Modalku Debuts in Thailand, Securing Early Stage Funding from 500 Tuktuk

Funding Societies (known as Modalku in Indonesia) announced its operational debut in Thailand, after obtaining a crowdfunding license from the Thailand Securities and Exchange Commission (SEC) in February 2021. Simultaneously, the company secured early stage funding with an undisclosed nominal from 500 TukTuks.

Apart from Modalku, another fintech company pursuing on the same opportunity in the regional arena is Investree. In addition, Danacita has also been available in Thailand.

500 TukTuk is a venture capital part of 500 Startups which focuses on early-stage funding for startups across Thailand and CLMV (Cambodia, Laos, Myanmar, and Vietnam).

Funding Societies Thailand's Country Head, Varun Bhandari said, the company's vision is to always serve credit-worthy SMEs while growing wealth for investors. “[..] We believe that this will pave the way for Funding Societies to become the first choice digital lender for SMEs,” he said in an official statement.

500 TukTuk's Partner, Krating Poonpol added, fintech is one of the rising industries with exponential growth in recent years. In Southeast Asia, there are many successful fintech startups due to many different factors including its large market size, population size, established financial institutions, and businesses that are open to new technologies and innovations.

They discover an opportunity for Funding Societies to grow exponentially with its capacity to solve the challenges faced by SMEs and startups in the region. "We strongly believe that Funding Societies can strengthen the Thai economy by offering solutions for entrepreneurs in Thailand," he said.

Since the launching in Thailand, Funding Societies has funded local Thai SMEs and startups of up to more than THB100 million (approximately 42 billion Rupiah) at affordable prices, with no bad credit. Also, partnering with Central Retail, NocNoc, Freshket, and Accrevo as institutional lenders.

Funding Societies offer short-term financing to businesses, connecting them to retail and institutional clients seeking attractive alternative investment opportunities. In Thailand, there are more than 3 million SMEs operating in various industries, and more than 60% of them have experienced declining income due to the pandemic.

Many of these SMEs have no access to adequate funding from traditional financial institutions. As small businesses become the backbone of the economy, Funding Societies is committed to bridging the SME financing gap in the region by providing flexible loan products to meet working capital and expansion needs such as invoice financing, PO financing, project financing and term loans of up to THB 50 million (approx. 21 billion Rupiah).

The Modalku Group was founded in 2015 to address the S$300 billion SME funding gap, with the strong belief that every eligible SME deserves funding. Over the past six years, the company has disbursed over 58 billion (over 21 trillion Rupiah) THB through 4.8 million loans to more than 70,000 SMEs throughout the Southeast Asia region.

Its default rate during the pandemic remains less than 2%, supported by an AI-led credit scoring model. The platform has been trusted by regional partners such as Lazada, Shopee, CIMB, and FoodPanda, to fund SMEs in the supply chain, such as suppliers, distributors or merchants.

Southeast Asia SME market

Based on a study by the Asian Development Bank entitled "Asia Small and Medium Sized Enterprise Monitor 2020", MSMEs accounted for an average of 97% of all types/scale companies, 69% of the total workforce, and 41% of the country's gross domestic product (GDP) during 2010-2019.

The Covid-19 pandemic in 2020 exacerbated the high tense global trade and economic uncertainty in the region. In many ways, MSMEs hold the key to economic recovery in Asia's developing countries.

Indonesia is a Southeast Asia's country with the largest number of MSMEs in the region at 64 million, followed by Thailand with 3.5 million, and the Philippines with 1.2 million MSME units.

MSMEs are a major and important force to drive the Southeast Asian economy. The number is 97% of the business world and absorbs 97% of the national workforce from 2010 to 2019 period. MSMEs also contribute an average of 41% of GDP for each country in the same period.

However, there are still many business players have no access to financing. Many of them are considered ineligible to borrow from banks with no credit history.

Fintech can make it easier for MSMEs to optimize the effectiveness and efficiency of business operations, as well as make it easier for MSMEs with no sufficient requirements to access banking financing, in accessing working capital financing.

–Original article is in Indonesian, translated by Kristin Siagian