UOB offers alternative funds for fintechs

The bank broadens the suite of funding and partnership options to these startups.

TECH startups are, and will continue to be, one of the driving forces of the new digital economy. They bring to the market disruptive ideas that could transform entire industries. But ironically, that very innovativeness may pose a challenge, particularly, in raising money for their ventures.

Janet Young, head of group channels and digitalisation at UOB, affirms that tech startups often find it hard to raise funds through conventional methods such as bank loans.

"This is largely because tech startups, unlike established companies, may not be able to generate consistent cash flow, to offer familiar products and services, or have proven business models - all of which are considerations for the approval of loans."

It is thus important to provide alternative funding options to help startups scale up their businesses in their early stages of growth, Ms Young said. Aside from having access to funding, startups need professional advice to understand the various funding options that are available and which would suit their business needs best.

Ms Young said: "UOB provides startups with alternative funding options and has commercial bankers trained to advise them on the various type of financing for which they can qualify and to provide support thereafter."

The bank offers startups alternative funding options such as equity crowdfunding and venture debt, and also supports them through strategic collaborations.


In September 2016, UOB said it would partner Israel-based OurCrowd to provide equity crowdfunding.

Through this comparatively new form of crowdfunding, startups can seek relatively small investment amounts from a large number of accredited investors in return for equity in the company.

Ms Young said: "This provides startups with the funding needed to help them to develop viable business models. It also gives them the opportunity to tap OurCrowd's global investor network for their business development and international expansion."

Two notable companies in OurCrowd's portfolio are BioCatch and BriefCam. Israeli BioCatch has since 2014 raised over US$5 million through the crowdfunding platform. The startup is an online authentication service that prevents online fraud through analysing behavioural and cognitive responses.

BioCatch does this by capturing behavioural data from the use of keyboard, the mouse, track pads and other pointing devices on personal computers, and the touch interface on mobile devices to generate unique user profiles.

BioCatch then conducts real-time comparisons of the user behaviour against their profile to detect the use of stolen or fake identities for online applications.

As the analysis is done in real-time, there is no disruption to the user's digital experience, said Ms Young.

BioCatch was the winner of the ABS Global FinTech Award at the Singapore FinTech Festival in 2016.

The second company, BriefCam, is also based in Israel. In 2014, it raised some US$2.2 million through OurCrowd. The startup's technology was used during the Rio 2016 Olympics as part of surveillance efforts.

Its video synopsis technology allows users to review large amounts of video footage quickly, accelerating the investigative process so that action can be taken quickly.

On average, one hour of video can be "synopsised" down to one minute of review time, according to Ms Young.


Venture debt is another alternative funding option that UOB offers to startups. It is a form of financing that enables start-ups to raise funds without the need to pledge collateral or to dilute their stake in the company.

Ms Young said: "With the funds, startups are able to accelerate the commercialisation of their business and increase the valuation of their business."

UOB in July 2015 announced that it has partnered Temasek to create InnoVen, a joint venture that offers venture debt financing to startups in China, India and South-east Asia.

InnoVen's chief executive officer Chin Chao told The Business Times that it has several fintech companies in its India portfolio such as Mswipe, a card payments processor.

"In South-east Asia, we have been actively evaluating fintech companies over the past year and are close to completing our first transaction with a South-east Asian consumer finance company. We are also in late-stage due diligence with several other fintech companies in Southeast Asia and India."


Ms Young said: "We constantly seek new avenues through which we can collaborate with fintech startups to make banking simpler, smarter and safer for our customers."

One of these ways, she said, is through The FinLab, a joint venture formed by UOB and SGInnovate in 2015. The FinLab is an innovation accelerator that supports fintech startups in going to market with solutions ranging from wealth management to machine learning. Startups that are selected to participate in the programme are mentored by financial institution experts and successful entrepreneurs. UOB's senior management will also provide mentorship and guidance to these startups through a 100-day accelerator programme, helping them to refine their business models and propositions.

Ms Young said: "By collaborating with fintechs, we can harness their creative strengths to create financial solutions our customers need. Such collaborations also contribute towards supporting the growth of fintech startups, by providing them access to innovative projects in the banking sector and helping them to build a track record locally."

Two of the fintech startups that UOB has worked with include CardUp and PayKey.

CardUp, a Singapore-based company, enables card payments in areas where payment has been traditionally made in cash or cheque. These include property-related payments such as rent and property deposits and Management Corporation Strata Title payments, as well as insurance premium payments and school fees. PayKey, which is based in Israel, offers a patent-pending mobile payment keyboard that lets users transfer money to anyone within any social media platform. In fact, UOB worked with PayKey to create UOB MyKey, which enabled the bank's customers to be the first in Singapore to pay and to be paid using PayNow via any social messaging app, said Ms Young.

"This is PayKey's first business deal is South-east Asia and is an important milestone for the company as it builds its presence in the region."