Funding Societies raises Series C+ round of US$144mil

• Funding led by SoftBank, VNG Corp, Rapyd Ventures et al
• US$144mil comes on back of US$45 mil Series C raised between 2020 and 2021

[Ed: An earlier version of the headline cited Funding Societies Malaysia as having raised the funding. The error is regretted. Funding Societies Malaysia is a subsidiary of Funding Societies Group.] 

Funding Societies Group announced that it has raised US$144 million (RM605 million) in an oversubscribed Series C+ equity round led by Japanese venture capital fund SoftBank Vision Fund 2, into its legal entity Funding Asia Group Ltd.

It also added new investors including Vietnamese tech giant VNG Corporation, Rapyd Ventures, Asia-based global investor EDBI, Indies Capital, K3 Ventures, and Ascend Vietnam Ventures.

In a statement, the company said it also received US$150 million (RM630 million) in debt lines from institutional lenders across Europe, the United States, and Asia, some of which have been drawn down since 2021.

[RM1 = US$0.239]

This comes on the back of its US$45 million Series C raised between 2020 and 2021, it said.

It said the funds solidify Funding Societies’ position as a market leader in digital financing, and propel 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 US$16 million to former and existing employees via the company’s stock option plan, in the form of share buyback, it added. Funding Societies was founded in 2015 by Kelvin Teo and Reynold Wijaya to empower MSMEs in Southeast Asia.

The company said its platform addresses MSMEs’ key pain points for growth, starting with the region’s US$300 billion financing gap.

Although small enterprises make up almost 99% of total enterprises in Southeast Asia, they also face many hurdles in obtaining business financing from traditional financial institutions due to a lack of a credit track record or collateral to pledge.

Funding Societies offers financing up to RM2 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.

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

Co-founder and group CEO, Kelvin Teo, said, “We’re honoured by the faith of our new and existing shareholders. 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 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.”

Meanwhile, Wong Kah Meng, co-founder and ÇEO (pic above) of Funding Societies Malaysia, said, “We’re grateful for the trust of our shareholders. Having emerged stronger through the pandemic, we are expanding our suite of digital financial services offerings to elevate the financial well-being of unserved and underserved MSMEs in Malaysia.”

“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, said Greg Moon," managing partner at SoftBank Investment Advisers.

“We are delighted to partner with Funding Societies to support their mission to improve societies in Southeast Asia by funding worthy and underserved SMEs.”

Funding Societies said its annualised loan origination has exceeded US$1 billion in Q4 2021.

Separately, a portion of the Group’s outstanding loan exposure comes from Europe-based institutional lenders.

In Malaysia,  boosted by 100% growth of financing deals in 2021 compared to the previous year, it claimed in a 21 Jan media statement to have disbursed RM1 billion in business financing across more than 17,000 financing deals, directly uplifting thousands of local SMEs. Despite the higher amount disbursed, it maintained a default rate of around 3%, crediting this to the experience and lessons of the past two years, that allowed it to be in a better position to react and to adjust its business model and risk underwriting.

[Ed: Para updated with additional information.]

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.