Vietnamese tech VNG invests $22.5 million in Funding Societies
The fintech company will operate in Vietnam in addition to being present in other four countries including Singapore, Indonesia, Malaysia, Thailand.
VNG, the Vietnamese tech giant, has invested $22.5 million in Funding Societies (or Modalku in Indonesia), Southeast Asia’s largest small-medium enterprise (SME) digital financing platform.
In its latest series C+ equity round, Funding Societies has raised a $144 million total, led by SoftBank Vision Fund 2, with Vietnamese tech giant VNG Corporation, Rapyd Ventures, Asia-based global investor EDBI, Indies Capital, K3 Ventures, and Ascend Vietnam Ventures as new investors.
The funds solidify the investee’s position as a market leader in digital financing, and propels its expense management, and business-to-business (B2B) payments services for micro, small and medium enterprises (MSMEs) across Southeast Asia. Its latest fundraising also provides $16 million to former and existing employees via the company’s stock option plan, in the form of share buyback.
Le Hong Minh, General Director of VNG, said: “Financing capital for SMEs is our focus. Despite playing an important role in economic growth, SMEs often find it difficult to access traditional business loans. Therefore, we decided to invest in Funding Societies because they have products and a vision that aligns well with VNG's mission."
Although small enterprises make up almost 99% of total enterprises in Southeast Asia, they also face many hurdles in obtaining business loans from traditional financial institutions due to a lack of a credit track record or collateral to pledge.
Funding Societies offers micro loans from $500 up to $1.5 million, which can be disbursed in as fast as 24 hours, answering in a timely manner to MSMEs who face the pertinent challenge of accessing business funds.
The company also received $150 million in debt lines from institutional lenders across Europe, the US, and Asia, some of which have been drawn down since 2021. This comes on the back of its $45 million Series C raised between 2020 and 2021.
Greg Moon, Managing Partner at SoftBank Investment Advisers said: “SMEs across Southeast Asia have historically struggled to access institutional finance and instead been forced to mainly rely on personal funding to support growth.”
He added Funding Societies is building a bridge for these companies to access more sustainable and cheaper financing by building unique data sets on their performance and using AI-led technology to assess their creditworthiness more effectively than traditional models.
Funding Societies was founded in 2015 by Kelvin Teo and Reynold Wijaya out of Harvard Business School to empower MSMEs in Southeast Asia. The fintech company solves MSMEs’ key pain points for growth, starting with the region’s $300 billion financing gap.
A recent impact study, with calculations using methodology by the Asian Development Bank, revealed that Funding Societies-backed MSMEs contributed $3.6 billion in GDP.
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