Information on the Target

3one4 Capital is pleased to announce its leadership in a $10 million funding round for Xindus, with Orios Ventures serving as a co-lead. Positioned at a critical juncture in India's economic growth, Xindus aims to enhance cross-border trade infrastructure, which is essential for the country as it moves towards becoming a $5 trillion economy. The company's platform, XindusOne, integrates vital services such as shipping, compliance, payments, and fulfillment, empowering Indian businesses to effectively access and compete in international markets.

Xindus addresses the current barriers in India's export landscape, particularly for small and medium-sized enterprises (SMEs). The integrated approach of XindusOne not only simplifies logistics and compliance but also ensures that Indian businesses can engage with global trade effortlessly. By harnessing technology, Xindus aims to bridge the gap that has historically hindered MSMEs from thriving in cross-border markets.

Industry Overview in India

India currently holds the title of the fastest-growing major economy, with a nominal GDP reaching $3.7 trillion in FY24 and projections indicating surpassing $5 trillion by 2030. However, a significant challenge remains: enhancing per-capita income to prevent falling into the middle-income trap. To achieve this, India needs to improve its integration with global value chains, particularly in merchandise exports, where there is substantial potential for growth.

While India excels in service exports, merchandise exports remain underperforming, primarily due to accessibility issues rather than capacity constraints. The micro, small, and medium enterprises (MSMEs) contribute nearly 45% of India's exports, yet less than 20% of registered SMEs partake in cross-border trade. Additionally, around one-third of those engaging in international trade cease operations after just three transactions due to various challenges.

The hurdles facing Indian SMEs in cross-border trade include inefficient freight and logistics infrastructure, trade discovery problems, outdated payment systems, lack of accessible trade finance, and absence of trade assurance mechanisms. For instance, customs delays account for a significant proportion of freight disruptions, and many SMEs struggle with high shipping costs and complex documentation processes. These factors collectively limit the potentiality of the export capacity of Indian SMEs.

The Rationale Behind the Deal

The investment in Xindus is founded on the recognition of the pressing need for enhanced infrastructure for cross-border trade. With a collective belief that cross-border trade for SMEs is a high-potential, high-friction category, 3one4 Capital views Xindus as uniquely positioned to address these gaps. The funding will assist Xindus in scaling its operations and expanding its presence in key international markets, thus fostering greater economic inclusion.

Xindus's vision of constructing a comprehensive ecosystem for Indian exporters is not merely an enhancement of existing systems but a complete re-architecture of how exporters engage with global markets. As SMEs face myriad challenges, including financing issues and lack of trust in international transactions, XindusOne serves to simplify and streamline these processes, reducing friction in global commerce.

Information About the Investor

3one4 Capital is an investment firm known for its strategic focus on companies at the intersection of infrastructure, technology, and inclusion. The firm is dedicated to recognizing transformative opportunities within emerging markets, particularly in sectors ripe for innovation. Their portfolio emphasizes companies that are not only capable of significant growth but also contribute to broader societal progress.

The partnership with Xindus reflects the firm's thesis on the immense untapped potential within India’s export economy. By investing in a platform that promises to revolutionize cross-border trade for SMEs, 3one4 Capital is positioning itself to capitalize on the expected growth of India's economic landscape while supporting inclusive market access.

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The decision to invest in Xindus is considered a strategic move that could yield significant returns. The company's innovative approach to addressing the complexities of cross-border trade for MSMEs demonstrates a clear understanding of the market’s needs. Furthermore, the capacity to onboard a substantial number of SMEs in the next 12 to 18 months indicates a robust growth strategy that is essential for achieving profitability and market presence.

Moreover, the integration of multiple services into a single cohesive platform enhances customer retention and adds immense value for users. As more businesses engage with Xindus, the additional services utilized create a compounding effect, making it difficult for users to transition to competitors. This embedded value proposition is critical in establishing a loyal customer base.

Additionally, as SMEs become increasingly ambitious in their export endeavors amidst India's evolving economic narrative, the necessity for tech-driven solutions like Xindus will only intensify. Thus, 3one4 Capital's investment could play a crucial role in fostering the systemic change needed to elevate India's presence in the global market.

In conclusion, the substantial opportunity within India’s cross-border trade landscape, coupled with Xindus's innovative platform and the backing of an experienced investment firm, presents a compelling case for this investment. It is anticipated that Xindus will significantly contribute to India's export infrastructure and provide essential tools for SMEs to thrive internationally.

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