Existing investors Crystal Horse Investments and CE-Tech Invest also participated in this round, and the company said it would use the funds “for product development, marketing and sales activities”.
Capital Match, which had launched operations in April this year, says its objective is to provide borrowers with the next best interest rates after banks, and give investors access to an attractive yield with a low investment entry amount.
It targets loan sizes ranging from S$50,000 to S$200,000, with tenures of 3-12 months, and interest rate of 1.5 per cent – 2.5 per cent per month.
The company’s business case is based on the fact that while SMEs represent 99 per cent of businesses in Singapore and employ 70 per cent of the workforce; collectively they only receive 27 per cent of business credit. This is because the traditional banks focus their attention on large multi-national business customers. At the same time, individual investors looking for attractive rates of return have few options.
Peer-to-peer lenders therefore offer value proposition to both sides by facilitating the flow of capital from investors to SME borrowers, generating fixed income returns to the former and providing working capital to the latter.
Along with the Series-A investment, Innosight Ventures’ partner Pete Bonee is joining the board of directors of Capital Match. Said Bonee: “Capital Match has identified an opportunity to solve a big market inefficiency with an innovative technology solution.”
Pawel Kuznicki, founder and CEO of Capital Match, said, “The peer-to-peer lending model has been taking off around the world. We are thrilled to be bringing this model to Singapore and serving the needs of SMEs in this dynamic economy.”
Innosight Ventures is the strategic investment arm of US-headquartered Innosight Consulting.
The Capital Match deal could also be the last investment from Innosight’s $10 million IDEAS fund. It is also learnt that as of 31 December 2014, IDEAS has achieved a multiple of 1.44x, and its net IRR as of that date was 15.77 per cent.
Innosight Ventures has also began sounding out investors on plans to raise a new $50 million fund, to make series A investments in technology, media and telecommunications companies, a development that was reported exclusively by DEALSTREETASIA earlier.
So far, Innosight Ventures had been making seed investments of up to half a million Singapore dollars in local tech startups, and also co-investing with other VCs. The average ticket sizes under the new fund – Innosight Ventures SE Asia Fund I – will be $1-3 million, and the company also plans to set aside capital for follow-on investments from this vehicle, this portal had reported earlier.