How Twinco Connects SMBs with the World’s Largest Fashion Retailers

For small and medium-sized businesses in emerging markets around the world, selling to large Western customers can be transformative, enabling them to grow rapidly and create new wealth. But to meet the demands of large buyers with challenging supply chain requirements, these SMEs need access to finance – many are missing out on trade opportunities as a result, and some estimates put the trade finance gap as high as $1.7 trillion.

Specialist in trade finance Twinco Capital wants to help address that problem. And the fintech start-up, based in Amsterdam and Madrid, is today announcing a $12 million funding round that it hopes will provide the firepower to support more SMEs bidding for lucrative contracts in the apparel sector.

Sandra Nolasco, CEO and co-founder of the company with COO Carmen Marín, says the approach to trade finance is unique. “We are the first company to offer a global supply chain financing solution that starts with financing at the beginning of the production cycle,” she explains. “We do this worldwide for both small and large suppliers.”

Supply trade finance traditionally works according to a different model. A supplier landing a $100,000 order from a major retailer would fulfill the order and then invoice the customer; to improve its financing, it could then borrow from an invoice finance provider against the value of this invoice, instead of having to wait for the customer to pay its bill.

Twinco, on the other hand, offers capital at the time the retailer places the order. Nolasco points out that many small businesses do not have sufficient financial resources to purchase raw materials and secure production capacity for the order size a large international retailer might place. Twinco’s capital can therefore ensure that the SME does not miss out on such matters because a lack of financing prevents the fulfillment of an order.

In practice, for example, a Bangladeshi t-shirt manufacturer receiving a $100,000 order from a European retail chain could ask Twinco for $60,000 in financing. The capital would enable the manufacturer to fulfill the contract, with Twinco getting its money back once the order has been fulfilled and the bill paid.

“We want SMEs in every market to be able to participate in global trade,” explains Nolasco. “Lack of access to finance is a major challenge getting in the way of that, so we focused on that.”

Twinco works directly with Western retailers; they share details of their suppliers with the company, as well as data on how each supplier has performed in the past, such as whether they deliver orders on time and with the right quality. Twinco’s systems then analyze that data to assess the creditworthiness of suppliers, enabling it to offer financing earlier in the trading process.

It is a model that appeals to both buyers and suppliers. The former do not take any credit risk and work with a wide range of suppliers; Twinco’s systems also collect a comprehensive set of data on suppliers’ commercial, financial and sustainability performance, helping retailers ensure supply chain transparency. The latter receive the financing they need to take on larger contracts and support their growth.

Since its launch in 2019, Twinco has grown rapidly. It now partners with five major apparel retailers and more than 100 suppliers in 12 countries, including Bangladesh, China, Pakistan, South Korea, Turkey, Thailand, Vietnam and Indonesia. It has provided these suppliers with $150 million in financial support to date.

Nolasco is ambitious for the future of Twinco and sees opportunities to increase its influence with its existing customer base, but also to go further. “We want to change the fashion industry first, but we can also make a difference in other sectors,” she explains. As obvious examples of industries where major players in developed markets work with extended supply chains from smaller companies around the world, automotive and electronics are possible next steps for the company.

Today’s financing round should enable Twinco to pursue its ambitions more aggressively. The $12 million equity and debt round is led by Quona Capital, with participation from Working Capital Innovation Fund and existing investors such as Mundi Ventures and Finch Capital. “Twinco is focused on a significant pain point in the vast and under-penetrated market that is supply chain finance,” said Monica Brand Engel, co-founder and managing partner at Quona

The funding will be used to accelerate Twinco’s expansion in the key markets from which Western retailers typically originate, and to strengthen its technology and data capabilities, particularly in relation to environmental, social and governance (ESG) data. Twinco also has plans to agree a $100 million debt facility in the first quarter of the year.