Trade finance blockchain company Komgo has closed a funding round with $29 million, a press release said on Tuesday (June 1).
The round featured both new and existing investors. SMBC was one of the new investors bought in. There was also an unnamed global financial institution that participated.
It also comes as enterprise buyers have responded to the COVID-19 pandemic by using more digital ways of doing business. The release said there has been more demand for Komgo’s services, with a 50 percent uptick in trade finance transactions through the platform. There has also been a 65 percent increase in clients in production in the past year.
Komgo has seen expansions as of late, including U.S. locations such as Houston and New York.
In 2018, ING, Societe Generale, ABN Amro, Shell and other companies in the banking and oil sectors launched Komgo. It began work in Geneva and has since expanded to Singapore. The new funding will go toward a mix of expanding as well as marketing as the company looks to reach companies outside of the commodities sector. It also plans to invest in other features while refining its operation.
There are four different solutions Komgo has developed, letting users: work in trade finance, use blockchain to manage risk, digitize know your customer (KYC) exchanges and authenticate and trace digital documents.
Trade finance has traditionally been steeped in paper-based documentation and has only recently begun modernizing. As that’s gone on the industry has faced scrutiny over its relationship with credit risk. According to some critics, some trade finance products have ended up encouraging late payments from large corporates, or those same corporates were encouraged to force suppliers into financing agreements.
The industry is rooted in the ability for cash to flow from one entity to another effectively. Triterras Chief Operating Officer John Galani said the problem with the industry was the continued reliance on paper when better methods were available.
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