Some of the biggest industries in the world still rely on antiquated processes to operate on a daily basis. Farm equipment buying, the pork industry, the coffee industry, and even maritime trade have all been recently seen startups applying technology in a bid to modernize operations. Now, TradeCafe is aiming to digitalize the process of buying protein commodities with an online marketplace.
“This type of trading has been done forever, but there are these middlemen who will do it the old-fashioned way and call up their networks,” TradeCafe founder and CEO Nicholas Walker told AFN. “What we do is just accelerate the process by putting it all onto a platform that matches buyers and sellers instantaneously through their computer or mobile phone. We see it as a central clearinghouse for cash commodities.”
Walker is a 35-year commodities trading industry veteran who finally had enough of the antiquation and inefficiencies around him, launching TradeCafe in 2015.
The Toronto-based startup recently scored a C$10 million ($7.89 million) equity investment from Round13 Capital.
“We weren’t looking so much for the money as we were for [an investor] that could lead us with the technology to a larger audience than what we’ve got. We’ve reached an inflection point where we’ve got a fair amount of participation on the platform over the last four years and have feedback from buyers and sellers,” Walker said.
TradeCafe’s cloud-based platform automates nearly everything in the complex commodities-trading process in a centrally organized system that’s visible to all counterparties. Trading documents can be created and uploaded, invoices can be automatically generated and paid, and products can be tracked from farm to delivery point. Account and pricing history can also be plotted graphically to visualize market trends and manage cash flow cycles.
It’s free to use for qualified buyers and sellers.
“Let’s say you have a poultry producer in Arkansas producing chicken leg quarters for the domestic market. They can come on the platform, enter a price, and they’ll be matched with every potential qualified buyer on the platform,” Walker explained.
“We will make sure they get paid in whatever payment term they want. We’ll finance them and we’ll take the goods from Arkansas to their destination.”
TradeCafe has managed to conduct, finance, and fulfill $2 billion in transactions to date for over 1,000 corporate users, according to the startup.
Getting an antiquated industry on board
The funding will be used to help TradeCafe expand globally while also supporting new R&D efforts for its platform. The startup is optimistic about adoption due to the messiness that traders currently have to wade through to get deals done.
“There’s a lot of inefficiency and crisscrossing of messages going on between producers and traders. [TradeCafe] has streamlined all of that and addressed a lot of the miscommunication; fewer errors, faster execution,” Walker said.
The startup is running the second generation of its platform, which it developed after taking a close look at the back-end aspects of its service.
“We looked at every efficiency point and programmed it into the platform so that we could accommodate additional volume going through,” Walker said. “We’re in the volume game. The more we put into the platform, the lower the costs for fulfillment become.”
Still, convincing an entire industry to change its culture can be an uphill battle no matter how convenient, efficient, or cost-effective a new technology may be. Incorporating user feedback is a priority for TradeCafe so that it is as user-friendly as possible, Walker said.
When convincing someone to come onboard, he likes to use the analogy of banking, which has seen rapid digitalization in recent years. Instead of having to go into the bank to check your balance, you can log into an app from almost anywhere and see real-time transaction data.
Next to adoption, adaptation can be a challenge for some customers, he added. Many are used to being on the phone, tracking down middlemen, and trying to figure out where their goods are once a deal has been done. All of that information is readily available to them on the TradeCafe platform.
Despite these challenges, Walker believes the startup has necessity on its side.
“I think this is overdue. Where there’s inefficiency, there’s waste – meaning food spoilage,” he said.
“[TradeCafe] can help reduce insurance claims and the cost of food to the consumer.”