Southeast Asian peer-to-peer lender Funding Societies, popularly known in Indonesia as Modalku, is in the midst of raising around $50 million in a new funding round, according to multiple sources familiar with the development.
The deal, which is understood to be Funding Societies’ Series C funding round, values the company at a pre-money valuation of $350 million, one source said.
Once closed, the fresh capital is set to further establish the company’s position as one of the leaders in the region’s P2P space.
When contacted by DEALSTREETASIA, Funding Societies did not confirm nor deny the development, saying, “We’ll inform you of our fundraising situation once we have more clarity.”
A $50-million financing would see the company double the investment it secured only a year ago, in a round led by SoftBank Ventures Asia. The startup’s $25-million Series B raised was at the time the largest financing round for a P2P lender in Southeast Asia.
Modalku’s other existing investors include Sequoia India, Alpha JWC, Golden Gate Ventures, Qualgro and Line Ventures.
Founded by Kelvin Teo and Reynold Wijaya in 2015, Funding Societies is a digital lending platform that connects small and medium-sized enterprises with retail and institutional lenders. It claims to be the first platform to introduce e-signing of contracts and an auto investment algorithm for lenders as well as launch a mobile app for borrowers and lenders.
With operations in Singapore, Indonesia and Malaysia, the company claims to be Southeast Asia’s biggest peer-to-peer financing platform. As of May 22, 2019, the company said it has facilitated total loans of over $438 million across the region.
The Funding Societies P2P platform was first launched in Singapore in 2015 before it came to Indonesia under the Modalku brand in 2016. A year later, it became the first P2P lending platform to launch in Malaysia.
The company’s initial operations were funded by Sequoia India and Alpha JWC, which contributed an undisclosed amount in the company’s first significant funding. It then raised $7.45 million in a Series A round in 2017, followed by the $25-million Series B a year later.
The new funding is expected to mark the biggest fundraising by a P2P player in the region, which presents a huge opportunity for online lending services, with Indonesia as a key market.
With 80 per cent of its 260 million population without a bank account and 203 million earning less than $4.50 a day, the Indonesian market is an attractive proposition for financial technology ventures as well as investors.
Last year, a number of local P2P players raised a significant amount of investment from local and foreign investors. Koinworks, Investree and Kredivo are among those that raised a Series B round in 2018.
Indonesia’s Financial Services Authority (OJK) last year also identified as many as 227 peer-to-peer (P2P) lending platforms to have been operating in the country without a licence. These P2P lending platforms are being operated by 155 unlicensed fintech companies, more than half of which are from China.
According to the OJK, the influx of Chinese-origin P2P platforms into Indonesia is likely prompted by the Chinese government’s tightening measures on curbing illegal financial technology firms in the domestic market.