Scrap Connection / Tradefox: Business intelligence and trading tools for recycling industry professionals

What does your company do?

Tradefox (previously Scrap Connection) is a global platform providing B2B software solutions to companies that buy, sell or broker recyclable materials. We connect scrap professionals to facilitate trade in a $250 Billion market. We offer our customers unlimited access to company details on over 100,000 companies dealing in recyclables and thousands of in-depth company Trade Reputation Reports which provide insight on the trustworthiness and reliability of those companies.

Where will your company be in 5 years?

We aim to become the most trusted platform for services centered around the trade of recyclables. Our goal is to have $2 billion of the annual global scrap trade being conducted on our platform by 2022. Business intelligence on trading partners and competitors, financial services, documentation tools, and arbitration are just some of the elements we will combine to reduce massive financial risks and market inefficiencies.

Why did you choose this idea?

Our founder, Chris Yerbey dealt with a loss of over $150,000 in 2009. After learning that literally every other person which has worked in our industry for at least 5 years had also dealt with fraud and other unscrupulous trading behavior, he founded Scrap Connection to create a safe way for people with integrity to buy and sell recyclables.

Why did you start Scrap Connection?

To fix some big problems. Our founder, Chris Yerbey, has been in the recycling business for over 23 years. He started out brokering, and later traded internationally. Over the years, he and his partner built up a very successful business, but as revenue increased so did their exposure to financial risks. Fraud, contract cancellations, and losses in settlement of quality claims plague every honest buyer, seller and broker of scrap materials. With experience in platform based technology gained from his previous startup, he had a unique cross-industry perspective on how to solve the very problems he was experiencing as a trader. Motivated to use his knowledge to help others avoid these types of losses, Chris founded Scrap Connection in 2012.

Why should I invest?

Two reasons: Financial: Because you agree that Scrap Connection's solutions can provide massive financial value to the industry and that we have the team, knowledge and vision to make it happen. You expect a sound return on investment because of this. Personal:Because you're sick of dodgy characters taking advantage of honest people. It's time to change the scrap industry for the better, and you want to help Scrap Connection achieve that. If you're in the industry, you want to trade without risk. Our team has years of experience dealing with the problems we are now building products to solve, and also with building technology platforms to solve problems in a traditional industry. We are trying to solve a big problem that could potentially create enormous value for a huge market. If we are successful, our investors could see returns of 10x – 50x in a few years.

What's new about what you're making? How is it different?

Put simply, we're a first mover. Services for scrap trading exist online, but none with the scope or approach we're aiming for. We see the potential to provide massive value through the reduction of risk, quality claims, contract cancellations, and workflow inefficiencies. Much of the scrap business operates in a quite old-fashioned (low tech) way, but we believe the sheer value of our services gives a strong incentive for businesses to take advantage of the solutions we're creating.

How do you make money?

Through a low monthly membership fee currently. Our strategy in the short term is to keep the barrier to entry as low as possible in order to grow the membership base, thereby increasing the value of the network. In the near future, we will implement new features accessible on a pay-per-use basis. For example, we intend to earn money from company reports containing in-depth information on new and existing trading partners, which members would typically download before booking a new order or when doing market research. Other features will include the ability to book low cost shipping, and financial products such as escrow payments, foreign exchange, LC finance, and insurance.

How big can you be?

We aim to have $2 billion of the annual global scrap trade being reported on our platform by 2022. As we offer more and more pay-per-use services centered around trades, we calculate that our revenue as a percentage of transactions will reach 0.25% or $5 million per year. Using PE ratios for technology companies, the estimated value of our company at this level would be more than $100 million. But $2 billion of trade is less than 1% of the $250 billion scrap market. Upon reaching that milestone, we would pursue a 10% share of the market, and more. This would push the value of our company above the $1 billion mark.

I don't know anything about scrap. Can you explain it for me?

Sure thing. The waste management industry is one of the biggest industries that you never think about. Around US$250 billion of scrap is traded globally every year, including metals, paper, plastics, glass, rubber, etc. "Scrap" could actually a bad word for it, because it's not rubbish at all; for example 88% of all steel is recycled. You've probably seen your local scrap yard stacked with old cars, but that's not the only place scrap comes from. Other sources include the demolition of buildings and equipment, off-cuts/waste from industrial processes, and municipal waste collection services. Who buys the scrap? Well, depending on the material, the country, and what the market is doing, roughly two-thirds of scrap is bought & sold domestically. The remainder is shipped in containers or in bulk overseas. It's bought by industrial mills who melt the scrap down, remove any impurities, and shape it into new products to be sold.

What problems are you actually solving?

Despite being an old industry, there's a lot of room for incurring loss in the scrap industry. We estimate these losses cost companies over $200 million a year. Here are the main causes, which we're aiming to solve: Material quality claims: Claims happen, and for good reason: sometimes the material the buyer receives just isn't what they thought they were buying. Maybe it's poorer quality than expected; maybe it's gone rusty over the journey because it was wet when it was loaded into the shipping container. It could be in different size pieces, and therefore requires further treatment before processing. There's a myriad of reasons (not all of them scrupulous), and a lot of them can be solved by better communication and documentation so expectations are managed. Fraud:Sometimes, you need to buy from a new source. The source might seem legit, but when your shipment arrives, it might be full of very low quality material or perhaps include no material at all. We aim to drastically reduce the chance of that happening with our verification and business intelligence tools. Contract cancellation:The price of scrap changes every day. Sometimes, it changes so much that the financial benefit of backing out of a deal appears to outweigh the cost of losing a trading partner and having them tell everyone they know not to do business with you. We plan to track deals as they happen so that we can reward honest players and flag dodgy dealers for everybody to see. Material quality and claims:Recyclable raw materials are typically waste products that have been processed in order to remove impurities that can cause problems in the process of making new materials like steel, aluminium and plastics. These materials can be handled multiple times between the point of creation (demolition of a building, shredding of a car, trimming plastic parts, etc) and the point of use. At each stage, material quality can be improved or worsened, often unintentionally. At the end of the supply chain, the buyer of the material is stuck with it for better or for worse, because they already paid for it. When quality is less than expected, the buyer will file a claim for a partial refund. In the end, the buyer wants a fair settlement and the supplier wants to be sure the claim is genuine. We aim to improve this claims process by first ensuring that both parties remain accountable for a fair resolution. We will provide inspection services and technology tools which reduce miscommunications regarding quality, while keeping all of the conversations, documentation and photos surrounding a transaction in one place for both parties to easily review. When a rapid solution cannot be found, we can forward the details about the entire transaction to an arbitration firm to help both parties reach a mediated settlement. Fragmented services:There are a multitude of financial, transport, and documentation services needed when trading in scrap, especially internationally. Some of these are accessible online, but not efficiently. We see that bringing all the services together onto one platform can dramatically streamline workflows.

Isn't the scrap business a bit dodgy?

Our services are focussed on industrial-scale B2B trade. Shady characters stealing copper wiring in the dead of the night to sell to their local scrap yard certainly exist, but that's not who uses our services. We connect scrap yards, waste companies, traders and brokers with industrial mills who buy the scrap to melt it down into new finished and semi-finished products, like steel. That said, there's still a lack of oversight and accountability in the industry, which leads to problems in itself, and which we aim to solve.

How do you acquire customers?

At the moment through word-of-mouth and campaigns on social media platforms that we focus towards industry groups. This has provided us with steady growth until now, but as we look to scale even more we'll be adding dedicated sales hustlers to our team in the near future.

What's your biggest risk? What keeps you up at night?

Honestly, it's how to convince everyone in the scrap industry that the minor short-term pain of slightly changing how they work is worth the major long-term financial gains delivered through vastly reducing their exposure to risk, quality claims and contract cancellations. It's a good thing we're passionate and believe in our solutions!

Are you just in metals? What about other verticals?

Our experience is with the metals market, so we're starting with what we know. Once we're happy with the product, however, we see no reason why it can't be expanded to other recyclables and any other commodity traded in a spot market.We've already opened up our platform to plastic and e-scrap recyclers. Essentially we see our product being useful to any company that trades in industrial raw materials.

Who are your competitors? How are you different?

There are a number of companies already offering company info and buy/sell listing services online, specific to the scrap industry. The problems in the industry aren't just solved by simply bringing everyone online, however; in fact they're probably compounded. Our difference is our focus on verification, accountability, and hard data to give our customers real insight into which companies they should be dealing with.

How will you scale?

Our platform is designed to scale by its very nature. Our customers are incentivised to invite their contacts, because the more contacts a company has on Scrap Connection, the more value they receive. Therefore, our current users are our most important asset for scaling.

What is crowdfunding?

There are two types of crowdfunding: rewards-based crowdfunding and equity crowdfunding. We're using equity crowdfunding. Rewards-based crowdfunding (like on Kickstarter and Indiegogo) is where you give a company money to produce a product you believe in, and in return the company might give you a reward, such as a copy of the product, or public recognition. But if the company goes on to make millions, you don't get any of the profits! This is why we're using equity crowdfunding; we want our investors to profit themselves. Equity crowdfunding is the process where people (i.e. the ‘crowd’) invest in an early-stage, unlisted company (a company that is not listed on a stock market, like Scrap Connection) in exchange for shares in that company. A shareholder has partial ownership of a company and stands to profit should the company do well. Unlike traditional investing, each person can invest as little as $200. Investing in a startup at an early stage can be extremely profitable. If you'd invested $500 in Google back in 1998, it'd be worth $10M today. A $500 investment in Tumblr when it first started would be worth $750K today. These are just a couple of examples of young companies that were acquired for hundreds of millions, even billions, of dollars, making their earliest investors fantastically rich. However, examples like Google and Tumblr are extremely rare, and only 1 in 10 startups provide a significant return for their investors. Out of every 10 startups: 3 startups fail, go bankrupt, or the business closes.3 startups are worse than average, aren’t very profitable, and return less than the invested capital, but are still active.3 startups are a moderate success, are profitable, and return just the invested capital. They are not acquired yet and are still active.1 highly successful startup will pay the investor a multiple return on his investment. That startup has an IPO or is the target of a significant acquisition. Here are some great resources to learn more: Wefunder FAQ: "How do I earn a return?" Video [3 mins]: "Why Invest Through Equity Crowdfunding?" (just ignore when she talks about 'Americans' - everyone can invest in Scrap Connection!) A great in-depth equity crowdfunding video tutorial [25 mins]: "Crowdfund Investing 101" Also, check out this interview on Mad Money [6 mins]: "Investing In Startups"

Why did you choose to use crowdfunding instead of traditional investment?

We believe we can change the industry by creating the most trustworthy trading network in the world. And we need the industry’s support to make that happen. Through crowdfunding, we can now offer shares in Scrap Connection, allowing others to participate financially in our success. By investing, industry professionals can both enact change in the industry, and make a profit. Of 191 industry professionals we surveyed in July 2016, 51% said they’d be interested in investing in Scrap Connection, with amounts totalling over $240K. That belief in the demand for our product is hugely motivating, and it encouraged us to launch this crowdfunding campaign.

How do I invest?

For any questions you have about investing, please first read Wefunder's very comprehensive investor FAQ: https://wefunder.com/faq/investors. Otherwise, please ask us below and we'll be happy to answer!

Can I invest if I'm not in the U.S.?

Yes, absolutely! Just be aware that you're subject to your own country's securities laws. Essentially, you can invest unless the law of your country prevents you from investing. Also be aware that when you go to invest, the payment options on WeFunder look like they're only for US investors. Never fear! It's quite easy. To do a transfer from your bank to WeFunder, select the 'wire' option, and WeFunder will give you more instructions about how and where to send your money.

How do I transfer money to WeFunder from outside the U.S.?

The payment options on WeFunder look like they're only for US investors. Never fear! It's quite easy. To do a transfer from your bank to WeFunder, select the 'wire' option, and WeFunder will give you more instructions about how and where to send your money. One great option for transferring your money to WeFunder is https://transferwise.com. They're much cheaper than most foreign exchange options because they use the actual exchange rate, and only make money off of their small fee. (No, we don't have any connection to them, we just think they're great. We love good tech!)

Should I/we invest as an individual or a company?

Either. We absolutely accept investments from companies. For companies who have lost money in the past due to fraud, contracts being backed out of, and/or bad material quality claims, investing is a great way to support us in building a solution to those problems (and hopefully make a return on investment, also). Individuals who believe in our vision can also invest separately to their company. How much have you or your company lost due to cancelled contracts and fraud in the last 10 years? If you were to invest 5% of those losses in the solution, not only could you decrease losses in the future, but with a possible ROI of 10x – 50x, the losses could be recovered! Plus, you would have a say in our product development.

1	First Pick of 525 startups for participation in Startup Bootcamp Amsterdam 2012 accelerator program. (Tech Stars Affiliate.)
2	Revolutionizing the $250 billion market for recycling.
3	Potential to provide $200 million of value per year to companies that deal in recycling.
4	110,000 new company profiles added since 2018.
5	More than 2,500 detailed Trade Reputation reports available for download.
6	Over 1 million shipments added in 2019 totaling more than $30 billion.

1	The following trends or uncertainties could affect our financial condition, including the liquidity, cash flow and capital resources described below: The Company’s operations may be unprofitable, and may result in the total loss of investment.
2	The success of the Company is highly dependent upon the ability of its CEO and management team, to attract and retain qualified managers and other personnel in a competitive environment.
3	While the Company believes in good faith that its business plans have a reasonable chance of success, the operation of the Company are ultimately speculative and involve the possibility of a total loss of investment, due to any number of considerations. Investment is suitable only for individuals who are financially able to withstand total loss of their investment.
4	The company intends to use a significant portion of the proceeds from the offering for unspecified working capital. The offering proceeds will be used by the Company in the ways management deems most effective towards the Company’s goals. This means that although we definitely have plans for the proceeds (focused on sales, marketing, and product development) the Company will have ultimate discretion to use the proceeds as it sees fit and the Company has chosen not to limit the Company’s use of the funds to specific uses that investors could evaluate. Such portion of the proceeds from this offering will be used for the purpose that the company’s management deems to be in its best interest in order to address changed circumstances or opportunities. As a result of the foregoing, the Company’s success will be substantially dependent upon its discretion and judgement with respect to application and allocation of such portion of the proceeds of this Offering. The company may choose to use the proceeds in the manner that the investors do not agree with and investor may have no recourse. A use of proceeds that does not further the Company’s business and goals could harm the Company and its operations, and ultimately cause an investor to lose all or portion of his or her investment.
5	From time to time, third parties may claim that one or more of the Company’s products infringe their intellectual property rights.
6	Growth of the company will require the recruitment, retention, and integration of additional highly qualified individuals. Even if such people can be hired, the projected growth in staff could present further management risks. The market for qualified personnel is highly competitive and there can be no assurance that any critical positions can be filled on a timely basis.
7	The company has received no notices or indications otherwise and believes they have not infringed on anyone else’s IP rights. That said, the Company’s technology-driven business is highly dependent on the Company’s intellectual property. While the Company believes in good faith that it has robust rights to all intellectual property needed for its business, any dispute or litigation regarding intellectual property could be costly and time consuming due to the uncertainty of the intellectual property litigation and could divert the Company’s management and key personnel from its business operation. A claim of intellectual property infringement could force the Company to enter into costly or restrictive license agreement, which may not be available under acceptable terms or at all, could require the Company to redesign or relabel its products ,which would be costly and time consuming, and/or could subject the Company to an injunction against sale of certain of its products. The Company may have to pay substantial damages, including damages for the past infringement, if it is ultimately determined that its products infringe a third party’s proprietary rights.
8	The Company’s revenue model may be impaired or change. The Company’s success depends mainly on its ability to receive revenue as earnings from the Company’s software as a Service platform. The company may generate but retain some or all of the earnings for growth and development of its business and accordingly, not make distributions to the shareholders. If the Company does not generate revenue, its business, financial condition, and operating results will be materially adversely affected.
9	The Company has a small team, and the loss of key team members, and especially the loss or death of the founder Chris Yerbey, could harm the company’s ability to implement their plans.
10	The Company could be harmed in the event of the death or disability of founder Chris Yerbey. Likewise, key team members could leave or become unable to serve, decreasing the Company’s ability to achieve its goals. The company also leverages the global talent pool and political risks, natural disasters, communication outrages and other factors can make team member unavailable or otherwise impact our ability to keep operating at current efficiency.
11	The market for technology companies is not predictable. While we may be able to sell the company for its technology, client relationships, team or other factors, there is no guarantee that it can be sold, nor that it will become profitable, nor that it will reach an Initial Public Offering (IPO). Even if those do occur, there is no guarantee that investor returns will be positive.
12	Scrap Connection Inc. operates currently as a holding company for its Dutch based subsidiary, Scrap Connection BV. All business development and tech development carried out from their offices in the US, Netherlands, Poland and India are managed and paid for by Scrap Connection BV. 99% of Scrap Connection, Inc.'s assets are comprised of its interest in it’s foreign subsidiary and a loan of investment proceeds to Scrap Connection BV. This represents amounts advanced to Scrap Connection BV primarily from investments in previous rounds of funding. Scrap Connection BV is organized under the laws of and located in The Netherlands.
13	The Company not might sell enough securities in this offering to meet its operating needs and fulfill its plans, in which case the Company might need to reduce sales & marketing, engineering, or other expenses. Were recurring revenue to decrease, further cuts would be needed and hurt the Company’s ability to meet its goals. Even if the Company raises the entire round successfully, we may need to raise more capital in the future in order to continue. Even if we do make successful offering(s) in the future, the terms of that offering might result in your investment in the company being worth less because of the terms of future investment rounds.
14	Even if the Company is successful, an investor may want immediate access to the then net worth of the investment, but selling private securities can be difficult or impossible. In this case, an investor may need to wait until a liquidity event, and there are no guarantees one will occur.
15	Our future success depends on the efforts of a small management team. The loss of services of the members of the management team may have an adverse effect on the company. There can be no assurance that we will be successful in attracting and retaining other personnel we require to successfully grow our business.
16	The Company may never receive a future equity financing or elect to convert the Securities upon such future financing. In addition, the Company may never undergo a liquidity event such as a sale of the Company or an IPO. If neither the conversion of the Securities nor a liquidity event occurs, the Purchasers could be left holding the Securities in perpetuity. The Securities have numerous transfer restrictions and will likely be highly illiquid, with no secondary market on which to sell them. The Securities are not equity interests, have no ownership rights, have no rights to the Company’s assets or profits and have no voting rights or ability to direct the Company or its actions.

Director	Occupation	Joined
Chris Yerbey	CEO of Scrap Connection @ Scrap Connection	2012
Ashwani Dutt	President @ Easy Travel India Pvt Ltd	2017

Date	Amount	Security
11/2017	$969,727	SAFE
	$251,813	SAFE
03/2019	$14,162	Loan
11/2018	$100,000	SAFE
08/2019	$20,000	SAFE
06/2019	$200,000	SAFE
06/2016	$55,000	Convertible Note
09/2013	$330,000	Convertible Note
09/2012	$12,000	Convertible Note
02/2012	$20,000	Accelerator

$50,000	94% -- Funds will be used for paying critical business development costs 6% -- Wefunder intermediary fee
$100,000	94% -- Funds will be used for paying business development costs with a focus on rapidly increasing monthly recurring subscription revenue 6% -- Wefunder intermediary fee
$250,000	94% -- We plan to expand the business development focus by hiring new team members who will focus on revenue from subscriptions. Additional funds can be used for marketing and sales. We also plan to hire a data scientist to help us improve the quality of our product. 6% -- Wefunder intermediary fee
$500,000	94% -- We plan to further expand sales in 2020. We also plan focus on expanding or product offering into additional verticals such as industry raw materials and agricultural products based on the success and learnings from 2019. 6% -- Wefunder intermediary fee

Class of Security	Securities (or Amount) Authorized	Securities (or Amount) Outstanding	Voting Rights
Preferred A	1,000,000	369,690	No
Preferred Aa	100,000	0	No
Common Stock	10,000,000	882,400	Yes

Why you may want to support us...

Why investors us

we've raised $2,013,984 since our founding

Our team

And Our Major Accomplishments

In the news

Downloads

Connect

What we're building

Our Deck

In-depth with Chris Yerbey, CEO

Years of experience and connections

Investor Q&A

Financials

At a Glance

Risks

Details

The Board of Directors

Officers

Voting Power

Past Equity Fundraises

Convertible Notes Outstanding

Outstanding Debts

Related Party Transactions

Use of Funds

Capital Structure

Form C Filing on EDGAR

Recycling Today Article

Only 3 Days Left to Invest in Tradefox

Cheating to Compete - How Tradefox is Making a Difference

Tradefox's Campaign is Closing & New Video Released to Investors

A Handshake Isn't Enough

Using Tech To Win In ‘The Wild West Of Recyclables’

Wefunder Experts Interview Tradefox CEO If you want to learn more about what we are doing, our potential for growth and what drives us, watch this!

Tradefox Virtual Conference Proposal - with additional comments for Investors

Tradefox Virtual Conferences - Almost LIVE!

New Regulation D Funding Round

COVID-19 Investor Update

Kick Off Session with Maestral Solutions

New Strategic Partnership!

Chris Yerbey Interviewed by Early Investing

The Magic Behind the TrustScore

New Product Demo is Receiving Rave Reviews

Tradefox Recommended Again by EarlyInvesting.com

Investor Update

Investor Update

Scrap Connection is back on Wefunder - This is your chance!

Are you sure you want to delete this?

Are you sure you want to delete this?

Are you sure you want to delete this?

Are you sure you want to delete this?

Are you sure you want to delete this?

Are you sure you want to delete this?

Are you sure you want to delete this?

Are you sure you want to delete this?

Are you sure you want to delete this?

Are you sure you want to delete this?

Are you sure you want to delete this?

Are you sure you want to delete this?

Are you sure you want to delete this?

Are you sure you want to delete this?

Are you sure you want to delete this?

Are you sure you want to delete this?

Are you sure you want to delete this?

Are you sure you want to delete this?

Are you sure you want to delete this?

Are you sure you want to delete this?

Ask a Question

Your commitment was sent

Join 702,061 investors who funded 487 startups with over $178.5 million1

View Reg D, A+ and Reg CF Breakdown

Signup

Forgot password?

Join 702,061 investors who funded 487 startups with over $178.5 million¹