Startup of the month: Grain

Give us a brief company description of Grain.

Grain is an end-to-end embedded cross-currency solution that empowers software platforms and marketplaces to effectively eliminate cross-currency risk for their end customers. Through our user-friendly and automated solution, Grain's partners and their customers can easily secure currency rates into the future and conduct seamless cross-border fund transfers. Our team consists of industry professionals, including former employees of Barclays and Deutsche Bank, as well as successful fintech startup entrepreneurs.
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Which problem does grain solve for its customers and what’s their biggest pain point?

Grain addresses a critical issue for its customers by providing solutions that mitigate the challenges posed by currency volatility, particularly for freight forwarders and their shippers operating in international markets. This sector faces significant financial uncertainty due to the fluctuating nature of exchange rates, which can substantially impact the cost and profitability of their operations.

Grain's cargo value protection service is a unique offering that allows freight forwarders to add significant value for their shippers. This solution ensures that the value of the cargo is maintained from PO to delivery,  throughout its transit, despite any shifts in currency rates. This aspect is particularly vital in the highly competitive freight forwarding industry, where adding additional value can be a key differentiator to solve profit erosion and create differentiation.

In discussing the cargo value protection, let's use a concise example: Imagine an importer in Manzanillo, Mexico, purchasing goods from Hamburg, Germany. They pay 30% upfront, with a balance of €64,766 due at cargo delivery.

To mitigate FX risks over the 32-day transit, they opt for FX protection integrated into their freight forwarder's platform. They hedge €64.7K (MXN 1.209.016,55), incurring a 1% hedging cost (MXN 12,090).

The key advantage here is reimbursement for losses due to currency fluctuations during transit. This safeguards the importer's financial interests, ensuring a more stable and predictable business operation. It's a strategic approach to managing FX risks in international trade.
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Additionally, Grain offers an embedded cross-currency solution designed specifically for freight forwarders and shippers. This innovative feature safeguards these companies from the risks associated with currency fluctuations. In addition to helping freight forwarders conduct transactions in international markets more securely, this solution also allows shippers to pay their freight cost in their functional currency.

In addressing the challenge of FX uncertainty in logistics, let's streamline the explanation for Grain's embedded solution: Logistics providers frequently face FX volatility, traditionally countering this with static markups of 2-4% on customer transactions in local currencies. Yet, this method often falls short in adequately countering FX fluctuation impacts.

Consider the typical FX movements for major currency pairs over an 82-day period in 2023—3.4% for HKD to EUR, 3.7% for EUR to USD, and 3.5% for USD to CNH. There's a 70% likelihood of experiencing a change exceeding 3.2% in this duration.

For a standard ocean freight order, the FX exposure extends to 82 days, factoring in a 25-30 day shipment, plus 1-7 days for arrival and customs, on Trans-Atlantic routes. Combined with payment terms of around 45 cash days, the risk intensifies.

Grain's solution steps in here, specifically crafted to nullify FX risk and enhance profits for logistics providers. By adopting this solution, businesses move beyond static markups, actively managing FX exposure across the entire shipment lifecycle. In an industry where uncertainty can eat into profits, Grain's approach is a strategic tool for securing financial stability and boosting business performance.

By addressing these pain points, Grain provides freight forwarders with a competitive edge in a challenging market.
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Can you walk us through a typical customer journey from onboarding to first transactions? How do you integrate with an existing IT infrastructure and what is needed from your customers?

For Grain's two key solutions, the customer journey from onboarding to the first transaction is streamlined and integrates smoothly with existing IT infrastructures. Here's a breakdown of the journey for each solution:

Embedded Cross Currency Solution

Step 1: Seamless API Integration

The journey begins with the effortless integration of Grain's API into the customers' existing platform. This integration is designed to be smooth and hassle-free, ensuring that the platform is ready for advanced FX management without major disruptions to existing operations.

Step 2: Sync Cross-Currency Orders

Once integrated, Grain's system automatically aligns with the customer's cross-currency orders. This synchronization ensures that FX operations are seamlessly integrated into the customer's business processes, maintaining consistency across transactions.

Step 3: AI-Powered Rate and Pricing Setup

Grain utilizes an AI engine to establish optimal FX rates and pricing tailored to the customer's specific business trends. This step involves smart, data-driven decision-making, enabling the customer to benefit from pricing that reflects their unique business dynamics.

Step 4: Automated Hedge Settlement

The final step in the journey involves the automated settlement of hedges at their due date. This process is efficient and precise, requiring minimal manual effort from the customer, thereby streamlining their FX management.

Cargo Value Protection

Step 1: FX Protection Offer during Booking

For the cargo value protection solution, the journey starts when FX protection is offered through the freight forwarder's platform during the booking of the shipment. This step provides immediate reassurance to the shipper that their cargo value is protected against FX volatility during transit.

Step 2: Reimbursement Post-Shipment

Upon arrival at the destination, Grain steps in to reimburse the amount the shipper lost during transit due to FX volatility. This reimbursement can either be collected by the shipper through the freight forwadrer’s platform or applied to their next order, offering flexibility and added value to the service.

In both solutions, Grain's approach is to minimize the effort and input required from customers, ensuring a smooth transition and integration with their existing IT infrastructure. The focus is on automated, AI-driven processes that enhance efficiency and accuracy, allowing customers to concentrate on their core business activities while Grain handles the complexities of FX management and cargo value protection.
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What is the key differentiator of Grain?

Localized Currency Charging for Global Operations: Grain allows businesses to lock in exchange rates at the time of booking the shipment on the freight forwarder platform, enabling them to bill in local currencies while mitigating currency fluctuation risks. This feature is particularly beneficial for international supply chain operations, enhancing ease of transactions across borders.

Assumption of Principal Risk: Grain takes on the role of principal risk taker, offering rate guarantees that provide complete risk mitigation. This risk-free assurance is a significant advantage for the supply chain industry, ensuring stability in a fluctuating currency market.
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Cost-Effective Hedging Solutions: Grain’s automated platform enables more efficient and cost-effective hedging compared to traditional solutions. This leads to reduced overall hedging expenses for supply chain businesses, directly impacting their bottom line. The platform features an intuitive interface and automated processes, making it straightforward for users to manage and implement hedging strategies.

Transparent Pricing Structure: With zero setup costs and a no-hidden-fee policy, Grain stands out for its transparency and straightforward pricing. This approach is especially appealing to supply chain platforms looking to manage costs effectively.

Flexible Currency Operations: Grain enables businesses to charge in the local currencies of their customers while receiving payments in their functional currencies. This flexibility enhances customer satisfaction, mitigates currency exchange risks, facilitates market expansion, simplifies financial management, and provides a competitive edge in diverse global markets.

Adaptive Solution in Response to Operational Fluctuations: Grain's system is designed to adjust hedging strategies in real-time, accommodating changes in transit times. This flexibility ensures that businesses remain protected from currency risks even when their operational timelines shift unexpectedly.
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Looking at your customers: what would you say is more important for them when using grain ease of cross-border trade processes or hedging of currency risks?

Both the ease of cross-border trade processes and the hedging of currency risks are integral to our customers, but they prioritize differently based on their specific needs.

For many, the hedging of currency risks stands out as the primary concern. This aspect of Grain's service addresses a critical pain point – the volatility and unpredictability of foreign exchange rates, which can significantly impact profitability and financial planning. By offering effective hedging solutions, Grain provides these customers with a sense of security and stability, ensuring that currency fluctuations do not adversely affect their business operations.

On the other hand, the ease of cross-border trade processes is also highly valued, particularly for businesses that engage extensively in international transactions. The simplicity and efficiency of Grain's platform streamline these processes, reducing the complexity and time involved in managing cross-currency transactions. This feature is especially beneficial for businesses seeking to expand their international presence without being bogged down by cumbersome currency management tasks.

In conclusion, while both aspects are important, the prioritization largely depends on the individual business’s core challenges and strategic goals. For those deeply impacted by FX volatility, hedging currency risks may take precedence, while for others, the ease of managing cross-border transactions could be more critical. Grain's ability to adeptly address both these needs is what makes it a valuable partner for businesses navigating the complexities of international trade.
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When talking about FX risk in supply chains, where do you see the biggest risk factors for potential customers and how aware are the stakeholders of FX risks?

Volatility in Currency Markets: The most prominent risk factor is the inherent volatility in foreign exchange markets. This volatility can be driven by geopolitical events, economic policy changes, and market speculation. For businesses in supply chains that operate across multiple countries, this volatility can lead to significant fluctuations in costs and revenues, making financial planning challenging.

Complexity of Global Supply Chains: The intricate nature of global supply chains, involving multiple currencies and diverse economic environments, adds to the FX risk. Companies must navigate these complexities while ensuring efficient operations and maintaining profit margins.

Lack of Real-Time Information: Another key risk factor is the delay or lack of access to real-time currency exchange information. This can lead to decision-making based on outdated data, potentially resulting in financial losses.

Regulatory Changes and Compliance: Changes in regulations across different markets can also impact currency values and transaction costs. Staying compliant while adapting to these changes can be a significant challenge for businesses in the supply chain sector.

Dependency on Single Markets or Currencies: Businesses heavily reliant on a single foreign market or currency are at greater risk. Diversification can mitigate this, but not all businesses have the resources or market access to effectively diversify.
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In which geos or for which currencies do you see the most demand for de-risking? Are there any trends visible?

Emerging Markets and Volatile Currencies: There is a significant demand for de-risking in emerging markets where currencies are more prone to volatility. This includes regions like Latin America, Southeast Asia, and parts of Africa. Businesses operating in these markets are particularly keen on mitigating FX risks due to the frequent and sometimes drastic fluctuations in currency values.

Highly Traded Currencies in Uncertain Economic Climates: We also see substantial demand in markets associated with major world currencies, especially when these regions face economic uncertainties. For instance, the Euro (EUR), British Pound (GBP), and US Dollar (USD) often see increased de-risking activity during times of economic turmoil, political instability, or significant policy shifts.

Trade-Intensive Regions: Areas with heavy trade activity, such as the European Union, North America, and major Asian trading hubs like China and Japan, show a consistent demand for de-risking solutions. Businesses in these regions are involved in substantial cross-border transactions and thus prioritize managing FX risks.

Currencies Affected by Commodity Prices: In regions where economies are heavily reliant on commodities, such as oil or minerals (e.g., Middle Eastern countries or Russia), currency values can be closely tied to commodity prices. Companies in these areas often seek de-risking strategies to protect against price volatility in global commodity markets.

Trends in Global Events: Specific global events, like trade wars, pandemics, or geopolitical conflicts, can trigger spikes in demand for de-risking in affected currencies or regions. For instance, recent events like Brexit impacted the demand for de-risking strategies involving the GBP and Euro.
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How do you see the future of grain? What’s there to come in the next few years? Where are you headed? 

At Grain, our core objective is to equip businesses with advanced technological and financial tools that were once beyond their reach. We strive to provide a newfound sense of financial stability, enabling companies to confidently tackle the complexities of international trade. Our automated hedging tools are designed to address currency risk in an efficient and effective manner, making them suitable for businesses across various scales.