Trade finance blockchain joint venture Komgo raised CHF 26 million ($29 million) in its third round of funding. The investment brought in SMBC and an unnamed global financial institution as two new shareholders, bringing the total number to twenty.
The Komgo trade finance platform targets the commodities sector. It was launched in 2018 by ING, Societe Generale, ABN Amro, Shell and eleven other organizations involved in the banking and oil sectors. The fact that the shareholders are a mix of banks, commodities and trading companies differentiates komgo from other trade finance platforms where investors tend to be banks.
In the beginning, most of Komgo’s transactions were from oil and commodities companies using VAKT’s post-trade commodities blockchain, which has several common shareholders. Komgo began in Geneva and has already expanded to Singapore, with both locations being global commodity centers. Some of the investment from this funding will be allocated towards expanding in the U.S, with New York and Houston already online.
Besides expansion, Komgo will also allocate funds towards marketing to reach companies beyond the pure commodities sector and invest in new features and refine its existing software solutions.
Komgo has developed four different solutions: konsole, market, check, and trakk. ‘Konsole’ is the main line of service for trade finance, ‘market’ uses blockchain to assist banks in managing risk, ‘check’ digitizes KYC exchanges, and ‘trakk’ authenticates and traces digital documents. The solution uses enterprise ethereum blockchain technology.
The Covid-19 pandemic led to higher demand for digital solutions across all sectors, which contributed to the 50% increase in trade finance transactions on Komgo’s platform and 65% growth in its client base in the last year. ING reported that 50 of its commodities clients are using the solution. Komgo has plenty of clients that are not shareholders, with 29 banks using the platform and 146 corporates. Two that have been publicly announced include Lloyds Bank, and Sberbank.
“The nature of Komgo’s business, as a B2B financial software provider, means that having the requisite institutional support is key,” said Souleïma Baddi, Komgo’s CEO. “Our base of founding shareholders have thus far enabled the company to take a leading role in the transformation of trade finance.”
Meanwhile, Komgo purchased trade finance platform TRAFEC at the beginning of 2020.