FrontEdge, a Nigerian fintech focused on enabling the growth of African cross-border trade has raised $10 million in a seed round , both debt and equity led by TLG capital including digital freight forwarder Flexport.
Founded in 2021 by Moni Alli, FrontEdge provides SME exporters and importers with the working capital and software tools needed to facilitate their cross-border and international transactions.
Moni Alli,chief executive at FrontEdge said,“It’s a volume game, and we’re trying to essentially do as many trades as you can, given how tight margins are. And so what you see in Europe and other jurisdictions is like these traders are given this financial support, which means that they can give longer payment terms to their buyers offshore and be more competitive.”
FrontEdge provides upfront capital to these exporters based on transaction-based underwriting without a request for collateral.
The startup typically engages when goods are on an actual vessel or, at times, at the warehouse, with average payment terms set between 60-90 days, allowing the fintech to fund the working capital gap, thereby accelerating receivables and allowing exporters to engage in more transactions.
FrontEdge acts as a vertical bank consisting of financing, cross-border payments and offshore accounts tailored to the needs of African traders. Meanwhile, it provides software tools, including logistics management, cargo insurance and document management, to exporters to complement its financial offerings.
“And so, we equip the African exporter with the funding and tools needed to compete with the South American, European or U.S. exporter. For these large buyers, all that matters is the quality of goods and price. And so we can give them the financing where they can give the right terms and then have a level playing field with many of these buyers globally.”
Since its launch, the company customers, consisting of SME exporters have grown 20% month-on-month thus enabling the company to triple their sales on the platform. The company’s revenue comes from a spread of the transactions it finances.FrontEdge claims to record a zero default rate after performing over 50 contracts, each encompassing multiple trades and invoices.
The capital which is over 70% of debt component, will be used to hire more talent, scale its financing product across Nigeria, Ghana, Ivory Coast and Kenya, and launch additional products as it aims to diversify its revenue streams beyond financing.
Johnnie Puxley, an investment professional at TLG Capital said, “TLG is proud to support FrontEdge in its mission to help African SMEs prosper, serving as a crucial conduit to provide access to capital for Africa exporters and financial empowerment. FrontEdge is strategically placed to tackle an important problem that must be solved for African traders to effectively engage in global trade, and we believe that the leadership will execute on the vision.”