Kelvin Teo is the co-founder of Funding Societies | Modalku. Having moved to Singapore on the ASEAN scholarship, he believes everyone deserves a chance. Selected as Top 200 FinTech Influencers in Asia, he’s spoken at major conferences such as LendIt Shanghai, Boao Hainan and Money20/20 Asia. Kelvin’s also been featured on Bloomberg, CNBC and Business Times amongst many others. Before this, he served as a consulting professional at KKR, McKinsey and Accenture. Kelvin graduated from Harvard Business School and National University of Singapore (as a valedictorian), and is a certified Chartered Accountant.
Reynold Wijaya is the co-founder of Funding Societies | Modalku. His dream is to build a better Indonesia through financial inclusion. Selected as Forbes 30 under 30, Reynold has led the Indonesia entity Modalku to be part of the Next Indonesian Unicorn (NextICorn) program, under the Ministry of Communication and Information Technology. Prior to this, he was an executive at his family business, one of the largest confectioneries in Indonesia, where he drove multimillion-dollar projects. Reynold graduated from Harvard Business School and has Master’s and Bachelor’s degrees in Engineering from the University of Michigan.
Singapore, Jakarta, Bandung, Surabaya (Indonesia), Kuala Lumpur (Malaysia)
How did you come about setting your focus on the SME lending fintech category? Please tell us a little more about the company’s beginnings as well.
We started Funding Societies | Modalku, as the stars aligned. We are passionate about SMEs because we knew how hard it is for them. Reynold’s family business was saved from near-collapse, thanks to a credit line from a supplier. And working across Southeast Asia showed me how huge a problem SME financing is. We chanced upon peer-to-peer (“P2P”) lending while studying at Harvard and found it to be a great solution to the SME financing problem. Hence we took it upon ourselves to bring it back to Southeast Asia where we call home.
What transformations have you undergone as a company since starting up?
In 2015, we were 2 students at Harvard working with a team in Singapore via Skype. We were late to the market, struggling to be heard. Some kindly dubbed us “latecomer, fast mover”. In 2016, we launched in Indonesia, raised US$7M Series A from the prominent Sequoia Capital, and won the MAS FinTech Award. Still, many considered our entry into Indonesia a mistake. In 2017/ 2018, we entered Malaysia, received the United Nations’ Global SME Excellence Award and closed our US$25M Series B from the renown Softbank (Korea). As of Aug 2018, we are proud to have served 2,000 SMEs with S$200M loans from 70,000 investors. But it is still a long way until we serve 1% of SMEs, as we believe “stronger SMEs, stronger societies”.
Thoughts on the present Asian fintech landscape? How does it compare to the rest of the fintech majors in other parts of the world like those in United States, UK, Europe, etc. according to you?
Asia is huge, we can only speak about Southeast Asia. Being years behind, Southeast Asia have the benefit of learning from their western and Chinese counterparts. But the advantages stop there. Southeast Asia is highly fragmented with 11 countries, each with different economic, social and regulatory environment. Besides the usual overheating which we see in other regions too, we have to contend with local giants in e-commerce and ride-sharing which have FinTech ambitions and a few years of head start. While SME financing may be slightly sheltered, the fragmented markets and high competitive pressure make it a harder battle.
Which are the markets in Asia where you think there are untapped opportunities for Funding Societies? How does it fit in with your product and growth plans for the immediate future considering the different geographies within which you operate?
There is significant opportunity across Asia, as SME financing is a structural problem. However compared to consumer financing, SME financing is also an extremely hard problem with considerable local nuances. For Funding Societies | Modalku, we only enter markets that we’re passionate in and that we can win, hence Southeast Asia is our natural choice. While we’re open to new markets, there is still a lot of work to be done in our current ones. Hence we’d stay focused, building core capabilities and expanding our team in our existing countries.
Please tell us a little about your funding journey up to the most recent one in April this year – the requirements & objectives in mind when you decided to raise a round/s; the fit you found or were looking for with your investors; what would you be looking for in the future as the business grows?
Fundraising is a bitter-sweet experience. It is nice to know that others have faith in us, but we fundraise to survive and face ever-increasing expectations. As such, we want investors who are helpful believers. They must believe in our vision and in us, because hard times will come and only believers will stay steadfast and help us in this journey. We believe this is important for both current and future investors. And we’re fortunate to have found them in SoftBank, Sequoia, Alpha JWC Ventures, and other investors, very early in each of our fundraising cycle.
What advice would you give to other fintech entrepreneurs?
If we may share a perspective, it is that being compliant should be the minimum, not the maximum we do. Regulations will often lag behind innovation. As a result, regulatory gaps, legacy rules and at times special interests may create uneven playing fields. As the first/ second wave of FinTech entrepreneurs in Southeast Asia, we have the responsibility to set a high bar for the sustainability and impact of the industry.