Interview with Kelvin Teo and Reynold Wijaya, Founders of Funding Societies
What is Funding Societies about?
Funding Societies is a peer-to-peer (P2P) lending marketplace for small-medium enterprises (SMEs) to get loans to grow and investors to get good returns in Singapore. We pride ourselves on innovation, as the first and only platform in the region to implement escrow service, e-contracting, webinar, internet chat and more. Since our launch in Jun, we have crowdfunded ~3M SGD (approx. 2M EUR) in loans to 35 SMEs with 100% repayment. We aspire to be the most trusted P2P lending marketplace in Southeast Asia.
What are the three main advantages for investors?
As investors ourselves, we believe returns, convenience and security are critical. Therefore we offer an alternative investment that gives investors a much better return than traditional fixed income, through the convenience of a fully-online and hassle-free investment approach, with funds handled by a professional escrow agency for security.
What are the three main advantages for borrowers?
Having worked with many SMEs, we find their biggest constraints to be capital, time and energy. Therefore we strive to provide them with capital at competitive rates, fast speed-to-cash and best user experience with minimal effort.
We target the SME segment structurally underserved by existing financial institutions. Our interest rates are just a few percent higher than banks’, to minimize adverse selection. We charge 9% to 14% simple interest and pass the full return to investors with only 1% service fee. With diversification, we believe investors can earn at least 7%, much better than deposit interest of 0.05% in Singapore.
How is your company funded?
We began by bootstrapping. Thanks to a talented and committed team, we achieved numerous awards within the first 6 months and received considerable attention from the investor community, including strategic VCs who share the same values with us and now fund us.
Is the technical platform self-developed?
Yes, we built everything from scratch based on best practices we observed. It took us 95 days from start to launch, thanks to our talented CTO Felix Richard. Our goal is to deliver the best user experience, while ensuring security and scalability.
What was the greatest challenge so far in the course of launching Funding Societies?
Without a team, founders are nothing. The strength of a start-up to a large extent is determined by the founding team. The time we spent building the right team was unimaginable. Ultimately we are fortunate to have found a great team, whom till this day, we do not understand why they have believed in us so much to the extent of taking the leap of faith with us, when we had nothing but a belief.
How do you see the market in Singapore and SE Asia?
We believe Singapore and Southeast Asia are ripe for innovation. There is strong demand for alternative financing and investment, but limited supply and opportunity. However, it is also an extremely fragmented market with more than 10 countries, each with their unique market, regulatory and cultural characteristics. Having both international FinTech knowledge and local understanding, we believe we have a natural advantage and hence responsibility to make an impact in the region.
Which marketing channels do you use to attract investors and borrowers?
We use a combination of online and offline, as well as direct and indirect channels. For borrowers, we believe it is an offline-driving-online market. Therefore we have built a network of partners to refer us leads and have developed a small salesforce to deliver personal touch. For investors, we opine it is an online-driving-offline market and hence we invest on digital marketing and consumer education.
Is Funding Societies open to international investors?
Yes, we accept investors of all nationalities. We are able to do so thanks to our escrow agency, which performs the standard Know Your Customer (KYC) checks for anti-money laundering (AML) and other international blacklists. We also accept foreign currencies, thanks to our escrow bank that automatically converts them into Singapore dollars at spot rate. In fact, we have a good base of international investors, here to take advantage of the attractive returns and strong Singapore currency.
Do you plan an international expansion?
Being born and bred in Southeast Asia, we are passionate about the region. We do hope to bring the benefit of P2P lending to more societies. The key is to finding the right team. So if anyone shares the same passion and values with us, Funding Societies wants you!
Where do you see Funding Societies in 3 years?
We shall be the most trusted P2P lending marketplace in Southeast Asia, not only helping SMEs to grow into mature corporations but also turning P2P lending into a mainstream investment option.
P2P-Banking.com thanks Kelvin Teo & Reynold Wijaya for the interview.