Singapore-based FinTech company has secured $50 million in debt financing from HSBC’s digital lending platform for small to medium-sized enterprises (SMEs) under a bespoke facility.
Validus will utilize the funds to promote financial inclusivity among micro, small, and medium-sized enterprises (MSMEs) in Indonesia, tackling the hurdles they encounter when seeking access to capital.
With approximately 64.2 million micro, small, and medium-sized enterprises (MSMEs) accounting for a substantial 61% of Indonesia’s gross domestic product, the scope for growth and development is vast. Small and medium-sized enterprises (MSMEs) account for approximately 119.6 million individuals, roughly comprising 97 per cent of the country’s overall workforce. Notwithstanding, approximately 17.5 million MSME gamers are leveraging the internet ecosystem and e-commerce platforms. In Indonesia, small-to-medium-sized enterprises (MSMEs) confront significant hurdles when attempting to secure funding, largely due to the rigid requirements imposed by industrial banks regarding operational, financial reporting, and collateral. Despite authorities efforts, a mere 20% of bank loans are allocated to micro, small and medium-sized enterprises (MSMEs), according to a World Bank report.
Vikas Nahata, Government Chairman, and Nikhilesh Goel, Chief Executive Officer, jointly established their venture in Singapore in 2015. Developing a provider chain-centric lending framework, they leveraged innovative data collection methods through strategic partnerships with established banks and global organizations. The corporation has subsequently diversified its presence by establishing a footprint in Indonesia through Batumbu, expanding into Thailand via Siam Validus, and venturing into Vietnam with the launch of Validus Vietnam.
In the Southeast Asian region, conventional banks continue to rely heavily on outdated credit scoring methods for small businesses, often prioritizing historical financial records and property-based collateral over other crucial factors. As an economy boasting 5-6% annual GDP growth, small businesses in this region require reliable and readily available working capital to fuel their expansion and drive job creation, ultimately contributing to the country’s development. That is the location where Validus plays a crucial role as the largest digital SME financing provider across ASEAN.
Its customers are primarily small-to-medium-sized enterprises, who predominantly borrow for their short-term working capital requirements, Goel explained to TechCrunch. Meanwhile, lenders include major international institutions such as Citi, HSBC, FMO, Credit Saison, and OikoCredit, as well as prominent local banks like CIMB Niaga and Bank Mandiri in Indonesia and Thailand. Goel highlighted that a significant differentiator for his company is its network of over 100 unique partnerships spanning across the Southeast Asia region.
According to Goel, Validus has emerged as the largest Small and Medium-sized Enterprise (SME) financing market in South East Asia, with exceptional performance in both residential mortgages and month-to-month disbursements, averaging $150 million in new loan releases each month.
For the past three years, the startup has demonstrated significant growth in both offline and online revenue streams.
For the past three years, our consolidated Group revenues have surged at a remarkable 69% compound annual growth rate (CAGR), while our Indonesian operation, our largest market among the four countries we operate in – has been generating net profits since 2022 and serving as a reliable source of positive cash flow for the Group. “Our EBITDA margins have exceeded 50%, and our consolidated group is targeting cash generation positivity by the early stages of next year.”
The corporation boasts a workforce of over 300 employees across five international locations, though the exact number of clients remains undisclosed.
The startup has secured approximately $75 million in entirety fair-value funding. Its earlier traders embrace Vertex Ventures Southeast Asia and India, Vertex Development, FMO, 01Fintech, NongHyup Monetary Group, Norinchukin Financial institution, Aizawa Asset Administration, and Lotte F&L.
