Funding Societies is one of the more established crowdfunding platforms in Singapore. We have invested with them for more than a year and are generally pleased with the investment performance. It recently also raised S$10m from investors such as Sequoia India to its regional expansion. We spoke to Kelvin Teo recently for our Invoice Crowdfunding Guide (click here to download).
Give us a quick introduction to Funding Societies
Funding Societies is an online peer-to-business lending platform for SMEs to get invoice financing and loans, crowdfunded by individual and institutional investors.
Since its launch in 2015, Funding Societies has rapidly expanded from Singapore into Indonesia and Malaysia (brand “Modalku”). It was the first platform to secure bank partnerships with DBS Bank in Singapore, Bank Sinarmas in Indonesia and RHB Bank in Malaysia. It is funded by Sequoia Capital, the early Silicon Valley investor of tech giants Apple, Google and LinkedIn.
As of Sept 2016, Funding Societies have 90 full-time staffs, led by Kelvin and Reynold from Harvard. Kelvin was from Accenture, McKinsey and KKR, while Reynold was an entrepreneur who grew his family business into a MNC.
How is Funding Societies different from other platforms?
Funding Societies prides itself for trust and innovation. It was the first platform to implement escrow, offer e-contracting and publish repayment statistics.
To us, “safe growth is more important than fast growth”. It regularly calls investors to diversify when investors have a concentrated portfolio. It also made the difficult decision of cancelling a loan before disbursal, when a new SME litigation was filed in the last minute.
It also has the biggest credit team among the online lenders in Singapore, assessing each invoice using its proprietary credit assessment and third-party credit data.
What is Funding Societies’ track record?
As of early-Oct 2016, Funding Societies has financed close to 200 loans and invoices, totalling ~S$14M across Singapore and Indonesia (“Modalku”). Since its launch of invoice financing in Aug 2016, it has crowdfunded ~S$2M in invoices, earning it the reputation “Late comer, fast mover.” The simple interest rates and effective interest rates of its invoices are ~14% and ~24% respectively.
Upholding the motto of safe growth, Funding Societies has grown rapidly while maintaining a default of less than 2%, lowest compared to other mature platforms in Singapore. It also has 0% default for invoices, even with the strictest default definition in the market. Some borrowers even repay their invoices early upon receiving their repayment, enabling investors to re-invest their funds rapidly.
Can you give us an example of a successful invoice deal that you have done recently?
Funding Societies recently funded an invoice issued by an Engineering, Procurement and Services company of 25 years, with annual revenue of S$ 9M. The debtor (buyer) was a specialist in the design, supply and manufacturing of diving and subsea equipment for the international offshore industry. While the debtor came from a high risk industry, Funding Societies’ credit assessment indicated that the invoice would be ‘safe’. The invoice value was S$ 220K and Funding Societies offered to crowdfund S$170K for 30 days. Consistent with its assessment, Funding Societies received the full repayment for the invoice within just 20 days, while the investors enjoyed the full 30-day interest as promised in the contract.
The above interview was conducted in September and is an extract from Investor’s Guide to Invoice Crowdfunding. To download a copy of the Guide, please click here.