The Silicon Review
Small and Medium Enterprises (SMEs) account for approximately 60% of the GDP and the majority of employment in Southeast Asia. But they face a funding gap of $320 billion, based on World Bank IFC. Despite credit’s mixed reputation, money plays an integral role in peoples’ lives. Regulatory openness and regional digitalization gave Kelvin Teo and Reynold Wijaya, the co-founding duo of Funding Societies, a window of opportunity to solve this structural problem.
Incorporated in 2015, Funding Societies’ story began in 2014 when Kelvin and Reynold met at Harvard Business School. Both co-founders felt that they had been fortunate in their professional careers, and wanted to give back to their communities. Hence, they took it upon themselves to bring the idea of digital lending via crowdfunding back home, with the hope of empowering millions of SMEs, enabling social mobility for many more, and uplifting Southeast Asia. Digital lending via crowdfunding was booming in the United States, and they realized it could contribute to financial inclusion in Southeast Asia if it was adapted to the local context. The rest, as they say, is history.
Funding Societies soon expanded to Indonesia (where it is called Modalku), Malaysia, and Thailand. It specializes in providing short-term, unsecured, and flexible financing to meet the needs of SMEs and small, short-term and diversified investment options for investors. The financing comes in the form of term loans, invoice financing, and microloans starting from $500 to $1,500,000, catering to SMEs across sizes, stages, and needs.
Many business owners use these funds for working capital or bridging loans to scale their business. They can easily apply via Funding Societies’ website, with the support of sales officers if necessary, and receive a decision from the fintech company’s proprietary credit model in just two hours for a microloan.
As the largest SME digital financing platform in Southeast Asia, Funding Societies has given out more than $1.6 billion in loans to over 70,000 SMEs in Singapore, Indonesia, Malaysia, and Thailand. Licensed in these countries, Funding Societies differentiates itself from other business financing platforms through its wide range of product offerings for SMEs, enabled by technology and data. With operations in four countries today, Funding Societies is about three times larger than its next best competitor today.
Everyone Can Invest Now
A two-sided platform, Funding Societies also serves retail, accredited, and institutional investors via a digital platform. As a regulated entity, it conducts a standard know-your-customer (“KYC”) process for all investors. After which, investors can start investing at as low as $15, making it easy for individuals from every walk of life to create a diversified investment portfolio. Investors can track their investment activity and returns on their personalized mobile dashboard.
“We offer a good fixed income product that investors can just “invest-and-forget”, based on their investment preference in our auto-investment algorithm. "The short-term nature of the investment and monthly repayment give investors control on funds,” said Kelvin Teo. As this alternative asset class has little correlation to the stock market, some sophisticated investors also use it as a form of portfolio diversification. “Ultimately, we help to preserve and grow their wealth.”
Uplifting Societies in SE Asia
A shared cooking facility, IncuBaker, allows home-based cooking entrepreneurs who want to expand their business to experiment in a safe environment. The business got its start in 2018 when the founder, Terence Ho, was inspired by his wife’s desire to open a café. As an incubator for budding chef entrepreneurs, IncuBaker had already enabled the success of over ten business ventures. But when Incubaker was selected to organize a national snack entrepreneur competition by the Government Statutory Board Enterprise Singapore, Terence required upfront capital financing to undertake this exciting new business project. He turned to Funding Societies. “We looked to the banks. They said you want to borrow, show us the statements. The problem was it was a new concept, and we were a new company. So, even though we had a purchase order, we needed the funds upfront. But traditional banks thought it was too “dodgy,” so we were turned down. Funding Societies was able to bridge that gap for us,” said Terence Ho, Founder of Incubaker.
Funding Societies has been actively helping underserved SMEs to grow. An Economic Survey for Funding Societies’ Singapore and Malaysia borrowers conducted in 2020 revealed that 50% of its borrowers had grown their revenue and 11% of them had expanded their staff through the help of the fintech company’s funding.
For its good work with the SMEs, the fintech platform has received numerous accolades, including the United Nations Global SME Excellence Award, the Singapore government MAS FinTech Award and recently, special recognition by the Chairman of Indonesia regulator OJK as a key FinTech Mover for National Economy Recovery in the presence of President Jokowi. Funding Societies was also awarded the KPMG Fintech100 in 2018 and the Stevie® Award for Innovation in Technology in 2020.
The firm is also backed by renowned global equity investors such as Sequoia India and Softbank Ventures Asia Corp, as well as many local and regional investors such as LINE and Bank Rakyat Indonesia.
With the vision of uplifting SMEs and Southeast Asia’s economies, Funding Societies is consistently looking at new ways to serve SMEs better. Riding on the wave of rapid digitalization of SMEs, the fintech organization is growing its partnerships with both online and offline partners, expanding its smart credit underwriting with tech and data, and onboarding more financial institutions for funding, as every SMEs’ digital financial platform of choice.
Given the lack of financing options, many SME owners turn to personal credit cards, which are more costly, too small for commercial use, and not helpful in building a business credit track record. To that end, Funding Societies has launched new-age products like Virtual Credit Cards for SMEs in Indonesia. Just like any bank credit card, SMEs can now draw from Funding Societies’ virtual credit card to make payments and bridge working capital gaps. Having just successfully expanded into its fourth country, Thailand, Funding Societies continues to plan for further expansion in Southeast Asia.
Co-founder & Group CEO
Kelvin Teo is the Co-founder of Funding Societies | Modalku. He was the Co-Chairperson for Singapore Fintech Association’s Marketplace Lending Committee from 2018-2020 and recently named by the Association as among the Top 12 Fintech Leaders in Singapore in 2020. As one of the Top 200 FinTech Influencers in Asia, Kelvin has spoken at major conferences such as LendIt Shanghai, Boao Hainan and Money20/20. He has also been featured on Bloomberg, BBC and Business Times. Prior to this, Kelvin served as a consulting professional at KKR, McKinsey and Accenture. Kelvin graduated from Harvard Business School and National University of Singapore, and is a certified Chartered Accountant.
“As the largest SME digital financing platform in Southeast Asia, Funding Societies has given out more than $1.6 billion in loans to over 70,000 SMEs in Singapore, Indonesia, Malaysia, and Thailand.”