Skuchain has raised funding from Digital Currency Group (DCG), Amino Capital and Fenbushi Capital, the first China-based venture capital firm that exclusively invests in blockchain companies, to help it develop blockchain-based products to disrupt the US$18 trillion global trade finance market.
Skuchain, a Mountain View-based startup, is developing blockchain solutions for B2B trade finance and supply chain finance. It seeks to create a digital letter of credit using blockchain technology to optimize the clunky, expensive end of global supply chains.
Its technology aims to remove the need for paper by offering a secure and digitalized solution that can increase speed, decrease costs, and make financing available to small and medium sized businesses in locations where finance solutions were previously not accessible.
“Letter of credit [LC] is an expensive process …, which is simply not available to businesses in emerging economies,” Travis Giggy, head of international business at Skuchain, told IBTimes UK in a recent interview.
“The trust of the blockchain will allow financiers in places like America to chain loans down into the supply chain,” Giggy said. “This helps the buyer in America with cheaper cost of goods because they don’t have to buy them from a vendor that’s getting charged very expensive money.”
“It will result in a better relationship with their vendors, better visibility into their supply chain, and it will even help marketing departments and their customers who will have provenance into the origin the goods that they purchase and consume. This can all be verified, validated because it leans on blockchain which is very secure and very transparent.”
Giggy indicated that Skuchain’s technology is designed to be ledger agnostic. It operates a federated system where every member on the chain is trusted and KYC’d.
According to Sriram Srinivasan, co-founder and CEO of Skuchain, “collaborative commerce” based on this new type of trust is the future of global trade. A blockchain model has the potential to connect together new realms of commerce and enable faster and cheaper financing for businesses of all size, he said in a statement.
Barry Silbert, the founder and CEO of DCG, an investor in the startup, said in a statement that “Skuchain’s vision of building a ‘commerce cloud’ where trade partners can interact friction-free and gain deep visibility into their supply chains is compelling.”
“The Skuchain team and blockchain-enabled product is well-positioned to transform the trade finance space and DCG is thrilled to back such an ambitious effort,” Silbert said.
Giggy further indicated that Skuchain will soon release Blockice, an upcoming initiative for commerce that will allow banks, corporates, logistics providers, governments, and any player in the supply chain, to collaborate.
“We will focus on blockchain enablement of notarization, title transfer, and chain of possession,” Giggy said.
A report from Les Échos, a French financial news publication, suggests that multinational bank BNP Paribas is currently exploring several blockchain applications for banking and trade finance. The publication indicated that potential partners for the bank could be Skuchain and Ethtore.
The news broke simultaneously as BNP Paribas announced the first “Blockchain Bizhackathon,” a two-day event that aimed to assess real-world potential blockchain applications for trade finance and cash management.
Earlier this week, more than 70 participants gathered to explore how blockchain tech could improve both customer experience and the efficiency of services in the transaction banking area.
BNP Paribas is part of both R3 and CDC, a European blockchain working group formed in December last year that gathers 11 banks, financial institutions and insurance companies. BNP Paribas is also a stakeholder in Blythe Masters’ Digital Asset Holdings.