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Solving the trust conundrum

8 Jan 2024

Home > News > About Standard Chartered > Innovation > Solving the trust conundrum
Small businesses in dynamic markets can struggle to overcome the trust barrier when dealing with suppliers and middlemen. Solv, part of the SC Ventures family, aims to remedy this problem

Solv launched in India in 2021 with a purpose — to use technology to help micro, small and medium sized enterprises (MSMEs) grow.

With SMEs providing the backbone of the economy in India, growth for small businesses means growth for the nation. According to the SME Chamber of India, MSMEs account for 45 per cent of total industrial production, 40% of total exports and makes up more than a third (37.5 per cent of India’s GDP).

Solv’s business-to-business e-commerce platform (think China’s Alibaba) connects MSMEs to suppliers allowing for the easy financing and purchasing of goods.

After two years of operation, Solv has almost 400,000 MSMEs on its platform and is aiming to replicate its success in other markets, with pilots currently underway in Kenya, Ghana and Vietnam.

“The distribution value chains in India are very complex,” Amit Bansal, the CEO of Solv, explains. “Goods are produced in factories but, by the time they reach the MSMEs — the Mom and Pop stores, they’ve gone through middlemen and exchanged hands several times.

“Micro businesses in India have minimal resources and little access to capital. They struggle to get access to the right products at the right price and, because they’re not a part of the formal economy, most banks won’t lend to them. This is the problem we are trying to solve to help both the factories and the Mom and Pop stores to grow.”

A mutual trust

As well as making it easier for MSMEs to access products, Solv aims to increase product quality and assure delivery, helping factories and their MSME partners gain a mutual trust. Without this trust, growth doesn’t come easy.

Amit explains: “Without Solv, as a small business, my visibility of products is only as good as the local wholesaler or middlemen in my small city — my universe is finite. However, an MSME on Solv can reach thousands of factories.

“Importantly, MSMEs have the flexibility to either prepay for the goods or pay on receipt. They also have a window to return the goods if they are poor quality. Meanwhile, factory owners no longer depend on middlemen, which can save them a lot of money in distribution.”

Besides bringing manufacturers and MSMEs closer together, Solv has transparent pricing — levelling the playing field in terms of purchasing power — and provides MSMEs, primarily cash businesses, with a vital digital payment source.

Amit Bansal discusses how SC Ventures helped get Solv off the ground

“If I’m the owner of a small business, even if I place a small order I get the benefit of aggregation,” Amit says. “The factories are operating in a competitive marketplace so when they price their goods, they are not pricing for my 10 orders, but for the 1000 orders, they will see for that item efficiency.”

He continues: “We collect money from Mom and Pop retailers on behalf of factories and pay it to them within two to three days. Everything’s digital and everything’s reconciled on our platform. The businesses we work with have the time and space to do what they do best.”

By allowing Solv users to focus on their strengths, the platform can be a game changer. In addition to the access of high-quality goods and online purchasing, Solv has attracted a surge of overseas suppliers to the Indian marketplace and provided factory owners with the intelligence tools necessary to manufacture more precisely.

Amit says: “As we were coming out of the pandemic, we spoke to many exporters, who originally would sell in European and North American markets. With these businesses looking for post-COVID growth, they started to seek opportunities in new places. With Solv they found it a lot easier to operate in the complex Indian market.”

He adds: “We are also able to tell factory owners precisely what is selling, in what city and at what time of year. That intelligence, even though it’s in its early days, is proving a lot more meaningful and helps them manufacture precisely.”

An independent founder

Solv is one of several companies incubated by SC Ventures, our innovation, fintech investment and ventures arm. Amit believes the support provided by SC Ventures has been crucial to Solv’s steady growth and allowed him to run the company like an ‘independent founder’.

In the five years since launch, SC Ventures has helped launch more than 30 new business and currently has 22 companies in its portfolio.

“SC ventures brings a long-term growth mindset to the table, which is very different from some of the venture capitalists,” Amit explains. “I am not under pressure to make short-term decisions — we are building this business for the long run. Needless to say, I’m allowed to run this company like an independent founder.”

And with the backing of SC Ventures, Amit believes that Solv can go from strength to strength and could replicate the success of Alibaba.

He concludes: “I truly believe we’re onto something really big. There is a real possibility to create a second Alibaba but in India. We have a strong chance to deliver that for Standard Chartered over the next three to five years.”