FinTech, Folks
June 08, 2020
TFAGeeks: “Thank you Kelvin for giving us a chance to speak to you. We understand that it is a very busy period for Funding Societies, especially during this crisis period and that you have secured your Series C funding in April 2020. We know you first raised your Series A in August 2016, can you share the secret behind your growth in such a short period?”
Kelvin: “Since our launch in June 2015, we have now given out greater than $1.4B loans at a cumulative default of 1.3%. We’re the most important platform in Southeast Asia and are the one platform licensed in additional than 1 nation i.e., Singapore, Indonesia, and Malaysia. As SME financing is a localised enterprise, we take a hyperlocal strategy to every market, mix each ‘Fin’ and ‘Tech’, and put money into regulatory compliance to construct belief. We’re lucky to obtain the backing of Sequoia Capital India and Softbank Ventures Asia.”
TFAGeeks: “What are your plans from here?”
Kelvin: “Having been established for 5 years, we are evolving from a FinTech startup to a FinTech firm, with specialized functions and capabilities. We will continue to improve our product offering and channel penetration to better serve and reach SMEs and lenders in Southeast Asia, especially in the 3 countries we are currently operating in. We are exploring new business opportunities in technology and geographical expansion, but in a well-calibrated manner to minimize operational distraction.”
TFAGeeks: “How has the Covid-19 crisis affected your business? Do you think it presents more opportunities or poses more threat to Funding Societies?”
Kelvin: “Covid-19 is a tough time for everyone, including us. As a two-sided platform, we see 3 implications in FinTech for SME financing. For SMEs, there is a rise in demand but a fall in credit quality. For investors, there is a risk of a credit crunch as they choose to conserve cash. And for us, Covid-19 impacts our revenue and growth. We are fortunate to have our Series C funding of US$40m committed before the pandemic and have taken precautions since early February when Singapore turned DORSCON orange.”
“In addition to mitigating the above dangers from this world disaster, we’re additionally utilizing the disaster as a chance. We’re serving and constructing relationships with SMEs selectively, to stability the wants of buyers. We’re extending our observe document, demonstrating {our capability} to handle threat in a monetary disaster. And we’re streamlining our enterprise. As SME digital adoption rises amidst Covid-19, we anticipate to experience out the pandemic strongly and transfer from different to mainstream financing, complementing conventional FIs.“
TFAGeeks: “What makes your solutions and offerings so unique and different from your competitors?”
Kelvin: “We pride ourselves on breadth, flexibility, and speed. We offer a wide range of business term loans, trade financing, and microloans, from S$5,000 to S$1,500,000, with a credit approval from 2 business hours to a few business days. We assess each SME with a hybrid approach of human expertise and data, customising the offer to each SME’s needs. For it, we are honored to receive numerous awards including the MAS FinTech Award, Global SME Excellence Award at United Nations’ ITU Telecom World, Brands for Good Asia, and recognition as IDC Financial Insights’ Top 5 fastest growing Fintechs in Singapore.”
TFAGeeks: “In your opinion, do you think peer-to-peer funding solutions like yourself will replace the current banking and financial solutions? In other words, are the traditional banks and financial institutions threatened by your presence?”
Kelvin: “No, I don’t think FinTech lenders will replace traditional financial institutions (“FIs”), nor will they substitute us. Inside SME financing, conventional FIs deal with huge (>$1m), lengthy (multi-year) and secured loans (property collateral), whereas we focus on small (<$1m), brief (<1 12 months) and unsecured loans (time period or bill financing). SMEs come to us for his or her first enterprise loan, as a ‘top-up’ to their bank loan, or for pace and FinTech-only merchandise. Some FIs may really feel threatened on account of misconceptions. Actually, we complement and accomplice with banks, together with a serious Indonesian bank who grew to become our Collection C investor.”
TFAGeeks: “Will Funding Societies become a bank or even consider going the digital bank route in the future?”
Kelvin: “Funding Societies is one of the contenders for the upcoming wholesale digital bank license in Singapore, as a consortium with SP Group (Singapore Powers), AMTD, and Xiaomi. However, our focus will still be on SMEs. And we believe it will enable us to better serve the unmet needs of our customers.”
TFAGeeks: “In your opinion, do you think the FinTech industry is overcrowded and a time of consolidation is looming, or perhaps already is happening?”
Kelvin: “Yes, FinTech SME financing is overcrowded in Singapore. While the structural SME credit gap stands at $19B in Singapore, the offline-to-online (“O2O”) shift takes time and there are a substantial variety of gamers right here, not like Malaysia for instance, which has a wholesome variety of 11 licenses for P2P financing. We anticipate Covid-19 to speed up the consolidation to an oligopolistic market, like in banking.”
TFAGeeks: “Are Harvard Business School graduates more entrepreneurial than others?”
Kelvin: “I guess the question comes from the fact that many leading startups in Southeast Asia are founded by Harvard Business School (“HBS”) alumni. I’m unsure if the commentary is statistically important, however the training, publicity, and credibility have been useful for my entrepreneurial journey. HBS’ mission is to teach leaders who make a distinction on the planet, which is what we aspire to realize, therefore our firm identify Funding Societies, or Modalku in Indonesia (i.e., “My Capital” in Bahasa).”
TFAGeeks: “Do you think being an entrepreneur is the path for every graduate? What would be your advice to the fresh graduate who will be coming into the workforce this year?”
Kelvin: “Nope, being an entrepreneur is not for most graduates. Many young adults start or join startups starry-eyed. However, the reality is hard. Few graduates would have discovered their true north to persevere and establish a pedigree to rebound, in the worst-case scenario. For the minority who still choose to start up, the journey is worthwhile, well-encapsulated by President Roosevelt’s speech “The Man in the Arena”. For the others, flexibility is vital as organizations and people adapt to the brand new regular.”
