EXPONENTIAL EXCHANGE CLOSES $7.4M SEED ROUND TO FUND FURTHER DEVELOPMENT OF RISK MITIGATION TOOLS FOR THE AUTOMOTIVE ECOSYSTEM
While industries such as agriculture, energy, and manufacturing have long been able to hedge against price risk by using derivatives, this ability has never been available to auto fleet owners and insurance companies. Exponential is on a mission to change this by creating a set of financial instruments that would allow rental car companies, auto insurers, and auto lessors to transfer their financial exposure to other market participants – the first of many industries Exponential plans to serve with this ability.
"Pioneering new financial markets involves great complexity and rigor. Having investors and strategic partners connected to each side of our multi-sided market is invaluable and will help us kickstart trading and build liquidity," said
Exponential recently launched its initial product, the Exponential Used Vehicle Index, designed to offer an efficient and effective method for tracking used vehicle values using best-in-class data sets and modern data science techniques. It's the first benchmark designed and built to serve as an underlying instrument for hedging and trading used vehicle market values. The creation of such derivatives is the next step in Exponential's plan.
"The transportation revolution has created a fascinating array of new mobility choices for consumers, but the companies who own, finance, and insure these vehicles have limited options in managing the elevated levels of risk that come with rapid technological advancements," said
Other investors in the round include
"Exponential Exchange is pioneering risk-mitigation tools in auto that have been standard in other industries for decades, unlocking unprecedented opportunities for companies and market participants across the vehicle ecosystem," said Burak Cendek, partner at
Exponential is now focused on cultivating over the counter (OTC) trades as a proof of concept while building the market architecture and engagement required for futures trading. The result will be a suite of derivatives products that are cash-settled against the Exponential Used Vehicle Index. This will allow both parties in a vehicle derivatives contract to effectively hedge against the inherent volatility in used vehicle depreciation – a significant problem for rental car companies, auto insurers, and lessors.
"Current risk-mitigation approaches are inefficient for both automotive fleets and lessors who want protection against market values declining more than expected, and for insurers who want to protect themselves against volatile vehicle replacement costs," said
Exponential Exchange has now raised a total of
About Exponential Exchange
Founded by a team with decades of expertise across fintech, derivatives design, data science, risk management, and automotive finance, Exponential Exchange is creating a series of next-generation financial instruments designed to offer new levels of financial protection for participants in a variety of asset classes. These tools will allow hedgers to offset exposure to adverse price movements via derivatives that settle against Exponential-powered indices. Targeting asset classes that lack effective risk-management tools, Exponential relies on robust data sets to create their tradable financial instruments. The result is a powerful and innovative alternative to more expensive, less efficient versions of risk mitigation, offering new levels of financial protection for hedgers, while unlocking new tradable asset classes for the derivatives market. Exponential's launch product is designed for vehicle fleet owners and auto insurers looking to hedge against used vehicle market price volatility. For more information, visit www.exponentialexchange.com.
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SOURCE Exponential Exchange
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