Supply Pay: trade finance for Mexican farmers

Biography

William Steele is the co-founder of Supply Pay, a startup providing trade finance for Mexican farmers selling to the US. Supply Play just closed a $2.1M round and is making around $18K in MRR.

Prior to founding Supply Pay, William launched multiple ventures, including a civic media startup, an AI-focused consulting firm, and a creative agency. He is also a published science fiction author and a former data analyst. 

William currently lives in South Texas, where he is growing Supply Pay and supporting his wife in running their family restaurant. 

What problem are you solving?

Farmers in Mexico who sell their produce to the US get paid months after their produce is delivered. This creates a working capital hole, generating stress and hindering their ability to invest in their business. 

Supply Pay funds that working capital hole by “buying” farmers’ outstanding invoices, providing farmers with the cash they’re owed while we collect payment from the end client in due time. This is known as invoice factoring. 

On your website, you highlight a specific bankruptcy case that demonstrates the need for Supply Pay. Can you explain?

The Lakeside Produce bankruptcy case is an example of cross-border trade gone wrong. When it went bankrupt, the company left Mexican farmers with millions of $ in unpaid invoices. Court proceedings concluded that these farmers weren’t high on the repayment priority. They  were left with scraps. 

This case displays the risks associated with cross-border trade’s “standard” payment terms. This company had been around for decades and farmers trusted it. As a result, some might’ve relied too heavily on it as a source of business. When it went under, farmers bit the dust alongside it. 

The cautionary tale is two-fold. First, the more concentrated your client base, the higher risk you run. Second, having a partner that can anticipate these issues (Jorge Ayala, my co-founder, had predicted Lakeside would go under months prior) is crucial. 

What did your MVP look like?

Incredibly manual. 

Jorge has over a decade of experience in cross-border trade, both on the importer and the farmer side. He knew how acute the problem was. We reached out to farmers he knew, manually underwrote them and bought some of their invoices with our own money. The first month, we financed around $6K in receivables and I got started on building a low-code web app. 

A defining anecdote was how willing farmers were to upload sensitive financial data to our scrappy web app. That translated a dire, urgent need to get their financing problem fixed. 

I then went to Mexico, toured some of the farms and met with the farmers. The tour convinced me that these were the people I wanted to help. They are extraordinary entrepreneurs, operating in difficult, resource-constrained environments, leveraging every creative method you can think of. 

Building a smoother supply chain for perishable goods struck me as a laudable goal. This is the food we eat every single day. 

Source: USDA

Can you summarize the SupplyPay product today?