Singapore-based online financing platform Validus Capital has launched an S$20 million ($14.92 million) SME financing fund in partnership with asset and wealth manager Lighthouse Canton Group.
The fund, dubbed the LCV Trade Finance Fund, will eventually be scaled up to S$200 million ($149.19 million), said Validus Capital in a statement.
“Validus Capital’s curated online financing platform is helping responsible corporates in Singapore help their SME vendor base and ensure SME vendors have access to growth capital at bank-like rates. Our collaboration with Lighthouse Canton ensures that we bring strong, stable and reliable investors on our platform to support the ever-growing financing need of Singapore SMEs,” said Validus Capital co-founder and CEO Ajit Raikar.
While Lighthouse Canton co-founder and chief investment officer Rajesh Sundaresan said: “SME financing is a lucrative and exciting space that we have been exploring for some time now. This investment opportunity is rarely accessible to investors. With the launch of this fund, we will bridge this gap between demand and supply which until now was being intermediated by the banking channels. This investment, while offering better returns than similar duration fixed income investments, will also allow investors to diversify their fixed income portfolio outside of large corporate exposure.”
The Monetary Authority of Singapore-licensed financing platform claims to be one of the leading SME financing marketplaces in Singapore, having disbursed over S$85 million ($63.4 million) in the past 24 months.
Against the backdrop of an S$20 million SME financing gap in Singapore, Validus Capital aims to finance at least S$1 billion ($750 million) of the gap in the coming three years.
In an email interaction with DEALSTREETASIA, Ajit said the platform is growing between 20 per cent and 25 per cent monthly, or 400 per cent year-on-year in terms of disbursements.
“We are already doing about S$10 million ($7.46 million) of financing in Singapore each month. Going by current growth, we expect to reach disbursements of S$200 million per annum in 12 to 14 months’ time, across the geographies that Validus Capital will be present in.
“We are starting Validus Indonesia in July 2018, and another country in January 2019. We would look to raise Series B, possibly by end of this year, with only a few strategic investors,” he said, adding that Indonesia is a huge untapped market for SME financing – five times the size of Singapore.
According to Ajit, the use of machine learning, and AI technology in identifying and underwriting small businesses will be another big area of investment for Validus Capital.
“Validus Capital uses machine-learning and AI to unleash new insights into local businesses. The team of Validus data scientists analyses and utilises new, complex datasets that will help make better-informed lending decisions and predicting needs for local businesses as they win new contracts and projects,” he added.