Singaporean debt-based crowdfunding platform New Union has raised S$660,000 ($489,754) for interior design firm Mezzo Interiors, one of the largest sums raised to date on the business financing platform.
Mezzo founder Lee Yue Cheng stated: “Receiving this injection of funds from New Union comes at an opportune time. We are in the midst of expanding our team in order to cope with the upcoming series of alteration and addition and rebuild works we have secured, together with a few overseas projects in Cambodia.”
With this infusion of capital via New Union’s platform, Mezzo expects to triple its annual turnover. Lee added, “We are grateful for this alternative source of funding, as previously seeking a loan from a bank was difficult, due to the fact that we are a young business that did not meet their minimum criteria.”
In a Business Times report, New Union co-founder Eddie Lee said, “This shows the success of our model, as it has worked well for Mezzo such that they have come back to us. (The S$660,000 financing was done through three tranches). Through crowdfunding, we hope to help aspiring SMEs elevate their business standing and have their needs addressed by the local banks in future.”
Lee cited the Mezzo as a model of how SMEs could leverage crowd-lending in the BT report, explaining “Many of their renovation projects are for large corporate clients, and they will not get full payment until the project is finalised. When they take on financing, they are able to preserve cash flow for actual operations of the business.”
To date, New Union has raised over S$21 million in 82 deals for 40 local SMEs and more than S$170 million for nearly 500 SMEs in Asia.
To-date, all New Union applicants have repaid their loans within the stipulated duration, typically a three to six month period. Most of these are SMEs in the engineering, construction, services, fast moving consumer goods, food and beverage (F&B), healthcare, IT services, wholesale, retail and property sectors.
This puts it ahead of competing crowdfunding platforms like Capital Match and MooloahSense. Capital Match, which launched in April 2015, has raised S$950,000 for seven SMEs. MoolahSense, which launched in November 2014, has financed S$811,000 in four companies.
New Union developments
Launched in February 2014 with the aim of connecting local SMEs seeking short-term financing with individuals and businesses interested in making short-term investments, other Singapore-based crowdlending platforms competing against New Union are Capital Match and MoolahSense, which allow investors to lend directly to businesses in exchange for a fixed return.
However, New Union differs from them in only allowing accredited and institutional investors to participate in the funding process. New Union‘s platform sees SMEs obtaining loans at pre-determined interest rates, with some rates being as low as 8 per cent per annum. Typically, they can secure investors within two weeks of applying.
New Union has raised what it termed “a couple of million” in an angel funding round. Angel investors include Ivan Lee, co-founder of Thai Express and director of New Union, who divested in controlling stake in Thai Express for S$80 million.
New Union is currently seeking to perform is Series A, with a target value of S$10 million, in order to raise growth capital for expansion into other ASEAN markets.
Commenting on the latest deal, Ivan Lee stated: “New Union’s sterling track record and explosive growth makes it an automatic choice for investors. Their management team is young, dynamic and also visionary. In a short span of time, New Union is already the market leader in the crowdfunding space which is the biggest thing for Asia right now.”
Recently, New Union, real estate crowdfunding platform CoAssets and Swedish crowdfunding platform FundedByMe formed a strategic partnership intended to grow the crowdfunding industry in Southeast Asia. According to BT report, this alliance plans to crowdfund an upcoming campaign jointly conducted across all three crowdfunding platforms sometime in late 3Q 2015.