Small- to medium-sized businesses are one of the most important parts of Southeast Asia’s economy, but many have trouble securing growth capital from traditional financial institutions. Validus wants to fix the financing gap with its peer-to-peer lending platform, which connects accredited lenders with SMEs. The Singapore-based startup announced today that it has raised $20 million for its ongoing Series B+ round.
The funding was co-led by Vertex Growth fund and Kuok Group’s Orion Fund, which is managed by K3 Venture Partners. Returning investors in the round include FMO, the international development bank of the Netherlands; Vertex Ventures Southeast Asia and India; Openspace Ventures; AddVentures; and VinaCapital Ventures.
This brings the total raised by Validus to about $40 million since it was founded in 2015, including a $15.2 million Series B round announced last year. After getting its capital markets services license from the Monetary Authority of Singapore in December 2017, Validus launched services in Indonesia and Vietnam and says it has lent over $315 million to businesses so far. Plans for its Series B+ round include expanding into Thailand during the last quarter of this year.
Co-founder and COO Nikhilesh Goel says that during the COVID-19 pandemic, the company has seen more demand for short-term financing, with a 50% year-over-year increase for credit-approved unsecured loans over the past few months.
Despite the impact of the pandemic on small businesses, loan performance has held steady, he added, because Validus focuses on corporate vendor financing for SMEs whose end-buyers are large corporations or government-linked entities. Its credit risk model analyzes information from invoices, contracts and cash flow.
Validus also plans to provide financing to SMEs that are on the frontlines in the battle against COVID-19, including working capital for SMEs in the healthcare and pharmaceutical industries, as well as logistics and cleaning services.
"Through working closely with corporate partners and investors on the platform, we also aim to support SMEs who are pivoting their businesses to adapt to services and products that are required in this time," Goel said. "In the last month, we have disbursed multiple such loans, averaging $250,000 to $500,000, to support SMEs’ efforts in meeting the demand for face masks and other protective gear in short supply."
In a press statement, MX Kuok of K3 Ventures said, "We are highly impressed by the leadership and depth of credit management experience at Validus. The team has demonstrated the unique ability to capture critical data points, combined with comprehensive machine learning capabilities, to identify high-potential SMEs that may have fallen through the gaps of the traditional banking model."