Singapore’s Funding Societies raises $294M led by Softbank to fuel expansion plans in Southeast Asia

Funding Societies, Southeast Asia’s largest small and medium-sized enterprise (SME) digital financing platform, announced Wednesday that it has raised $144 million in an oversubscribed Series C+ equity round led by SoftBank Vision Fund 2.

Other new investors included Vietnamese tech giant VNG Corporation, Rapyd Ventures, Asia-based global investor EDBI, Indies Capital, K3 Ventures, and Ascend Vietnam Ventures, the Singapore-based firm said in a statement.

The company also received $150 million in debt lines from institutional lenders across Europe, the United States, and Asia, some of which have been drawn down since 2021. This comes on the back of its $45 million Series C raised between 2020 and 2021.

The funds solidify Funding Societies’ position as a market leader in digital financing, and propels its expense management, and business to business (B2B) payments services for micro, small and medium enterprises (MSMEs) across Southeast Asia.

Its latest fundraise also provides $16 million to former and existing employees via the company’s stock option plan, in the form of share buyback.

“We’re honoured by the faith of our new and existing shareholders. We started Funding Societies | Modalku to empower SMEs by solving their biggest problem, access to financing, especially unsecured financing. A common misconception is that we compete with banks. The reality is we ‘compete’ with savings, friends and families, and personal credit cards. There is a huge unsecured financing gap because it takes patience and focus, or you risk losing a lot of money. Having proven our artificial intelligence (AI)-led credit capabilities in an unprecedented financial crisis, we look to serve SMEs even better with neobanking and deeper regional presence in Southeast Asia,” said Kelvin Teo, Co-Founder and Chief Executive Officer of Funding Societies.

Funding Societies was founded in 2015 by Kelvin Teo and Reynold Wijaya out of Harvard Business School to empower MSMEs in Southeast Asia. The finTech company solves MSMEs’ key pain points for growth, starting with the region’s $300 billion financing gap. Although small enterprises make up almost 99 percent 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 offers micro loans from $500 up to $1.5 million, which can be disbursed in as fast as 24 hours, answering in a timely manner to MSMEs who face the pertinent challenge of accessing business funds.

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. A recent impact study that with calculations using methodology by the Asian Development Bank, revealed that Funding Societies-backed MSMEs contributed $3.6 billion in gross domestic product (GDP).

Seven years in, the fintech company is now licensed and registered in four countries across the region – Singapore, Indonesia, Malaysia, Thailand, and operating in Vietnam. To date, it has disbursed over $2 billion in business financing to MSMEs through more than 5 million loan transactions in Southeast Asia.

“SMEs across Southeast Asia have historically struggled to access institutional finance and instead been forced to mainly rely on personal funding to support growth”, said Greg Moon, Managing Partner at SoftBank Investment Advisers.

“Funding Societies is establishing a bridge for these companies to access more sustainable and cheaper financing by building unique data sets on their performance and using AI-led technology to assess their creditworthiness more effectively than traditional models. We are delighted to partner with Kelvin Teo and the team to support their mission to improve societies in Southeast Asia by funding worthy and underserved SMEs,” he said.

According to the statement, Funding Societies’ annualised loan origination has exceeded $1 billion in the fourth quarter of 2021. Separately, a portion of the group’s outstanding loan exposure comes from Europe-based institutional lenders.

Since 2019, Funding Societies has expanded its suite of financial services beyond lending and plans to bring its operations to more locations in Southeast Asia within the next 12 months.

Singapore-based Funding Societies raises $18M in debt, on track to raise $120M