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MidCap Financial and Castlelake Lead $200MM Financing for Marco

February 28, 2023, 07:40 AM
Filed Under: FinTech

Marco — the first tech-enabled trade financing platform built for small and medium-sized businesses in Latin America and the United States — announced it has received a $200 million credit facility from leading middle market lender MidCap Financial and global asset-based private credit specialist, Castlelake. Marco has also announced it raised $8.2 million in equity funding, led by Arcadia Funds LLC. The new funding will support Marco's growing client base and portfolio to expand its trade finance platform and suite of trade services aimed at closing the $2 trillion global trade finance gap that disproportionately impacts small and medium-sized enterprises (SMEs).

SMEs power global business. They account for more than 50% of all employment worldwide, — 80% in developing countries — represent 90% of all businesses and contribute up to 40% of GDP in emerging economies. However, the biggest obstacle to their growth is access to financing; banks reject 50% of SME applications globally and fewer than 10% of SMEs in Latin America (LatAm) have access to financing despite accounting for 90% of all businesses in the region. Banks have largely retreated from SME trade lending following a tighter regulatory climate driven by the 2008 financial crisis. Legacy lenders fail to understand SME risk and depend on outdated, lengthy financing processes that stifle growth of small and mid-sized businesses. This has led to a $2T global trade finance gap — estimated at $350 billion in (LatAm) — that blocks too many exporters from global markets.

Marco takes a unique approach to closing this trade finance gap: it couples smart decision models with best-in-class industry experts. The company is the first operating system for SMEs in trade in LatAm addressing the most pressing problem in today's lending climate: providing them the liquidity and tools they need quickly, seamlessly, and during bear market cycles.

Marco unleashes the big power of small businesses by simplifying, accelerating, and reimagining cross-border trade with cutting-edge technology. Its tech-powered risk solutions outperform traditional financing methods, enabling SMEs to receive a decision within days instead of weeks and 24-hour approval turnaround, accelerating their ability to participate in the global economy.

"Marco is addressing one of the most pressing yet under-recognized economic issues of today: the ongoing inability for small exporters in emerging markets to swiftly access capital," said co-founder and COO Peter D. Spradling. "We believe that when there's economic uncertainty is exactly the time when lenders should help businesses. The umbrella should be given to businesses when the forecast shows rain, not when it's sunny."

The credit facility and equity financing follow a year of significant growth for the three-year-old fintech. Last year, Marco lent $100 million faster than any other LatAm fintech, it has financed over $254 million with zero losses since inception and saw 1,500%+ CAGR in funding between 2021 and 2022. Marco aims to fund $750 million by the end of 2023, focusing on target segments in the U.S. and across LatAm, specifically in Mexico, Ecuador, Colombia, and Peru, where total exports exceed $490 billion.

The Miami-based fintech — which also has offices in Montevideo and New York — plans to expand its ecosystem to continue providing SMEs with critical trade finance products, such as factoring, purchase order financing, and asset-based lending, and to grow its exporter-focused trade services suite.

Marco's leadership team includes industry experts Barry Kastner and Fred Leder who jointly have almost a century of experience in asset-backed lending. The company recently hired its chief technology officer, Nik Bougalis, who previously served as director of engineering at fintech company Ripple Labs, where he spent the past decade building a more open and accessible financial system. At Marco, Bougalis will leverage this experience, leading a growing team of engineers working to democratize and streamline access to financing for SMEs today - and developing the vision and infrastructure for the cross-border trade ecosystem of the future.

"We're extremely proud to have provided small businesses with more than $250M of liquidity in two short years, but the best is yet to come," said Marco co-founder and CEO Jacob Shoihet. "Our team is working on some revolutionary products that address exporters' critical needs, crafted by our new CTO, Nik Bougalis. Our new financing comes during a tremendous period of growth at Marco and demand for our services and will help us meet the pressing liquidity demands of small exporters who are increasingly vital to a healthy, thriving, and resilient global and borderless economy."

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