M-DAQ is riding the fintech high

Its Aladdin platform allows customers on e-commerce platforms to shop in their home currency.

PULL-UP bars, bunk beds and foosball tables. Sixty-odd employees in matching hoodies huddled over screens . A fully stocked kitchen and a dining table fitted with an automated lazy susan. M-DAQ's office checks all the boxes when it comes to what you would imagine a typical startup to look like, but this homegrown fintech darling is far from average.

The fintech startup clinched this year's Digital Economy Award - a special award to mark the 25th year of Enterprise 50 (E50) awards - that gives recognition to an enterprise that could be the "next billion-dollar company" in Singapore.

M-DAQ has gone through its fair share of highs and lows. The startup almost ran out of funds in 2012, and chief executive officer Richard Koh had to go without a salary for 12 months. But, today, the 10-year-old company is one of the most valuable fintechs in the region, and is poised to go public in the next year or two.

M-DAQ also recently received fresh funds from a pre-series D equity round by South Korea's Samsung and Japan's Nippon Telegraph and Telephone (NTT), bringing its valuation to S$500 million, double the reported amount of S$250 million from its series C round four years ago.

Other investors include Ant Financial and EDBI Singapore.

With these major backers, the fintech startup is now set to take on North Asia, with South Korea and Japan among its key markets.

M-DAQ uses several platforms aimed at streamlining cross-border trading, but one of its most innovative, Aladdin, allows customers on e-commerce platforms to shop in their home currency, while allowing merchants to receive payments in their desired currency.

Through this, M-DAQ can guarantee the foreign exchange (forex) rates for customers with a spread of 1.25 per cent (and rebating up to one per cent back to merchants), cutting out additional forex charges from credit cards for both shoppers and merchants - which typically hover around 4 per cent each side.

Customers are more likely to check-out after adding items to their carts as they face more familiarity and certainty when the item is in their local currency, said Mr Koh.

The chief executive added that the company's service can help to reduce shopping cart abandonment - the term coined to describe customers abandoning their "shopping cart" before checking-out - improving sales conversion by 300 per cent.


The platform also guarantees the refund rate up to 90 days, despite constant movements in the actual interbank forex markets.

The reason that M-DAQ can guarantee such low rates is due to its proprietary data-driven system. This system predicts demand-side pricing by analysing data from national expenditure patterns, and uses these macro data to hedge.

Mr Koh said that its algorithms have a consistent 93 per cent accuracy rate, which allows M-DAQ to trade confidently to secure the best possible pricing for their clients. So far, this model has worked well for the startup, which boasts S$6.6 billion in transactions for 2018. The firm first broke even last year, with a net profit of S$6.2 million for the 12 months ended Dec 31, and S$40 million in cash reserves.

Mr Koh attributes this to his team, whom he said have stayed with the company through thick and thin. "When we ran out of cash in 2012, those who stuck by us believed in our vision; and today we are the result of their hard work," he said.

The company was still operating at S$6.6 million loss in 2017, but managed to turn it around as it developed new products and onboarded more clients, all while keeping costs relatively constant.

Ninety per cent of its costs are manpower costs, said Mr Koh, adding that since headcount will be "very much constant" moving forward, the firm is well-positioned to scale up its operations.

"If we increase our volume by three to five times, our cost base will only need to rise by 10-15 per cent," Mr Koh said, adding that he thinks this is a good reflection of a company in the digital economy - the ability to scale at low additional cost.

Today, M-DAQ's clients span across a range of industries: e-commerce, remittance companies and stockbrokers. However, Mr Koh said, 80 per cent of its revenue is concentrated at the hands of one client, across the suite of services the startup offers. The firm is looking to bring that down to half.


This year, M-DAQ has been focusing on building different pipelines to diversify its business. Thus, the startup is starting to plant its seed further overseas. But Mr Koh said that the startup's identity will always be tied strongly to Singapore.

"We are a true blue home-grown startup, with Singaporeans forming two-thirds of our core team," he said, adding that this home ground has been an integral support system through M-DAQ's journey.

The Singapore Exchange partnered M-DAQ in 2018 to develop a solution for investors to view and trade real-time prices of the component stocks of the Straits Times Index in their preferred currency. This allowed investors to trade with more certainty and better manage risks, said Mr Koh. Besides Singapore-based clients, M-DAQ also counts Economic Development Board (EDB) as one of its biggest benefactors. Mr Koh said the government agency under the Ministry of Trade and Industry took a chance on M-Daq when no one else would.

"Four months after we started, all we had was a business plan and a dream. EDB Singapore gave us a huge monetary grant without taking any equity, which helped us a lot to grow our business," Mr Koh said, adding that he has been grateful for their support throughout the years.

The former regional head of e-commerce for JPMorgan said that he grew up loving technology, and has always wished to see a Singapore-based, home-grown tech company on the world map one day, citing Creative Technologies as one of the pioneering companies he used to look up to.

He hopes that M-DAQ can be a trailblazer in leading the way, and that other newer Singaporean tech startups will also "dare to dream big".