Kelvin Teo is the Co-Founder while Vikas Jain is the Marketing Director of Funding Societies, an online marketplace lending platform for small-medium enterprises (SMEs) to raise loan funds, crowd-funded by retail and institutional investors. They believe in enabling better and easier access to funding for SMEs will result in stronger societies.
Tell me a little bit about yourself.
I am the Co-founder of Funding Societies-Modalku. Prior to this, I served as a consulting professional at KKR, McKinsey and Accenture. I graduated from Harvard Business School (MBA) and National University of Singapore, and is a certified Chartered Accountant.
Vikas Jain is the Marketing Director and the very first founding team member of Funding Societies, who set up most of the Singapore business. Prior to this, Vikas worked at ING, Citibank and HDFC Bank managing consumer and SME loan product portfolios. He subsequently moved to SingTel where he developed its mobile based financial products for the underbanked segment. He has a graduate degree in Commerce (Honors) and is also a MBA in Finance.
What is your business venture about?
Funding Societies is a leading digital lending platform in Southeast Asia. It enables small-medium enterprises (SMEs) to get loans for growth, crowdfunded by individual and institution investors who lend for a good return. It’s the only regional platform to be licensed in Singapore, Indonesia and Malaysia, to serve not only high-net-worth individuals but also retail investors. Within 2 years, it has crowdfunded more than S$ 40M loans and is backed by world-leading venture capital firm Sequoia Capital.
What is your mission at the outset?
As per our motto, we believe that “Stronger SMEs, Stronger Societies”. We provide loan financing to under-banked SMEs for growth, and offer loan investment to individual investors for wealth creation. Passionate about the region and crowdfunding, we hope to make a positive impact in Southeast Asian societies, hence the inspiration of our name Funding Societies.
How did you get your idea or concept for the business?
We first heard about the idea from a good friend Santosh Kumar. We thought it’s crazy. But we chanced upon the idea again while doing MBA at Harvard in 2015. P2P lending was thriving in the US. Having previously worked with SMEs as a banker and management consultant, we knew it’d benefit SMEs and investors in Southeast Asia too, who have limited financing and investment options. We believe we could make a difference, so we launched Funding Societies.
What is unique about your business?
We pride ourselves for innovation. We were the first platform in Southeast Asia to introduce escrow account for professional funds handling, the first to go paperless with e-contract, and the first to launch a SME loan mobile app (“Bolt”) approving credit in as fast as 2 business hours. For the various innovations, we’re honored to be the first and only P2P lender to be awarded the prestigious FinTech Award by the Monetary Authority of Singapore (“MAS”) in 2016.
Who do you sell to and how do you get customers?
As a two-sided platform, we serve both the SMEs and investors. We offer SMEs unsecured term loan and invoice financing to support their growth. To some SMEs, this may be their very first business loan; while to other, they may use it as a top-up to their bank loan or as an urgent source of financing given our quick approval. Conversely for investors, we enable them to invest in these SME loans, earning them a good monthly return and diversifying their investment portfolio from traditional asset classes.
Why will customers stay or do repeat business with you?
Our SME and investor customers stick with us because we provide value to them. Our SMEs tell us that they find our application process simple, approval speed fast and product structure flexible. Investors choose us for various reasons. Most choose us because we’ve the lowest default rates in region, while others pick us for fund safety given our escrow account and low investment bar of S$100 per loan. We’ve also been rated to have one of the best customer services in alternative financing.
What have been the biggest obstacles?
There was a time when we would wake up in cold night sweat due to uncertain regulations, but we’re glad to be one of the first to receive the CMS license from MAS, as well as RMO from SC Malaysia and official registration with OJK Indonesia. Once a blue ocean, P2P lending has since turned dark red, with more than 20 P2P/ online lenders in this 5.5M population market. Yet general market awareness of P2P lending remains low, resulting in a double whammy and aggressive negative competition.
If you had one piece of advice to someone just starting out, what would it be?
Only start out in a business you’re passionate in, give your everything and build a great team. This is because for the risk you’re taking and the hours you’d be working, there is no better reason to start out other than passion. Tough times would come; in fact, sometimes they never go. It’d demand everything of you and of your team to survive. But it’d be a fun sprinting marathon. After all, what’s the joy of achieving something unless it’s near impossible and with buddies?
Do you have any final thoughts?
I can’t emphasize enough the importance of building a great team. Many promising startups have been destroyed not by market, competition or funding, but by internal conflict and talent dearth. We believe in unity and fairness, and abide strictly to our culture value of “No politics, no asshole”. We see our roles as attracting the best talent, setting clear directions, creating an environment where they can thrive and get out of their way. Talents and leaders would know what to do, we’re but overhead.
Who is your biggest inspiration or drive to do what you are doing?
Peter Thiel spurred us into action, when he promoted his book “Zero to One” at Harvard. But the drive came from the under-served SMEs and people in Southeast Asia, especially in the emerging markets, whom we came across in our previous professions. We feel they were ‘underdogs’ like us and could achieve so much more with a little help. We’ve been fortunate to do well for ourselves. We believe there is a moral obligation to give back, and Funding Societies is one of the most impactful ways to do so.
What’s next for you and for Funding Societies?
It’s been a roller coaster ride for us, having launched at 3 markets in just 2 years and achieved what some considered impossible. But it’s just the beginning. We may be performing well by regional standards, but we’re still small and behind by global standards. The next step is to forge ahead and become a world-class P2P lending platform for the greater benefit of societies in Southeast Asia.
Hock Lai has 18 years of experience in the financial industry, having performed roles in both business and technology. He graduated from the National University of Singapore (Real Estate), Nanyang Technological University (Infocomm Technology) and Nanyang Polytechnic (Fund Management & Administration).
He is also a Fellow of the Singapore University of Social Science, advisor to FinTech Startups and mentor to student FinTech projects.
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