HandEX – NOAH19 London

Morning we are hand X we are Europe’s So first export financing partner, and we’re based in Hamburg in Germany So quickly what is export financing? Export financing is a bit of a misnomer in that. It’s the financing of the importer now how that works Today is an export credit agency who is backed by the government underwrite the risk in the transaction and Then finances now what we see today is in Europe There’s very little market penetration of trade credit insurance products. Only 10% of SMEs are using Additionally 95% of the loan risk is underwritten by the export credit agency we’re also seeing portfolio losses of only 0.15 percent across underwritten loans and An upper yield potential of 7.8 percent So export finance is something that is not anything new. Yeah, but the process today is extremely complicated and lengthy This is a simplified version of the process on the screen behind me I won’t go through the each and individual steps, but as we can see it’s not particularly simple What are the problems behind this so the first thing that we see is that There are a lot of analog processes today. There are still four billion pieces of paper being used in export financing This leads of course to long durations of applications And very limited automated or automation and digitization additionally banks are turning away as much as fifty percent of transactions because of the high overhead costs that they have and the lack of kyc and credit scoring abilities that they have for Checking these importers in other countries Finally on the backend side of things. We see limited standardization and integration between bank and export credit agency to the point that 27 percent of investors in these financial products say Actually, we don’t really understand what the underlying risk is here, but they would then be very much interested in working with a standardized product So we’re solving these three areas by first and almost we’ve created a digital application process which allows for full management of the application and Storage of documentation online and later we want to move into a blockchain solution which allows all parties to have a single point of truth we’re solving for high rejection rate by incorporating digital kyc processes and alternative credit scoring models and Additionally we operate on a much more efficient cost base in that we use robotic process automation To automate automate our workflows and we utilize Natural language processing in order to extract the really important information out of documents reducing manual processing time then on the standardization, we’ve introduced a standardized contract and additionally we’ve integrated the two processes between bank and An export credit agency making for a much more streamlined process So on the screen behind me this is what the this is what the application This is what our software looks like at the moment as you can see The application can be managed by the export to the importer. They can see their status instead of telephoning and send of sending emails It’s all there in real time Additionally other parties can be invited into an application process in order to fully evaluate or fill out application An example of one transaction that we worked on or that we we financed Was a German EPC? who was exporting their goods to North Africa the Customer wanted to pay over a period of 36 months and was unable to pay the full amount up front It was a it was a photovoltaic system and basically through this financing this project was able to be completed Briefly what does the hand X ecosystem look like? Of course, you have the exporters and the importers? Additionally, we work with vari-angle Bank who acts as our fronting partner provides us with the banking license and the regulatory body Additionally provides the financing for these loans Oiler Hermes is our underwriting partner and they underwrite all the loans up to 5 million euros Additionally, we incorporate third-party data sources in order to validate these transactions and to efficiently process these transactions Finally our internal risk engine is the the core motor that processes all of this data in one Just very briefly looking at the unit economics on a hypothetical transaction So if we take a five million euro transaction, we assume an interest rate of 10% and a default or 5% We then incorporate costs for custom acquisition and loan processing We can actually see they’re in the fourth column that the loan segment is unprofitable now what we do is in the first phase we drive cost savings through our processes and through our platform turning the loan segment marginally profitable but then through the incorporation of the The credit insurance we massively increase the profitability in this segment completely unlocking a loan segment Which has been massively underserved by banks today? In terms of timeline we’ve been moving very very very quickly we kicked off the company in January this year with three founders March we closed our seed funding round in May we Connected to the API from oil Hermes September close our partnership with a VAR on gold bank And we’ve got an eight digit volume of transactions originated already in future We want to expand its private credit insurance and set up an SP V to repurchase the loans and securitize these going forward Very quickly to the team because I’m running out of time I take corner funds as our ambassador Andrew Shaw is the CEO of Koya is a business angel with us as well in goes Alec Exported or Exeter auto is a business angel with us and as an advisor we have Hypoid shut who is the ex cohan of underwriting? Royal Hemis with 35 years of international export credit experience patrick CFO Previous M&A and private equity experience as fandom alec. Our CTO was one of the early Developers at credit sec. One of germany’s large fintechs and myself. I have a mixture of banking venture capital and FinTech experience we will be fundraising as an early-stage startup. So please do come and have a conversation with me afterwards i’ll be happy to tell you a little bit more about hand x and Exactly what export financing is and how it works. Thank you very much

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