Tradeshift raises $70M, launches financing JV with HSBC focused on B2B trade

Global trade has been in a slump, in part due to ongoing economic pressures in the wake of the Covid-19 pandemic. Now, with some glimmers of recovery on the horizon, a startup that’s built business around tools to enable B2B trading has raised some money and is launching a JV that it hopes will kickstart further activity.

Tradeshift — a platform for building B2B payments, supply chain procurement and B2B marketplace services — has raised $70 million, money that it will be using to scale its business network, which it says already more than 1 million users, including big names like food giant Danone and the UK’s National Health Service.

Areas where it said it plans to invest include adding more SaaS, B2B marketplace, and embedded financial services. It is also considering some acquisitions, it added.

The round is being led by HSBC, which is putting in $35 million, with participation also from AYTK Limited, LUN Partners Group, Fuel Venture Capital, Doha Venture Capital LLC, Notion Capital, IDC Ventures and The Private Shares Fund. All are existing shareholders.

Alongside HSBC’s capital injection, the banking giant is embarking on a new joint venture with its portfolio company. Together, the two plan to build a financing operation to complement Tradeshift’s business, which is set to launch in early 2024.

HSBC has lately been doubling down on financing services for technology-based businesses — earlier this year it picked up the assets of the failed SVB in the UK and recently rebranded them as HSBC Innovation Banking — and this new JV, while entirely separate, extends that part of its wider business strategy.

“Enabling and growing global trade has been in HSBC’s DNA for almost 160 years,” said Barry O’Byrne, CEO of Global Commercial Banking at HSBC, in a statement. “We are very excited to partner with Tradeshift to help businesses and their suppliers trade more smoothly using world-class technology and solutions that the joint venture will deliver. This agreement supports our strategy of being a digital first bank, which includes our commitment to partnering with fintechs and embedding our solutions into the platforms of others.”

Tradeshift — originally founded in Denmark, and still with extensive operations in Europe, but now headquartered in San Francisco — is not updating its valuation with this round, said a spokesperson.

But there are some reference points to keep in mind. Well before Covid hit the world as hard as it did, the startup appeared to be en route to an IPO, it was raising nine-figure rounds, and it was dabbling in buzzy hype tech like blockchain to introduce new services.

In March 2021 — perhaps the high-point of funding exuberance for tech companies that had weathered and even thrived during Covid-19 — Tradeshift raised a Series F of $200 million at a $2.7 billion post-money valuation. That round was described by many at the time as a “pre-IPO round.” Since then, there has been a $170 million debt round (late 2021); as well as a secondary round (January 2022) and an additional funding round (October 2022), both of undisclosed amounts, per PitchBook data. The IPO appears to have been delayed.

This latest round is coming during a very tough climate not just for all technology startups, but specifically the sector in which Tradeshift works. In April 2023, Tradeshift put out a quarterly update that noted inventory amongst B2B suppliers was spiking while trade and logistics services were in decline or moving at a snail’s pace.

A small ray of hope, it seems, in the most recent Q2 quarter from last month: there are “tentative” signs of small recovery in the U.S. market, but Europe and China continue to disappoint. Overall, growth is still four points below the expected range.

Working capital in the forms of cash and liquidity, not demand, appear to be the biggest culprits right now, the company says: that might explain some of the logic of HSBC moving in to partner with Tradeshift to provide financing: that has the potential of bringing more business to HSBC, but also of encouraging more activity and business for Tradeshift, too.

“We’ve been overwhelmed by the belief expressed by investors in our vision and execution strategy,” said Christian Lanng, CEO and co-founder at Tradeshift, in a statement. “We’ve proven the value we can unlock by bringing digital trade and financial services together on a single platform.”