SME financing platform Funding Societies raises $294m in equity and debt
Funding Societies (known as Modalku in Indonesia), which claims to be Southeast Asia’s largest SME digital financing platform, has raised $144 million in an oversubscribed Series C+ equity round.
The round was led by SoftBank Vision Fund 2. It also attracted new investors such as Vietnamese tech giant VNG Corporation, Rapyd Ventures, Asia-based global investor EDBI, Indies Capital, K3 Ventures, and Ascend Vietnam Ventures.
In addition, Funding Societies received $150 million in debt lines from institutional lenders across Europe, the US, and Asia, some of which have been drawn down since 2021.
The latest fundraise also provides $16 million to former and existing employees via the company’s stock option plan, in the form of share buyback.
The round comes on the back of the company’s $45 million Series C raised in 2020-2021.
Funding Societies was founded in 2015 by Kelvin Teo and Reynold Wijaya out of Harvard Business School to cater to micro, small and medium enterprises (MSMEs).
Although small enterprises make up almost 99% of total enterprises in Southeast Asia, they also face many hurdles in obtaining business loans from traditional financial institutions due to a lack of a credit track record or collaterals to pledge, Funding Societies notes.
The start-up offers micro loans from $500 up to $1.5 million, which can be disbursed in as fast as 24 hours, it says.
“Instead of using a traditional corporate supply chain approach to financial inclusion, Funding Societies has differentiated itself as a one-stop shop in SME financing with an AI-led credit model and value-added products to under-served businesses,” it says.
In addition to financing, the company offers expense management and business-to-business (B2B) payments services.
Funding Societies operates in Singapore, Indonesia, Malaysia, Thailand, and Vietnam. To date, it says it has disbursed over $2.1 billion in business financing to MSMEs through more than five million loan transactions in Southeast Asia.
Its recent study, with calculations using methodology by the Asian Development Bank, found that Funding Societies-backed MSMEs collectively contributed $3.6 billion in GDP.
“A common misconception is that we compete with banks,” says co-founder and group CEO Kelvin Teo. “The reality is we ‘compete’ with savings, friends and families, and personal credit cards.”