visibility into both sides of the transaction, including forthcoming orders, Twinco Capital is able to offer liquidity to suppliers “from the initial purchase order through to final invoice settlement”.

“We accomplish this by analyzing extensive supply chain data – evaluating supplier performance, identifying network effects among common suppliers and buyers, and numerous other data points,” states Nolasco.

“Essentially, through advanced data analytics, we can more accurately assess and mitigate risk, leading to improved pricing. Importantly, as we fund more transactions and onboard more suppliers and buyers, our risk assessment becomes increasingly robust, creating a strong network effect.”

Revenue Model and Competitive Advantage

Twinco Capital generates revenue by charging a “discount fee” for each purchase order it finances.

“Given that default rates are significantly lower than this fee, we are able to unlock substantial value,” Nolasco points out.

The fintech also opens up a new asset class for investors and differentiates itself from traditional local banks, which typically rely on more manual processes and lack the benefits of network-driven visibility.

To align interests, Twinco Capital invests a portion of its own equity in the purchase orders it funds.