Le projet

About the issuer

General information:

• Borrower:                                          FS Capital Pte Ltd
• Countries of operations:                  Singapore, Indonesia and Malaysia
• Head office:                                      Singapore
• Website:                                            https://fundingsocieties.com/
• Date of incorporation:                      21 November, 2016
• # of employees:                                350+

Information document issuing entity (NL)

Information note issuing entity (BE)

Project terms

• Currency:                                          EUR
• Amount:                                            200,000
• Maturity:                                           12 months
• Grace Period:                                   n.a.                      
• Interest rate:                                     4 % p.a.
   

Summary

Funding Societies (“FS”) - in Indonesia known as Modalku - is a very fast-growing digital financing platform in Southeast Asia providing short-term credit to under-served SMEs, in Southeast Asia with Indonesia being their largest market. They provide secured and unsecured products with a tenor of < 12 months. This is done by a combination of automated and manual credit assessment and underwriting. FS has an extensive technology stack that is used to automate various parts of its business and possess a rich historical dataset. To date they have funded > €1 billion and current funding pace is ~ €42m/month

FS operates a crowdfunding platform as well as providing funding from its own balance sheet (“BS”) with on average a 50/50 split but varying across quarters and geographies. They have a hybrid model and are looking to fund FS Capital (“FSC”). FSC is the formal borrower and is the entity where all on-BS lending is booked. It is 100% owned by Funding Asia Group (“FAG”) that is also owning the other FS entities. All On-BS lenders to FS go through FS Capital. FSC is used to fund loans that cannot be crowdfunded due to single borrower limits for crowdfunding, ticket sizes (too small or large), government supported loan program (in Singapore) or credit disbursements that require a quick turnaround time

FS caters to both SMEs (providing loans) and investors (issuing notes to them, for a fee), implying both interest and fee income at all country entities and are backed by A-list (VC) equity investors, such as Softbank and Sequoia and have attracted established debt investors funding the On-BS lending, such as Triodos Bank Capital and Innoven Capital

Mission

Funding Societies | Modalku’s tagline of Stronger SMEs, Stronger Societies echoes our mission of enabling fast and effortless financial access to worthy and under-served Small and Medium Enterprises (SMEs). According to the World Bank IFC’s estimates, there is a US$320 billion SME funding gap throughout Southeast Asia today. We are committed to improving societies in Southeast Asia through easy access to financing, and we achieve this by bringing SMEs and investors together on our platform.

Vision

By providing access to formal financial services, Funding Societies | Modalku envisions greater financial inclusion for Southeast Asia. We drive and contribute to greater economic growth and prosperity in developing Asia by currently lending in three countries – Singapore, Malaysia and Indonesia. We are expanding further into more SEA countries to promote the growth of the region.

Use of Proceeds / Loan purpose

FS Capital is expected to use the proceeds from this raise to fund the working capital needs of about 25 SMEs in Jakarta, Bandung and Surabaya in Indonesia. Majority of these SME are engaged in eCommerce, agriculture & allied activities and wholesale trade. These SMEs prefer Fintechs like FS Capital due to the speed of disbursal, convenience of online application and diverse product offerings suited to their business such as invoice financing which is typically not offered by traditional financial institutions to SMEs. Many of them need smaller quantum which most Indonesian banks are not interested in.

The top 3 sectors where the funds will be disbursed are - e-commerce merchants, agriculture & allied sectors, wholesale trade

Funding Societies | Modalku provides short-term, unsecured, and customisable financing to fit SMEs’ business needs. These come in the form of business term loans, invoice financing, and microloans starting as low as €420 to €1.6M per loan catering to all sizes and varied needs of the businesses. Many enterprises use these funds as working capital or bridging loans to scale their business operations.

These business loans are crowdfunded from retail investors directly via our platform, whereby investors invest into these SMEs and earn returns in the form of interest. Funding Societies | Modalku charges a loan origination service fee to SMEs and an investment service fee to our platform investors. We also have established debt investors funding our balance sheet, such as Triodos Bank and Innoven Capital.

In 5 years, we have helped finance over 815 million euros in funding through more than 3 million business loans across the region with more than 250K registered investors.

Impact

• Usage of Funds: 76% of SMEs use a portion of their loan proceeds for working capital.
• Revenue Impact: 50% of the respondents believe they would have lower business revenues if they had not received the Funding Societies financing.
• Employment Impact: 19% of respondents believe they would have needed to employ fewer workers if they had not received the Funding Societies financing.
• Gender Ratio: Funding Societies invests in women’s economic empowerment. Of our borrowers, 24% are female business owners.

COVID-19 Update

The management team has taken the following measures:

• Focusing on low-risk products and “white-list” sectors (healthcare, IT, cleaning, essentials, pharma)
• Discontinued more than 10m per month worth of facility from high risk sectors
• Improved risk management: Reduce limits and increase portfolio reviews frequency .
• Encouraging repayment and collection (e,g waiving fees for early repayments);
• Increasing interest rates for quality SMEs
• Increasing provisioning and collateral requirements.
• Pushing operational and funding costs down
• Reduced disbursement of higher risk products like Micro loans by almost 90%. Disbursements of micro loans have picked up again in Singapore in November under the government supported scheme where government is covering 90% of the risk for such loans.

Management team

Kelvin Teo (Group CEO)

• Nationality: Singaporean
• Total years of working experience: 8 years with organisations such as McKinsey, KKR, Accenture and Funding Societies
• Education: MBA from Harvard Business School and Bachelors from National University of Singapore

Reynold Wijaya (Group COO)

• Nationality: Indonesian
• Total years of working experience: 8 years primarily with PT United Family Food (mid size conglomerate family business) and Funding Societies (known as Modalku in Indonesia)
• Education: MBA Harvard Business School and Masters in Industrial & Operations Engineering, University of Michigan

Frank Stevenaar (Group Head of Finance)

• Nationality: Dutch
• Total years of working experience: 17 years with organisations such as GoBear (CFO & CO-founder), Aegon Australia (Director) and KPMG
• Education: Masters: Business Nyenrode University

Highlights or Awards

1.       Silver Stevie® Award for Innovation in Technology

2.       IDC Financial Insights' 101 Fast Growing Asia/Pacific FinTechs & Top 5 fastest growing FinTechs in Singapore in 2020

3.       Brands for Good (People Development & Business Model)

4.       Fintech100 (Emerging 50 Rising Stars) by H2 Ventures & KPMG

5.       Top FinTech 250 firms (2017 & 2018) by CB Insights

6.       Global SME Award 2017 by United Nations ITU Telecom World

7.       Best Customer Experience in Financial Services 2017 by CFXS Asia Awards

8.       Singapore Business Review 20 Hottest Startups 2017

9.       MAS FinTech Award 2016