(Updated) SG fintech firm MatchMove’s talks with investors to raise $50m falls through

MatchMove at the Singapore Fintech Festival. Photo: MatchMove

Editor’s note: This story has been updated with further responses from MatchMove that were received on April 9. The complete set of queries that DealStreetAsia sent to MatchMove (prior to publishing the story), and responses by the company’s spokesperson is enclosed. 

Singapore-headquartered fintech firm MatchMove’s talks with potential investors to raise about $45-50 million in funding has fallen through after it failed to secure a digital banking licence from Monetary Authority of Singapore (MAS), said sources privy to the development.

“The fundraising round was to be sealed on condition that the firm would successfully secure the Singapore digibank licence. When it lost the bid, the round collapsed,” said one of the persons mentioned above.

MatchMove had forged a partnership with Singapura Finance, Lightnet and OpenPayd Holdings to apply for a digital banking license in the city-state to bolster its existing banking-as-a-service portfolio, which would allow it to tap into the digitally underserved segments such as SMEs and gig workers.

When contacted, MatchMove chief executive officer Shailesh Naik and chief investment officer Daniel Stuart-Smith, in a joint email, said that the company’s plans to secure a digital license has been regional in nature and not confined to the periphery of Singapore alone.

The company had placed its bid through its subsidiary firm PowerBank, which will “continue to pursue its regional business strategy to serve the underbanked SMEs and consumers of Southeast Asia,” their email read. “Investors in PowerBank were motivated by the company’s strategy with or without the MAS licence.”

Separately, the company said that Powerbank had raised a seed round last year.

They, however, did not address assertions on the company’s allegedly collapsed fundraise or its operational runway.

MatchMove raised just $21 million in 2020 compared to its reported target of $150 million by TechinAsia in 2019, which was tied to the digital banking license.

Its operational runway is expected to end as soon as the third or fourth quarter of this year, said another source on condition of anonymity. Its most recent financial statements show the firm to be highly unprofitable even though MatchMove has already been in operation for about 10 years.

Filings from Acra show that MatchMove saw a rather flat revenue growth, rising by just 2.7% year-on-year to $7.7 million in 2019. However, the firm’s net cashflow used in operating activities sunk deeper in the red, doubling to -$7.1 million from -$3.5 million over the same period the previous year.

In an email on April 9 stating its ‘Response to DealStreetAsia article’, the company said:

  • We do not anticipate that our operational runway will end in the third or fourth quarter of this year as you allege: on the contrary we expect to be self-sustaining by the end of the year
  • Our current fundraising activities are designed to accelerate our growth plans so that we can enter new markets and launch new products faster than if we self-funded

Road ahead

MatchMove is understood to be ardently scouting for avenues to raise funds to extend its runway to the end of 2022.

While the company is currently in talks to raise $15-20 million from strategics in Japan, Indonesia and Singapore, it is also eyeing merger opportunities with traditional banks and fintechs in Indonesia, Vietnam and the Philippines to expand its operations in the region.

“We can confirm that we are currently engaged with several potential investment targets in the region,” verified Naik and Stuart-Smith. “These are businesses that would be highly additive to MatchMove because of their complementary product set, or their market presence, or their distribution channels.”

Going forward, both Naik and Stuart-Smith expressed their optimism over achieving a path to profitability that will see MatchMove become “EBITDA positive in Q4 2021 and financially self-sustaining thereafter.”

“We believe that consolidation in the sector is going to accelerate and we hope to close one or more of these transactions in the next six months. We believe we are well-placed to do so,” they jointly wrote in the email.

In the past, MatchMove’s largest shareholder, Vickers Ventures, is understood to have considered merging the firm with its own $120 million Special Purpose Acquisition Company (SPAC) which it priced on the Nasdaq in January, but the plan was discounted due to conflicts of interest.

A Vickers Ventures spokesperson rejected the assertion to DealStreetAsia saying: “We would like to confirm that this is not true. MatchMove was never in consideration or discussion. Hence there was no truth in any reporting of conflict of interest.”

Separately, two sources also added that MatchMove had entered into early conversations with US-listed SPACs to exit, including one which would have allowed them to raise $400 million, but those efforts too failed to take off. One source within MatchMove felt that the company was still “too small” for the SPAC market which made that fundraising route less appealing for them.

In the April 9 email,  the company further stated:

  • Discussions with the SPACs that have approached us did not “fail to take off”: we chose not to engage with them as explained to you
  • Your allegation perjoratively implies that investors found MM uninteresting whereas the reality is that the company chose not to engage with the SPACs: these are two completely different implications

Acra filings show that Vickers Ventures has a roughly 32.9% stake in MatchMove across its third, fourth and sixth venture funds, making it MatchMove’s largest shareholder. Meanwhile, Japanese financial services company Credit Saison is MatchMove’s second-largest shareholder holding a 13.6% stake.

Other investors on its cap table include NTT Investment Partners, Singapura Finance and the Royal Monetary Authority of Bhutan. MatchMove has raised about $64.8 million in equity to date.

 

Enclosed is the full list of questions that DealStreetAsia had sent to MatchMove, and the responses from the company spokesperson.

  1. MatchMove was in talks last year to raise about $45-50m on condition that it would successfully secure the SG digital bank licence. When Matchmove lost the bid, the round collapsed. Is this true?

PowerBank, the MatchMove subsidiary that was the applicant for the digital banking licence in Singapore, successfully raised an unconditional Seed round prior to the award of the licences by MAS.

Our plans for PowerBank were always regional in scope and were not dependent on the award of the licence in Singapore. Investors in PowerBank were motivated by the company’s strategy with or without the MAS licence. PowerBank will continue to pursue its regional business strategy to serve the underbanked SMEs and consumers of Southeast Asia with a platform built on MatchMove’s proven technology.

  1. One source has told us that MatchMove’s operational runway is set to end around Q3-Q4 this year. Is this accurate?

In addition to our existing client base, MatchMove launched programmes with new anchor customers in Indonesia and the Philippines in Q4 2020. In Indonesia, we launched our programme with Bank BRI, the largest bank in the country. In the Philippines, we launched our programme with Home Credit, one of the largest microfinance organisations in the world. We also continue to add marquee clients in India, Singapore, and Vietnam.

We have a significant customer pipeline in all of our active markets, as well as more awaiting our planned new market launches. We will go-live in Hong Kong, Malaysia, and Bangladesh during Q2 and Q3 2021 to serve new clients who have either signed with us already or are in the final stages of negotiations.

Currently, in common with many growth-stage tech startups, we are loss-making at an EBITDA level as we invest in our technology and people to accelerate growth and open up new markets. Fortunately, our positive unit economics and forecast revenues mean we are on a path to profitability that will see us become EBITDA-positive in Q4 2021 and financially self-sustaining thereafter.

In addition to the new clients and markets already launched in 2021, or scheduled for launch shortly, our future growth plans features exciting new product extensions over the next 12 to 18 months that all our customers and end-users will be able to benefit from. Our product roadmap includes the build out of micro-credit, micro-insurance, and micro-investing capabilities in our platform. We are in advanced discussions with credit, underwriting, and investment platform partners to develop, contextualise, and distribute these new products. Our mission is to democratise access to the full range of digital financial services for the hundreds of millions of people across South and Southeast Asia who are currently underserved by the incumbent providers.

Our geographic roadmap sees us entering South Korea, Japan, and the Gulf region in 2022. We are in negotiation with potential customers and bank partners in these territories in anticipation of new market launches. Consumer and SME demand for embedded digital financial services is strong and growing in these countries and around the world.

  1. One source told DealStreetAsia that some investors have struggled to see MatchMove’s edge as a banking-as-a-service platform, especially when it came to competing against superapps like Grab, Shopee, Gojek. Do you agree?

MatchMove does not seek to compete with Grab, Shopee, or Gojek. They are excellent organizations that have blazed a glittering trial for Southeast Asian tech companies to follow, however, we do not believe that any of them present themselves as Banking-as-a-Service (BaaS) platforms.

MatchMove is a B2B BaaS technology provider to organisations that wish to embed white-label digital financial services in their own existing platforms. We exist to serve our clients and to enable them in turn to better serve their end-users (either consumers or SMEs).

The advantages that our clients get from integrating our platform include a seamless payment experience, improved customer understanding, and enhanced revenue streams (amongst many others). Our clients own the branding of their MatchMove-powered payment solutions and they also own the customer data generated, enabling them to better serve their end-users.

We do not compete in the “SuperApp” space, but we do enable others that may wish to do so. The investors that we engage with understand very clearly the embedded digital finance market that we address. We have not had any discussions with investors where there was any confusion on this point. We are proud of our ability to turn any organization into a financial services provider overnight.

  1. One source that Vickers Ventures (MatchMove’s largest shareholder) had at one point considered merging MatchMove with its SPAC. Is this accurate?

We do not speak for Vickers Venture Partners and therefore cannot comment on any plans they may or may not have for their SPAC.

However, we note that we have not had any discussions with them about merging MatchMove with their SPAC and have no reason to believe they have considered such a plan.

  1. MatchMove had also been approached by SPACs to raise as much as $400 million but talks didn’t bear fruit. MatchMove had internally felt that the firm was too small for the SPAC market and so made that particular route less appealing for them. Is this true?

In common with many private Southeast Asian companies operating in attractive sectors such as fintech, we have been approached by several SPAC sponsors or their representatives over the last few months. Although it is of course flattering to be considered an exciting investment target by managers of large pools of capital, we believe that our growth trajectory and our shareholders are better served by MatchMove remaining as a privately held company for the time being. We note that remaining private while investing for growth has been the path followed by many of the world’s largest and most successful tech companies over the last 15 years.

We are fortunate to enjoy the support of a world-class set of shareholders who believe in our long-term vision and value potential.

  1. MatchMove plans to conduct M&A in 2021, especially traditional banks/fintechs in markets like Vietnam, Philippines and Indonesia. Is this true?

We have a strong reputation in the B2B fintech space in South and Southeast Asia. We are fortunate to be viewed in a positive light by other fintechs and by investors, advisors, and regulators in the region. As a result of this, we are often approached about potential investments, acquisitions, and mergers with complementary businesses.

We have an active screening programme for potential M&A opportunities. We also have a successful track record of investing. For example, we are particularly delighted by the fantastic growth and success of our friends at Shopmatic Pte. Ltd., a business that we invested in last year.

We can confirm that we are currently engaged with several potential investment targets in the region. These are businesses that would be highly additive to MatchMove because of their complementary product set, or their market presence, or their distribution channels. We believe strongly that inorganic growth, executed skillfully, is a powerful way to achieve significant growth in shareholder value and to provide exciting opportunities for customers and employees to benefit from our enlarged horizons.

We believe that consolidation in the sector is going to accelerate and we hope to close one or more of these transactions in the next six months. We believe we are well-placed to do so.

 

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.