Skuchain closed a funding round with backing from Digital Currency Group, Amino Capital, and Fenbushi Capital, a venture firm based in China that focuses on blockchain investments. The Mountain View s
Skuchain closed a funding round with backing from Digital Currency Group, Amino Capital, and Fenbushi Capital, a venture firm based in China that focuses on blockchain investments. The Mountain View startup is building blockchain systems for trade finance between businesses, aiming to remake the $18 trillion global trade finance market.
The company's core product is a digital version of the letter of credit, a financial instrument that currently requires paper, time, and significant expense to process. Skuchain wants to replace that system with blockchain technology, cutting costs and opening up financing options in parts of the world where banks have traditionally shut out small and medium enterprises.
Travis Giggy, who leads international business at Skuchain, laid out the case to IBTimes UK. "Letter of credit is an expensive process, which is simply not available to businesses in emerging economies," Giggy said. He described how the technology could reshape supply chains. "The trust of the blockchain will allow financiers in places like America to chain loans down into the supply chain. 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."
Beyond cost, Giggy argued the system creates benefits throughout a supply chain. Buyers gain better visibility into where goods come from. Marketing departments can show customers the origin and provenance of products they purchase. "This can all be verified, validated because it leans on blockchain which is very secure and very transparent," Giggy said.
The Skuchain platform uses a federated structure where every participant is known and verified through KYC processes. The company built it to work with different blockchain ledgers. Sriram Srinivasan, Skuchain's co-founder and CEO, sees this architecture as the foundation for what he calls "collaborative commerce" among trading partners across borders.
Barry Silbert, who runs Digital Currency Group, signaled enthusiasm in a statement about the company's vision. "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," Silbert said. "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."
Giggy announced that Skuchain will soon launch Blockice, a platform designed to let banks, corporations, logistics providers, governments, and other supply chain players work together. "We will focus on blockchain enablement of notarization, title transfer, and chain of possession," Giggy said.
The timing intersects with interest from established banks. BNP Paribas, according to reporting from Les Échos, a French financial publication, is exploring blockchain applications for banking and trade finance. The bank has considered partnering with Skuchain and Ethtore, among others. BNP Paribas organized the "Blockchain Bizhackathon," a two-day event that brought together more than 70 participants to examine how blockchain technology could enhance customer experience and efficiency in transaction banking.
BNP Paribas counts itself among members of both R3 and CDC, a European blockchain consortium formed last December that includes 11 banks, financial institutions, and insurance companies. The bank also holds a stake in Digital Asset Holdings, the firm run by Blythe Masters.
