The first and largest peer-to-peer (P2P) financing platform in Malaysia, Funding Societies, has raised RM100 million in Series B funding. Led by Softbank Ventures Korea, the funding round also includes existing investors Sequoia India, Alpha JWC Ventures (Indonesia) and Golden Gate Ventures. Qualgro and LINE Ventures also participated in this over-subscribed round. Additionally, the platform has raised credit lines from banks and financial institutions to further support SMEs. This fundraise, largest by a P2P lending platform in Southeast Asia, will help realize Funding Societies’ vision of financial inclusion for Southeast Asia.
Softbank Ventures Korea, an early stage venture capital arm of Softbank Group famous for its US$ 100B Vision Fund, invested the lion share in this fundraise. Softbank Group has also funded large alternative lenders like SoFi and Kabbage in US, as well as tech giants like Grab in Southeast Asia. “SoftBank Ventures Korea has been actively investing across Southeast Asia. SME digital lending across Southeast Asia is where we saw a huge growth potential. Among many players, we were most impressed with Funding Societies with what it has achieved in the short period of time and its potential to continue to become no 1 player,” said Sean Lee, Partner and Managing Director, Softbank Ventures Korea.
This marks the largest funding round raised by a P2P financing platform in Southeast Asia. Funding Societies, which was founded by Kelvin Teo and Reynold Wijaya, is a P2P lending platform that connects small and medium-sized enterprises (“SMEs”) in Malaysia, Singapore, and Indonesia with retail and institutional investors. The platform has disbursed more than RM400 million in financing to SMEs across Southeast Asia whilst maintaining one of the lowest default rates of less than 1.5%. The platform has an investor base of more than 60,000 investors across the region.
An estimate cited by the Securities Commission (SC) reveals a significant RM80 billion gap in SME financing in Malaysia. Hence, alternative financing platforms such as Funding Societies play a key role in supporting the financing needs of both unserved and underserved SMEs by connecting them with individuals and institutional investors both locally and globally.
“We are extremely humbled for the trust and support we have received from all our investors, SMEs, regulators, partners and renowned shareholders. This funding round will help advance our mission to improve the livelihoods of SMEs and individuals through greater access to financing and investments here at home in Malaysia and across Southeast Asia. Through our local experience, we recognize that there are significant and practical challenges in serving SMEs and individuals, leaving them side-lined by traditional institutions. The proceeds from this fundraising round will therefore enable us to further enhance our regional capabilities to more effectively serve SMEs and investors.” said Wong Kah Meng, CEO of Funding Societies Malaysia.
With a relentless focus on leveraging technology and design to improve the lives of SMEs as well as investors, Funding Societies has pioneered a number of industry leading digital initiatives and products. For example, Funding Societies was the first P2P financing platform to implement e-signatures, develop auto investment algorithms for investors and rolled-out mobile applications for SMEs and investors.
Sequoia India, which led the Series A, remains steadfast in Funding Societies.
“Sequoia India often invests very early – but not often in founders that are still in business school. And yet, Kelvin and Rey received a term sheet the month they graduated from Harvard. In those early days, we suggested they focus on the fundamentals: technology, product, risk management, and maintaining a high-quality loan book. They executed in all these areas with integrity and vision, and we believe these character traits will help them build Funding Societies into a large, enduring company,” said Pieter Kemps, Principal, Sequoia Capital (India) Singapore.
Other investors with complementary capabilities also participated. Vinnie Lauria Managing Partner of Golden Gate Ventures, most notable for their early investment in Carousell, commented, “We invest in disruptive technologies. Funding Societies uses machine learning on a large number of data points to identify opportunities that traditional banks would overlook. This leads to smarter financing decisions and higher-quality SMEs on their platform. Their loans are crowd-funded within minutes.”
Qualgro, a young but promising fund, is founded by Heang Chhor a former senior partner at McKinsey & Co, while his colleague Jason Edwards formerly from Baker & McKenzie has significant experience in alternative investment. “Funding Societies has built a market leading tech platform to provide Southeast Asian SMEs with fast and user-friendly access to credit, something that banks are not always able to provide. We’re delighted to support the team, who bring together deep credit expertise with a great user experience for lenders and SME borrowers,” stated Heang Chhor, Managing Partner, Qualgro
Funding Societies received many local as well as global awards and accolades in 2017. At the end of 2017, its Indonesian entity Modalku won the Global SME Excellence Award from United Nations’ ITU Telecom. It is the first and only Asian startup to win the award. The company was also included in CB Insights’ Fintech 250, a select list of the top FinTech companies around the world working on ground-breaking financial technology. It also won the Best in Customer Experience Asia award from Retail Banker International. The awards reflect local as well as global recognition of FinTech solutions’ positive impact on the society.
Launched in early 2017 in Malaysia, Funding Societies is the first and largest P2P financing platform in Malaysia. Funding Societies connects SMEs with investors through an online marketplace, thereby increasing access to financing for SMEs. By investing into SMEs, investors could earn risk-adjusted returns greater than fixed deposits, bonds, and other traditional investment instruments. Meanwhile, SMEs obtain access to short-term financing to expand their business through a fast and simple online process. Additionally, SMEs benefit from not having to provide collateral for financing, while interest costs are minimized due to short financing tenures.