Funding Societies Review: 5 Years And S$1.4b In SME Financing Later

And our renewed commitment to the local business community in future

Let’s review Funding Societies:

This month we turn 5 years old! From a wide-eyed newbie who burst onto the lending scene and quickly disbursed our first funded loan in 2015, to an experienced digital financing platform who is now among an exclusive few to pioneer the systemic change in how Southeast Asia’s small businesses access credit today, we are so glad to see the positive impact we’ve effected on the region’s underserved SMEs in such a short span.

Small businesses have long faced the difficulty of accessing credit from traditional financial institutions who usually favour large businesses with a long and strong credit record. For this reason, 51% of Southeast Asia’s SMEs although filled with economic potential have been denied affordable credit, if at all. But, technology has revolutionised the way money is distributed – democratised, to say the least.

Funding Societies has been riding at the top of this fintech wave in Singapore and as we celebrate half a decade, we’d like to look back on how far we have come, recognise our accomplishments, and acknowledge how long we still have to go.

A LOOK BACK AT OUR MILESTONES

2015: When we first started in 2015, we were a 4-person team running the platform with no investors and just one product out of our tiny room at the Octagon building along Cecil Street. We knew it was crucial to consistently add value to our customers’ financing experience so we were determined to simplify the process of getting funds from the investors to the SMEs.

2016: Regulations came in and we were asked to stop funding term loans until we obtained the necessary licenses. Invoice financing was then borne out of necessity and survival since it was the only product we could offer to platform investors. Then, December 2016 rolled around and we finally obtained our MAS license, one of the first fintech firms in Singapore to get it. This was also the time we raised our Series A equity round of US$7m, the largest by any comparable platform in Southeast Asia. To our delight, Sequoia India came on board as lead investor!

2017: But over a period of time, we realised that something was still not right. A segment of the market remained underserved – the group who arguably has the least resources, the micro businesses. Our founders started this mission to reach precisely those who fell through the cracks, surely we cannot leave them out? So rounds of brainstorming and refining later, we introduced FS Bolt in early 2017, a fully automated mobile loan product. With Bolt, businesses can get a loan of up to S$100,000 within the same day – a significant milestone! And around this time, we had grown to a small family of 25 so we moved to a shoebox office space in a Bugis street shophouse – an expansion for us, no less.

2018-Present: By 2018, we were leading the local market as the largest SME digital lending platform. And what better way to celebrate our 3rd birthday than with news that we raised US$25m in Series B funding, again the largest Series B for any digital SME lending platform in Southeast Asia! Now as we speak, we are in the process of closing out our Series C of US$40m.

Through these years of tremendous growth, we have also collaborated with DBS (after a cold email to Piyush Gupta), e-commerce giant Lazada, cards payment platform CardUp, Southeast Asia deals leader Fave, and Singapore’s leading procure-to-pay platform SGeBIZ to expand our services to over thousands of regional small businesses and merchants.

We’ve accomplished a lot in the last 5 years, serving our clients in Singapore, Malaysia, and Indonesia. For that, we’ve been recognised with the MAS FinTech Award in 2016, the Global SME Excellence Award at the United Nations’ ITU Telecom World in 2017, and the Fintech Top 100 by KPMG in 2018 among others. But out of the accolades we’ve humbly received, we’re especially delighted to be the only fintech to go home with 2 awards at Brands for Good 2019 as they reaffirm the positive impact we’ve created through our business – precisely what we set out to do.

COMMITMENT IN THE FUTURE

Nonetheless, we acknowledge that there’s still plenty of work for us to do, and it is especially poignant in today’s economic climate. With 72% of Singapore’s workforce coming from Micro Small and Medium Enterprises (MSMEs), the Government announced its support of our economy’s backbone in the Fortitude Budget on 26 May. In line with that, we’ve renewed our commitment to serving small local businesses during and after the impact of COVID-19.

Kelvin, our Group CEO, notes, “As an SME financing platform, we’re highly encouraged by the extensive and thoughtful support by the government for SMEs, notably the S$500m package to facilitate the digital transformation for businesses.”

According to the SBF-Experian SME Index that surveyed over 3,000 local SMEs from January to February this year, these small enterprises showed low confidence in getting access to financing in this uncertain economy. Yet, among other considerations like profitability, hiring, and capacity utilisation, their deepest concern remains their ability to bridge the impact of the weakening economy – if they manage to sustain operations at all.

“This package accelerates the offline-to-online (“O2O”) shift and improves productivity. It also enables us to further support local businesses in financing,” he continues.

With Southeast Asia’s digital economy expected to exceed US$300b by 2025, we remain watchful of the right opportunities we need to grasp in order to serve the underserved community. In particular, we are looking forward to being awarded the digital wholesale banking license later this year so as to propel MSMEs to their fullest potential.