Founder and CEO of Nextrade Group LLC, Kati Suominen, has deep expertise in international trade (importing and exporting), economics and finance. In the interview below we discuss her latest venture, TradeUp LLC, why she started it, how companies can get on board and whether size matters for global scale.
Laurel Delaney: What is TradeUp?
Kati Suominen: TradeUp (tradeupfund.com) is a new equity crowdfunding platform for globalizing companies. Companies can raise $100,000 to $20 million in debt or equity through us. We enable globalizing companies to connect and transact with a range of accredited investors (angels, superangels, VCs, PE funds, family offices, strategic investors, lenders, etc.).
TradeUp exclusively serves globalizing companies—companies that already export or have international presence or that have a very clear and specific internationalization plan and/or orders from overseas. From research we know that globalizing companies are an excellent investment target—they are consistently shown to outperform the broader market. Yet globalizing companies also tend to have accentuated capital needs. We help bridge this gap by helping high-performing companies access capital.
TradeUp is not a fund—we do not invest in companies or allocate capital. Rather, we provide a platform for companies to gain visibility and access to investors in one single place. Companies are still their own salesmen and women. Think of us as eBay for financing: If eBay is a site for companies to promote their products and sell them to customers, TradeUp is a site for companies to promote their fundraising and sell securities or issue debt to investors.
We know that fundraising is a tough, full-time job for companies and going door to door for capital is time-consuming. We help companies access investors in one single place and accelerate their fundraising.
While we are not a broker, we do have broker deal services available for companies through North Capital Private Securities, a leading broker-dealer in the equity crowdfunding space.
LD: What’s required for companies to work with TradeUp?
KS: Companies working with us need to already have international sales or be planning to go global. They typically have at least $500,000 in revenue. For now, we work primarily with U.S. companies and with foreign companies expanding into the U.S. market. Typically, companies on our platform are already in business—some have been as long as 25 years—and have a great team and a proven product.
LD: What does TradeUp do for companies, investors, lenders and service providers?
KS: TradeUp helps globalizing companies expand their visibility and investor networks and accelerate the path to funding. We are completely non-exclusive—companies can on board our site, yet continue raising funds through all other means as well.
For investors and lenders, TradeUp aggregates proven, prescreened and outperforming companies with mitigated downside risk and clear path to liquidity.
For banks, we offer an efficient way to access new clients and secure complementary capital to service existing globalizing clients (e.g., via TradeUp, access sub-debt to complement senior debt) or service future clients (e.g., refer a small business to TradeUp today that will be your client tomorrow).
In addition, TradeUp also enables service providers of all kind—government trade agencies, export consultants, trade lawyers, shippers, etc.—to build a profile on our site and cater their services to globalizing companies.
LD: Why did you start TradeUp?
KS: We started TradeUp with a very specific purpose: help globalizing companies access capital so they can reach their full potential in international markets. We are passionate about this mission: we get to help businesses expand, create jobs, and contribute to economic growth and recovery. We also have a clear business motives to start TradeUp, also discussed in our new White Papers and blog.
The first is the growth in the market. As the global economy rebounds, record numbers of small and mid-size companies around the world are seeking growth through exports. There is enormous latent capacity, just in the United States: so far only 300,000 of America’s 30 million small and medium-sized enterprises (SMEs) export.
The second reason for us to start TradeUp is the consistently impressive performance of globalizing companies vis-à-vis the broader market. Leading academic research across multiple rigorous studies on practically every continent has found that exporters outperform firms that do not engage in international trade.
Third, these outperforming companies face a major financing gap. Even though globalizing companies outperform, they also see obtaining financing as the main hurdle to doing trade. For example, in a 2010 U.S. International Trade Commission survey of more than 2,350 companies, U.S. small-business manufacturers rated access to financing as the No. 1 hurdle to trade, out of 19 hurdles, while businesses in service sectors rated access to capital as the third hurdle to trade, well above such challenges as high tariffs, locating foreign sales prospects, identifying foreign partners and establishing affiliates in foreign markets.
Similar patterns play out everywhere in the world: Capital is the No. 1 constraint for companies to grow internationally.
At TradeUp, our purpose is to bridge the financing gap facing globalizing companies by leveraging the power of equity crowdfunding. We simply put two and two together. Everyone wins. Companies can access critical gap capital to export and expand in international markets; savvy lenders and investors around the world access prescreened assets with superior growth prospects and pent-up demand for capital; and economies gain through export-led economic recovery, growth and competitiveness.
LD: Any other thoughts or ideas you’d like to share?
Today anyone can gain from trade, and not only as a consumer, but also as an exporter, mini-multinational producer and global designer. Technologies from digitization to ecommerce and 3D printing are radically lowering the costs of doing international business. Now for the first time, small size can be synonymous with global scale. In fact, no longer do companies need scale to trade; they need trade to scale. Small businesses have another advantage: They tend to have agility, speed and creativity, the success drivers in 21st century global marketplace of rapidly changing consumer fads, niche markets and out-of the-woods competitors. We believe small is big in the global digital economy. At the same time, companies still need capital for going global—and that’s where TradeUp can help.
(Full disclosure: I serve as a partner and on Kati’s board of directors at TradeUp.)