KUALA LUMPUR (Feb 15): Southeast Asia's largest digital financing platform for small and medium enterprises (SMEs), Funding Societies has raised a total of US$294 million (RM1.23 billion) to fund its expansion plan. 

In a statement, Funding Societies said it raised US$144 million (RM605 million) in an oversubscribed Series C+ equity round led by Japanese venture capital fund SoftBank Vision Fund 2 with new investors, notably Vietnamese tech giant VNG Corporation, Rapyd Ventures, Asia-based global investor EDBI, Indies Capital, K3 Ventures, and Ascend Vietnam Ventures.

The company also received US$150 million (RM630 million) in debt lines from institutional lenders across Europe, the US, and Asia, some of which have been drawn down since 2021. This comes on the back of its US$45 million (RM189 million) Series C raised between 2020 and 2021, the fintech company 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 (RM67 million) to former and existing employees via the company’s stock option plan, in the form of share buyback,” it said. 

Co-founder and Group CEO of Funding Societies, Kelvin Teo said the company is honoured by the confidence of its 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 AI-led credit capabilities in an unprecedented financial crisis, we look to serve SMEs even better with neobanking and [a] deeper regional presence in Southeast Asia,” said Teo. 

Meanwhile, Managing Partner at Softbank Investment Advisers, Greg Moon said SMEs in Southeast Asia have historically had difficulty accessing institutional financing and have instead been forced to rely primarily on personal financing to support their growth.

“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 Funding Societies to support their mission to improve societies in Southeast Asia by funding worthy and underserved SMEs,” he said.

Funding Societies was founded in 2015 by Kelvin Teo and Reynold Wijaya to empower MSMEs in Southeast Asia. The fintech platform addresses MSMEs’ key pain points for growth, starting with the US$300 billion (RM1.26 trillion) financing gap in the region. 

“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,” it said. 

Funding Societies offers financing of up to RM2 million that can be disbursed within 24 hours to provide timely assistance to MSMEs facing challenges in accessing business funds. 

After seven years, the fintech company is now licensed in four countries in the region — Malaysia, Singapore, Indonesia and Thailand; and operates in Vietnam. To date, it has disbursed over US$2 billion (RM8.7 billion) in business financing to MSMEs through more than 5 million financing deals in Southeast Asia.