The startup is using the Cozad New Venture Challenge to help bring the idea to fruition

Editor’s Note: Through itsOrigin Ventures Office of Entrepreneurship, Gies College of Business is supporting entrepreneurial activities of both on-campus and online learners. The Origin Ventures Office fosters knowledge creation and dissemination from top faculty in the field, and it designs and offers the curriculum needed to bring that knowledge to the classroom. The office housesiVenture, an accelerator for top student startups at the University of Illinois, and co-sponsors the Cozad New Venture Challenge, which allows University of Illinois startups to compete for a pool of $500,000 in funding. This is one in a series of features on Gies teams participating in this year’s Cozad, which culminated in the finals on April 17. This year, 57 Gies-led teams are participating in the contest, up from seven in 2024.

It’s not uncommon for contractors in the West to tap Asian markets and other developing nations for natural resources. But oftentimes those suppliers never see payment, or at the very least see their money come a year or two later. That’s because most contracts stipulate that the payment won’t be made until the work is done. That’s when the contractors are paid for their work and pass it on to their raw materials’ provider. A startup led by a Gies student, Abhiroop Somisetty, wants to help those in the East more reliably get their payment up front, while knowing who to work with in the West.

Somisetty, the CEO of Vendor Hub, along with his partners -- CMO Vasudha Acharya, CTO Nithish Sampath, and COO Yuvaraj Shanmugam are setting up a rating system for those contractors based on reliability and the speed at which payment is made. The team, which consists of four Gies Business students in the Master of Science in Technology Management program, is also partnering with local banks and credit unions who find it tough to give loans to small businesses without a credit score to pay the suppliers up front, while passing on smaller interest rates to the contractors.

“The market is extremely fragmented,” said Somisetty. “One of the pain points is that manufacturers and other industrialized companies are on credit cycles, meaning that until they make money, they don’t pay the suppliers, who are thus at risk. We are trying to make it simpler by creating a centralized system, a framework that gives a credit rating of these enterprises on our platform.”

Although the manufacturers don’t carry the risk that the suppliers do, they typically pay a high interest rate to them. As an incentive for buyers to use its platform, Vendor Hub would charge a much smaller interest rate to those manufacturers, despite taking on the risk.

“There is always a chance of them negotiating outside the network, but we want our incentives for both sides to make it cost-prohibitive to work directly with us,” Somiestty said.

Much like any savvy investor, volume and diversification will be key for Vendor Hub in minimizing its own risk.

Vendor Hub believes there is a market for this centralized system. For instance, Somisetty has already heard from an interested Philippine company that sells sheet metal to manufacturers in Spain and Portugal.

While the rating system takes some artificial intelligence and software developers to set up, finding the investors to start the process will be paramount for Vendor Hub to be the fulcrum in the operation. They are targeting investors and suppliers in India, Vietnam, Taiwan, and the Philippines.

Somisetty was strategic in building his team, pitching at events like the Technology Entrepreneur Center’s Social Fuse “I believe that the team should have at least four important pieces -- someone who has the vision, someone who has the organizational skills, someone who knows the product well, and someone who knows the market well. We have built this team with those goals in mind.”

Acharya was attracted to Vendor Hub because she saw similar issues with distribution while working for a supply chain SaaS company in India.

“In two years in that space, I saw how important it is for people in the supply chain space to have assurance,” she said. “With that in mind, once we get buy-in from the suppliers, we believe buyers will follow.”

Many of those potential buyers are small or medium-sized enterprises from the U.S., several of which work on federal contracts. Those contracts are publicly available. By analyzing those awarded bids through AI, Vendor Hub can use that data to provide suppliers with a likelihood of those manufacturers winning future bids.

“We are using Cozad to create the framework for the whole chain,” Somisetty said. “That will help us create a presence and build the foundation, which in turn will help us sell the idea to investors. To make this work, we will need to prove two things: a platform they can trust and successful onboarding with some early adopters.”