TradeShift launches to disrupt an entire financial system

One of the most potentially disruptive startups of the last ten years is emerging into the light this week. And I honestly don’t say that lightly.

Christian Lanng, a former builder of deep e-commerce and security services for the Danish government is co-founder of TradeShift along with a very hard-core team which includes John Bosak who created XML, who is on the board.

But what is perhaps most startling is the re-emergence of early Skype investor Morten Lund on the project. Lund was made famous in tech circles both for his early Skype investment but also for going personally bankrupt two years ago.

TradeShift, which has been operating under the stealth name of Porta till now, is aiming at a very, very big target.

It wants to disrupt how banks and credit card companies process payments between any kind of business, and use the Internet to do it.

For the last 10 months the dozen strong team in Denmark has been building what could be described most simply as an e-invoicing company.

But instead of the kinds of charges levied for credit card processing and other banking systems, transactions will be free across the network, but with the security of being legally binding. That is incredibly disruptive.

Financially it is backed by seed investors and is “currently self sufficient”.

How so? TradeShift has now signed up two undisclosed regions in northern Europe and a yet to be named city in Brazil for its platform. Crucially, it looks like Tradeshift will be hugely beneficial to emerging nations like Brazil which currently are not locked into old EDI systems.

The problem is simple. Businesses still trade on exchanging and printing out PDFs. Neither Microsoft not SAP haven’t solved this. So Tradeshift wants to let global SMEs participate in hard core business processes traditionally ruled by these companies.

Old fashioned Electronic Data Interchange (EDI) is dominated by huge IBM mainframes and pre-Internet protocols. Of course, it’s only natural that this should move to cloud computing.

The idea is this. Dynamic invoicing will, instead of being laborious hand-created entities, simply move between companies electronically. Accounts running on Tradeshift will constantly monitor exchange rates and automatically withdraw funds or make purchases just when the price is cheapest for the goods your company requires.

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