I recently spoke to Chris Yerbey, the founder and CEO of Amsterdam-based Tradefox. We recommended TradeFox in 2017 (back when it was called Scrap Connection) and again in 2019. It provides a business intelligence and trading platform for the global trade of scrap and recyclable commodities.
I caught up with Chris while he was back home for a couple of months visiting friends and family in Alabama. The following Q&A is based on my chats with Chris, in addition to the emails we exchanged. He had some exciting updates to share.
Andy: Was last year good or bad for you?
Chris: We believe we’ll benefit from multiple business and consumer trends that are the result of a post-COVID new normal — beginning with the proliferation of global virtual work and business transacting. There is an increasing awareness of and comfort level with doing business virtually. The necessity in doing so has enabled us to achieve greater customer awareness in the value of our products and services.
Andy: How has this new appreciation of what you do advanced your company?
Chris: Trade feedback data is the “gold” we are mining at Tradefox. At last count we have more than 350 companies which have contributed feedback on other companies. We’ve surpassed 11,000 reviews (a 90% increase in the last six months.) This significant improvement in feedback data is only scratching the surface of where we believe we need to go. Trade reviews are a critical component of our proprietary reputation scores. Greater trade review data means greater value within our reports and greater accuracy of our reputation ratings.
Andy: Did pandemic-inspired cultural shifts help or hinder you?
Chris: COVID-19 accelerated our business growth. The new willingness from industry professionals to embrace our vision for conducting trade globally without travel, handshakes or in-person meetings is a massive and sudden breakthrough.
Andy: How exactly are you turning your vision of “trade without travel” into something that companies actually want to do?
Chris: We want to create a system which is so safe and efficient that a seller on one side of the world can point, click and sell their material at the best price to a buyer thousands of miles away, locking in profits and insuring risk all without the need to ever meet in person. We’re doing that by focusing on the transaction side of the supply chain. This is where negotiations take place, orders are booked and pricing is hedged as well as where shipping, inspection, trade finance and insurance are arranged.
Andy:Did you have to make major or minor adjustments?
Chris: A little of both. One major adjustment we made was hosting two virtual recycling conferences. We never considered ourselves to be in the conference business, but that’s what our customers asked us to do to help them during COVID-19. We had 171 ticketed attendees at our first conference in September and 471 at the second one we did the following February. Each conference created more awareness of our products. We were able to teach people the value of our reports as they were used to unlock profiles of other attendees to check their company reputations before interacting with them at the event.
Andy: So something you would never have considered doing before the pandemic helped push your company forward?
Chris: Absolutely. We now have 4,500 (and growing) registered users on the Tradefox.co platform. We also hit a peak in active users of 486 as well as a 256% increase in Trade Reputation Report unlocks.
Andy: What new lines of business (or products) are you planning/discussing? How close/far away are they?
Chris: We have been in discussions with one of the largest global trade insurance companies. They would like to be the first to provide insurance coverage against the losses which come from the types of risky trading behavior Tradefox tracks for its members: Fraud, cancelled agreements, unrefunded pre-payments and uncollectable material quality claims. Right now, they are uninsurable. There’s not enough information about companies’ trading reputations. We’re making progress towards our goal of having enough data to be able to convince actuaries that Tradefox reports can be used to underwrite the risk of losses due to unfair trades. I believe we’re about 12-to-18 months away.
Andy: How solid is that time frame?
Chris: We are now in discussions with a well known shipping company to help them (and later on others) avoid losses. Shipping companies have hundreds to thousands of scrap customers along with their trading data — information that is more detailed and complete than what we can purchase from our data sources. To help them, we’ll need full access to their customers’ trading data. Getting access to this data would be a massive breakthrough, allowing us to have the data set we need for insurance much sooner than expected.
Andy: What’s next?
Chris: We will shortly begin a new fundraising campaign later this month. This will be our second Regulation D campaign, which means all investors must be accredited if they are a US citizen or resident. The total raise will be $2 million at a $25 million valuation cap. If you want to indicate your interest, just follow this link.
Andy: Any plans to do a Regulation Crowdfunding (Reg CF) raise for our non-accredited investor members?
Chris: A Reg CF round is not out of the question, but it will be based on the level of interest received. If we can confirm at least $150,000 from non-accredited investors, we will take the steps necessary to open a Reg CF round. If you want to indicate your interest, just follow this link.
I’m excited about these updates from Tradefox. A growing user base, a new insurance product under development and a new round of funding that’s soon to be underway — all excellent news. Feel free to let Chris know if you’re interested in investing. There’s no commitment. You can always change your mind. But if you like the direction Tradefox is going in and would seriously consider investing, by all means let him know. To refresh your memory, when I recommended this company to First Stage Investor members back in 2017, its valuation was $4.5 million.