In a dynamic marketplace, the need to bridge the gap between the lenders and borrowers is generally enhanced as entities look for funds to ensure zero pauses in business activities. Supply chain finance has given a platform for players with such needs to fulfil their capital requirements.

Innovative supply chain financing models are the future of Indian MSMEs’ steady growth. Yubi has helped several companies supercharge their supply chains by alternative financing means, helping them move onto a path of fast-growing enterprises. Discussing the same, Yubi organised a webinar with three leading entrepreneurship companies – Bizongo, Zetwerk, and Fashinza. These companies are some of the fastest-growing startups in the country- we spoke to them on how startups can utilise supply chain finance to spur their growth, revenues, and future outlooks.

These three companies are heralding the change in the supply change ecosystem in the country. So how did these companies become the stalwarts of effective supply chain financing in India? More importantly, what role did supply chain finance play? Let us find out.

Timing of supply chain financing for a startup

At what stage does supply chain finance become relevant for startups?

Supply chain finance can be employed at different stages by the startups, based on working capital requirements.

Sachin Agrawal, co-founder and CEO at Bizongo said, “It is a function of 2-3 key parameters. First and foremost, the true working capital need of your startup may vary from which sector you are operating in, what your revenue streams are, what your expenses look like, and if we combine all cash flows together, what is your total working capital need to run and grow the business.”

It is crucial to understand the requirement of working capital and source it at the right time. 

Looking at how to solve the working capital problem, Srinath Ramakkrushnan, Co-founder at Zetwerk said, “It can be done by not inheriting it to your balance sheet but also not just passing it on to your supplier. This solves the problem for our balance sheet as well as the supplier’s balance sheet.”

While looking at the ways to fulfil working capital requirements, and also the sources to get the money from, Abhishek Sharma, Co-founder and COO at Fashinze said, “Equity is growth capital. Whereas working capital requirements should be solved via some other players”.

The sources of debt financing include traditional lenders such as banks, NBFCs, as well as the rising segment of new-age fintech financiers. The ever-changing dynamics of new-age business models and operations probably require more modern solutions to working capital funds than what traditional sources initially offered. This is where tech-first financiers and support systems have found their footing.

Traditional vs new-age financing 

Is the Indian financial ecosystem, i.e., the banks and financial institutions, equipped with the kind of solutions that the new-age economy demands?

As Abhishek Sharma put it, “When we [Fashinza] started, we started partnering with NBFCs and banks, but they wanted to work with AAA, and BBB rated clients. We faced difficulty working with the traditional players.”  

The complex and innovation-driven business models may not be understood by all. The existing traditional financiers may not be equipped with the kind of loan products that startups ecosystems require. However, there is now a slew of new companies and fintech that are building credit solutions appropriate to the demands of the industry. 

Trusting the startups and their business model becomes necessary. Moreover, frictionless movement of both goods and capital becomes vital. This brings up a lot of challenges.

Banks are bound by regulations and documentation requirements and are working on post-shipment finance; however, they seem hesitant. Pre-shipment finance, on the other hand, continues to be a challenge even for NBFCs because of the high level of risk. However, new platforms are seen cropping up in recent times to manage these hurdles.

What are the steps that startups can take to enable alternate models of lending?

To enable alternate modes of lending, startups must focus on three key aspects.

First, they have to understand and be compliant with the risk underwriting process that the lender may take. Banks and NBFCs are geared towards providing credit to AAA and AA rated customers. This is due to a lack of ways to initiate proper credit profiling of startups and new companies. With supply chain finance, startups can be assessed from a different lens to manage better credit profiling.

The second thing that a startup must look at is the kind of pool of capital it can access. There are different types of lending solutions that can be explored to match the startup’s working capital needs.

Third comes the methods to facilitate the transactions. When scaling up, automating the transaction flow makes it easier for both the lender and the startup.

There are evolving supply chain finance solutions for commerce marketplaces. It can be a feature that the market builds on its own too. Alternatively, it may happen through collaborations. Both these routes have various advantages as well as challenges.

Collaborations in supply chain finance

Commerce is different from financing, right from its DNA to the processes involved. It is difficult to build them together, however, they must go hand in hand.

Sachin Agrawal said, “We [startups] need a partner, who can actually work with us, like a partner, and build a product based on the need we have and the market dynamics. For this, a strong collaboration is required.”

For B2B startups, two journey options exist. There are companies looking for partnerships and there are those that are trying to solve the problem in-house. There are certain custom solutions available in the market but some people may choose to create in-house.

Srinath Ramakkrushnan opines, “It’s not very wise to completely build this in-house.” 

If they do, they must make the solution mainstream and then take it to the market. 

Entrepreneurs may do well to focus on elements that are not present in the market today but has the potential to bridge the essential gaps in the ecosystem. When it comes to looking at the number of lenders and the availability of various pools of capital, there are enough banks and NBFCs present in the country today. But what they probably need, and possibly lack, are things that help them deploy a scalable supply chain financing solution.

It is not that the capital is not available. What is required is a route for the capital to get to the borrower and circle back. 

Growth of supply chain financing in India

As new changes come in, regulatory bodies have made proactive efforts to mobilise instruments that can amalgamate into large pools of capital and bridge the gap between credit supply and demand. 

There is abundant availability of credit information and repayment and transaction history. This is because of the data stack built via the implementation of GST rules regarding e-invoicing and e-way bills. How this can be used to build a very critical repayment and transaction history is the next development to watch out for.

Fintechs are also playing an active role. They analyse the startup’s business model and understand what they bring to the table. They then make credit products or support systems according to the particular needs of the startups.

As more progress is made, facilitating various supply chain financing products offered by more and more financial institutions is key. For example, NBFCs may soon start doing factoring and invoice discounting. They are definitely going to need tech-first companies to help them out here. Similarly, newer financing vehicles can be brought to the mainstream, but with increased regulatory support. Seeing how this unfolds is something to look forward to. 


Supply chain financing allows entrepreneurs to keep the business running by funding short-term working capital requirements. This helps them focus better on building their organisation and on operational efficiency for producing better results. This requires the right partnerships. Unlocking idle capital in the supply chain can be transformational for entrepreneurship. 

When a company has a strong business plan and a strong product pipeline, not having enough working capital can be a pain point that blocks growth. This is where supply chain finance comes to the rescue, without denting the books of the company and rolling them towards high debt. Supply chain finance bridges the gaps between supply and demand, while pushing idle capital to improve capacity utilisation.

With onboarding Yubi, supply chain finance needs to no longer be a worrying point for enterprises. The entire supply chain process has become seamless with Yubi’s tech-first supply chain marketplace – YubiFlow. Features such as instant access to multiple lenders, real-time management of deals and risk management measures, among others, ensure that your supply chain finance needs are met in the shortest time possible and you can get back to things that matter – growing your business! Call us for a demo today.