IOTA EVM Buildsphere AMA #16 – InvoiceMate

Published 16 September, 2024

In this AMA of IOTA Foundation which took place on August 21, 2024, Jonathan hosted Ibrahim from InvoiceMate to discuss the integration of Web3 with invoice financing, the benefits of tokenizing invoices for on-chain financing, and how retail investors can participate in this growing industry, and more! Read our notes below to learn more.

Background

Jonathan Hellweg (Host) – Community Manager at IOTA

Ibrahim (Guest) – Head of Web3 and Innovation at InvoiceMate

InvoiceMate – a platform that tokenizes invoices for on-chain financing

Exploring Invoice Financing in Web3: InvoiceMate’s Journey with IOTA EVM

Jonathan welcomes everyone to BuildSphere edition 16, explaining that the format allows projects building on IOTA EVM to showcase their work.
Ibrahim introduces himself as the head of Web3 and innovation at InvoiceMate. He mentions that they’ve been building InvoiceMate since 2021, with their Web2 products going live in July 2023. They are currently in the beta version of their Web3 stage. Ibrahim is based in Dubai, UAE, but originally from Pakistan.
Jonathan asks Ibrahim to explain invoice financing. Ibrahim describes invoice financing as a form of lending where loans are collateralized by future receivables. He provides an example of a company that has sold services to Coca-Cola and is waiting for payment, which typically takes 60-90 days. During this period, small and medium businesses can use their invoice as collateral to get a loan, helping them cover operational costs until the invoice is cleared.
When asked about the size of the industry, Ibrahim says that invoice financing is a $3.6 trillion industry, projected to reach $6 trillion by 2032. He notes that while this service is typically accessible to large corporations, InvoiceMate aims to extend it to small and medium businesses to solve their cash flow problems.
Jonathan observes that invoice financing and Web3 haven’t had many connections so far, and asks Ibrahim why this is changing now. Ibrahim explains that invoice financing and blockchain are highly compatible, as blockchain can solve issues like fraudulent credentials and fake invoices that have plagued the industry. He mentions that with the rise of real-world asset tokenization, the invoice financing industry is moving on-chain, allowing on-chain investors to invest in short-term loan propositions collateralized by tokenized invoices.
Regarding who can join invoice financing, Ibrahim outlines some prerequisites. Businesses need to have a credible invoice and a real transaction. They should be at least 3-6 months old, producing revenue, and conducting frequent transactions. Good financial statements and tangible assets are also required. He gives an example of a water bottle company, explaining that it should be selling water bottles on a frequent basis (monthly or bimonthly) to be eligible for invoice financing propositions from companies like InvoiceMate.

Retail Investors and Invoice Financing: How InvoiceMate is Democratizing the Space through Web3 Technology

Jonathan asks Ibrahim how retail investors can get started with invoice financing through InvoiceMate. Ibrahim explains that they are tokenizing invoices into real-world assets and creating a marketplace to list these invoices. This allows retail investors to invest in short-term loan propositions, potentially earning between 14% to 26% APY based on the risk. He highlights that this democratization of invoice financing is made possible through Web3 technology.
When asked about the timeline for the IOTA community to participate, Ibrahim mentions that they have already started building on IOTA EVM and will soon launch a beta version of their marketplace. Investors will need to complete a simple KYC process and connect their wallets to start investing. Ibrahim stresses the importance of a seamless user journey for Web3 mass adoption.
Jonathan asks about mechanisms to ensure loans are paid on time and to avoid bad debt. Ibrahim reveals that InvoiceMate has processed close to $50 million worth of invoice financing with zero bad debt so far. He attributes this success to their Know Your Invoice (KYI) technology, which uses AI to analyze invoices across more than 30 checkpoints. This process helps detect fake invoices and assesses the borrower’s financial history.
Addressing cross-currency transactions, Ibrahim explains that InvoiceMate works with OTC providers worldwide. This integration allows lenders with stablecoins to invest in propositions through smart contracts, while borrowers receive funds in their bank accounts without needing to handle crypto directly.
Jonathan asks about revenue-based financing. Ibrahim explains that this model offers a more stable and secure investment option compared to volatile crypto markets. It allows on-chain investors to access real-world yields without the volatility typically associated with crypto. He mentions that they can offer up to 20% APY, which is higher than US Treasury bills while maintaining a similar level of security.

InvoiceMate’s Journey: Accelerator Success, Roadmap Milestones, and Upcoming Retail Investor Marketplace on IOTA

Ibrahim discusses InvoiceMate’s participation in an accelerator program with Tenity, culminating in a demo day at Token 2049 in Singapore. He highlights the value of accelerator programs for startups and hints at a surprise reveal planned for the demo day.
Regarding InvoiceMate’s roadmap, Ibrahim explains that the product has been live for institutional investors since July 2023, processing close to $50 million in transactions. The company has partnered with banks in UAE and Pakistan, as well as various fintechs globally.
InvoiceMate’s immediate priorities include launching a beta version of their RWA (Real World Asset) marketplace for retail investors within the next couple of months. This will be followed by their token launch, which will include ecosystem-wide incentivization for early participants in the RWA marketplace.
In response to a question about IOTA’s role in InvoiceMate’s plans, Ibrahim explains that they are building their marketplace on IOTA EVM to allow retail investors from the IOTA community to invest in short-term loan propositions. He mentions the alignment between InvoiceMate’s vision and IOTA’s, particularly regarding the RWA narrative, which he believes could bring the next 1-2 million users into the Web3 space.
Ibrahim says that their fundraising has been entirely from institutional capital so far, with plans for a public sale in the future. The invoice financing liquidity has also been primarily from institutional sources, but the upcoming marketplace launch aims to target retail investors.

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Show Information

Medium: Twitter AMA & YouTube (Audio)

Show: IOTA Foundation

Show Title: BuildSphere #16 with InvoiceMate

Show Date: August 21, 2024