P2B lender Validus raises over S$100m in funding for SMEs

Singapore

SINGAPORE-BASED peer-to-business (P2B) lender Validus Capital has surpassed S$100 million in funding for local small and medium-sized enterprises (SMEs) and businesses through its financing platform, it said on Wednesday.

This works out to an average loan amount of about S$70,000 across more than 1,400 loans.

Established in 2015, Validus focuses on helping SMEs secure short- and medium-term financing from accredited and institutional investors through its curated financing marketplace.

By targeting such investors, Ajit Raikar, chief executive officer and co-founder of Validus Capital said: "Currently, they do not have access to the SME debt asset class. By allowing them access which includes insurance cover, we are able to match their needs with the needs of the SMEs."

Accredited investors and institutions are happy to fund growth-oriented SMEs at a lower cost of capital."

The insurance covers invoice financing products and the premium is paid by the investors based on a risk allocation matrix on a per facility basis. Up to 90 per cent of the principal that the investors put into the loans are insured.

Validus received its capital markets licence from the Monetary Authority of Singapore (MAS) in December 2017 and most of its borrowers operate in the marine, construction and services sectors.

"Through the platform, borrowers benefit from faster approval times and access to capital for business expansion while allowing for less stringent requirements to small businesses which have conventionally faced financing difficulties due to lack of collateral or cash flow records," Mr Raikar said.

Temasek-backed Vertex Ventures invested S$4 million in Series A funding in Validus in July 2017.

Earlier in May 2017, the fintech firm launched a virtual card-based solution with Visa to facilitate immediate cash flow to SMEs that may have unpaid invoices in their payment cycles.

"By clearing invoices for SMEs using a Visa virtual commercial card, we help SMEs to expand faster and have a faster turnover for their products and services," Mr Raikar explained.

In May 2018, Validus and independent asset manager Lighthouse Canton Group launched a S$20 million fund to finance SMEs in Singapore. It hopes to grow the fund to S$200 million in the next three years.

The fund is deployed solely through the Validus platform and may provide SMEs with funding for growth at lower interest costs.

Mr Raikar said: "We are immensely proud to have helped accelerate the growth of so many of Singapore's SMEs, and yet we still have much work to do to empower many more such businesses. We have innovations in the pipeline that will give SMEs even more capital flexibility and choice to suit their business strategies."