Funding Societies, Southeast Asia’s largest SME digital financing platform, is now live in Thailand. The platform was awarded the Securities and Exchange Commission (SEC) debt crowdfunding license earlier this month, enabling it to support Thai SMEs and startups in raising funds from retail and institutional investors.
While Thailand has more than three million SMEs, more than half face multiple challenges in obtaining financing, especially to meet short-term working capital requirements. Traditional financial institutions tend to focus on long term and asset-backed (collateralized) financing products, leaving a SME financing gap of over US$40 billion (RM162 billion), according to International Finance Corporation (IFC).
This lack of funding has also been exacerbated due to the ongoing Covid-19 pandemic as lenders have attempted to reduce their loan exposures in order to manage risk.
Varun Bhandari, Country Head of Funding Societies Thailand, said, “SMEs contribute over 40% of Thai GDP but face numerous challenges in accessing finance from traditional sources due to lack of collateral, onerous document requirements and lengthy approval processes.” He added, “By leveraging our proprietary technology, Funding Societies offers SMEs a new avenue for raising financing that is fast, affordable, and convenient. Thai investors will also get an opportunity to diversify their investments and earn attractive fixed income returns, while supporting local businesses and brands.”
Wong Kah Meng, Co-founder and Chief Executive Officer of Funding Societies Malaysia, commented, “Based on IFC numbers, there is a staggering US$250 billion (approximately RM1 trillion) financing gap in Malaysia, Singapore, Indonesia, and Thailand combined, and so this presents tremendous opportunity for digital financing platforms such as Funding Societies to tap on and financially support local SMEs. Our foray into Thailand will serve to strengthen our regional foothold in the digital financing space, as we remain steadfast in our mission to support underserved SMEs across the region. As it has in other countries, P2P financing is expected to digitally transform the financing business and reduce funding gaps in the Thai market.”
Funding Societies offers a range of collateral-free financing options including business term financing, micro financing, invoice financing, and dealer financing via a quick, seamless and hassle-free application process.
The financing support can help fuel business expansion or support working capital needs, such as purchasing inventory or covering up-front project costs. The platform has also established regional partnerships with companies such as Lazada, Carsome, CIMB Bank, and Zilingo thus serving SMEs within their ecosystem.
Thai investors will soon be able to log on to the Funding Societies crowdfunding platform and have a range of investment opportunities at their fingertips. These opportunities offer diversification benefits, and can help enhance overall portfolio returns. Funding Societies’ strong risk management capabilities have restricted defaults to below 2% across the region, despite the variable challenges brought on by the Covid-19 pandemic. With the debt crowdfunding license issued by the SEC, it will now bring its platform to Thailand to empower Thai SMEs and investors.
In Malaysia, Funding Societies has successfully disbursed more than RM650 million to-date with more than 60 percent local market share and is expected to disburse RM1 billion cumulatively by 2021.
The local platform serves SMEs from all segments, vintages and sizes, and has 50,000 registered investors. The platform is backed by credible investors such as Sequoia India, Softbank Ventures Asia Corp and LINE Ventures, amongst others.