First Stage Investor

Startup Update: Turning Misfortune Into Opportunity

Startup Update: Turning Misfortune Into Opportunity
By Andy Gordon
Date December 30, 2021
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In the article

Tradefox

Valuation $30,000,000
Total Raised $297,009
KingsCrowd

We first presented Amsterdam-based Tradefox in 2017 (back when it was called Scrap Connection). We presented the company again in 2019. It provides a business intelligence and trading platform for the global trade of scrap and recyclable commodities. 

The company’s valuation cap was $4.5 million in 2017 when we first suggested First Stage Investor subscribers invest in it. Let’s revisit exactly what that means. For those who invested back then, the valuation you get with the company’s next equity round can’t go higher than $4.5 million – even if Tradefox raises its valuation for that round to $10 million or $20 million. And if the pre-money valuation is less than $4.5 million? Investors automatically acquire shares based on that lower valuation. 

So this is what you need to know. A little more than a year ago, Tradefox did another capped round. That one capped at $7 million. And now?

Tradefox is currently valuated at $25 million, founder and CEO Chris Yerbey told me the other day. 

That’s a nice healthy increase from the $7 million cap of a little more than a year ago. And a 5.5 times increase over the $4.5 million cap of 2017. So the company must be doing something right. And indeed, it is (though Chris would be the first one to admit it hasn’t been easy).

Like a lot of startups, Tradefox has had its ups and downs. The pandemic was its latest challenge. Scrap trading nosedived, and Tradefox was forced to adjust. 

I’ve probably had a couple dozen conversations with Chris over the years. And I had the pleasure of meeting him face to face in New York City before the pandemic hit. Chris is an outstanding CEO. And I’ve come to realize that perhaps his biggest strength is his resourcefulness. 

As the pandemic slammed into one country after another, Chris managed to turn misfortune into opportunity. Tradefox began hosting quarterly virtual networking conferences for scrap dealers. Though the company doesn’t make a profit on the conferences themselves, they’ve become an effective way to introduce and showcase Tradefox’s services. 

Tradefox uses its proprietary data to match buyers with sellers at these conferences. Each side receives valuable information on the other, such as trade history and ratings. Chris says companies typically walk away from these conferences with two to four new trading partners. And having experienced Tradefox’s value proposition in action, many become full-blown customers. 

The conferences are a hit… so much so that Tradefox will begin charging more and turning them into significant money-makers beginning in 2022. 

Chris has other big plans for the future. He wants to offer trade financing next and eventually add shipping services. That would effectively make Tradefox an end-to-end service for traders. And not just for scrap traders. Raw materials and agricultural commodities are among other verticals that Chris is aiming to include. 

In the meantime, the company continues to expand and hire new people. A new raise is also on the agenda for 2022. It’s going to be an interesting year – perhaps even a pivotal year for the company. I’ll continue to give updates on all of Tradefox’s new initiatives. 

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