Mundi, a new financial tech startup focusing on small to medium-size Mexican exporters shipping to the United States, aims to reduce the risk and inconsistency involved with many B2B transactions in the cross-border marketplace, said Martin Pustilnick, Mundi’s co-founder and CEO.
“The problem that we see is that small and medium-sized enterprises (SMEs) end up acting like banks for their clients, and that makes no sense,” Pustilnick said. “We leverage financial rails that already exist. What we do differently is that we allow exporters to get paid instantly, even if the importers pay later.”
Pustilnick, who is originally from Argentina, holds an MBA from Stanford University. Before founding Mundi, Pustilnck was an entrepreneur-in-residence and investor at FJ Labs, a New York-based investment firm with a global focus.
In cross-border trade, exporters have to rely on their suppliers delivering the goods under contract, and must trust that their customers will pay on time.
Essentially, New York-based Mundi finances exporters by advancing payments for their cross-border transactions. Mundi then takes care of the payment collection from the importers of the products and receives a fee for overseeing the transaction.
“We use what we call managed accounts, essentially telling the exporters, ‘We’re going to manage your collections from now onwards, and you get an advance payment 24 hours to 48 hours after delivery, and then we’re going to go collect in the U.S.,’” Pustilnick said. “This is an improvement on the U.S. side, because the importer, they’re now gonna pay in U.S. dollars via an [automated clearing house], instead of having to spend money on wire transfers.”
When an exporter applies to have his or her invoice financed by Mundi, the company does a risk analysis of the transaction, the importer and clients.
Mundi offers the exporter’s clients the option to pay locally in more than 100 countries and 65 currencies, minimizing wire transfers or PayPal payments.
For now, Mundi is focused on Mexican exports to the U.S., but envisions expanding services to other countries. Mundi will also be working with companies involved in processed foods, chemicals, plastics and medical supplies.
The global finance gap, or the amount of requested trade finance that is rejected, was estimated at $1.5 trillion in 2019, according to a recent study from the Asian Development Bank. The largest trade gaps exist in developing countries in Africa, Asia and Latin America.
“You talk to an exporter and they know how to find new clients, but they don’t go to enough trade shows because they know that every time they go to a trade show the buyer will want them to go back to the factory, buy the raw materials, pay to ship the goods, and after all that, they receive payment 60 to 90 days later,” Pustilnick said.
Pustilnick added that many SMEs don’t have that kind of upfront cash to afford that kind of transaction.
“The more important thing is that if they don’t pay you, you go out of business,” Pustilnick said.