Singapore VC Majuven backs Myanmar-focused Daung Capital’s Series A

Photo: Daung Capital.

Myanmar-focused financing platform Daung Capital has announced the final close of its undisclosed Series A investment round this week, roping in Majuven, an early- and growth-stage venture capital firm from Singapore as a new investor.

The deal marks Majuven’s first investment in Myanmar. The VC firm typically bets on Asian businesses that are focused on sustainable technologies such as energy, water, and food.

With the Series A round now closed, Daung Capital’s post-money valuation has reached S$16.5 million ($11.9 million).

The startup announced the first close of its Series A round last month backed by Myanmar-based BOD Tech Ventures and led by tech investor Mike Than Tun Win, among others.

Daung Capital allows Myanmar users to purchase motor vehicles and electronics goods through a rent-to-own agreement. People can rent a product for a specific time with an option of subsequently purchasing it.

The platform also provides corporate financing for Myanmar SMEs and cash advances for salaried workers.

“We see steady growth in all product lines. Daung Capital’s mandate is to finance productive consumption. No one should be making use of Daung Capital to buy unproductive electronics or borrow beyond their means,” said Daung Capital founder Leon Qiu.

“Lim Ho Kee (managing partner of Majuven) brings to the table a wealth of experience and expertise, something Daung Capital will capitalise on to make improvements across our business lines,” said Qiu.

The startup claims it has financed about 2,900 motorbikes in the country and has got about 3,500 active borrowers.

Taking part in Myanmar’s financial inclusion

The startup is targeting the vast unbanked population in Myanmar who face low credit access.

According to a World Bank survey in 2017, credit access was the most commonly cited challenge facing companies in Myanmar.

Daung Capital seeks to expand its product base of white goods that are a priority for blue collared workers. It has items such as kettles, rice cookers and refrigerators on the list.

Myanmar’s fast-growing mobile internet penetration is also what Daung Captial is leveraging on to grow its business.

“I am confident that our tech-centric operating model is suited to the Burmese climate,” said Qiu.

“Myanmar is incredibly connected. Mobile subscription rates are at 105%. Everyone is on 3G. The takeaway here is that if Daung Capital were to be a tech-enabled lender, we have the potential to scale immensely, and transfer operational savings to the end borrower,” he said.

Alleviating risk in microlending 

On mitigating the risks associated with microlending, Daung Captial claims the startup employs a slew of measures that make stakeholders have their ‘skin in the game’.

“Whether it is motorcycle dealers having to guarantee the loan, or borrowers having a personal guarantee, we are able to mitigate many credit risks,” he said.

Daung Capital also has a proprietary system that enables dealers to onboard borrowers digitally to help manage demand. Solutions such as facial and optical character recognition are some of the key features of the platform’s onboarding process.

Other startups operating in a similar space include Rent 2 Own (Myanmar) that provides motorcycle rental service. It recently raised $3 million in debt financing from Incofin CVSO.

Besides, there is GL-AMMK, a consumer finance company that provides loans to facilitate the purchase of motorcycles, agriculture machinery and access consumer finance credit.