SME Loans

Catalysing Growth: SME Interview Series with Validus Capital

Founded in Singapore in 2015, Validus has quickly become one of Singapore's leading crowdfunding business lenders. We conducted an interview with the company to learn more about its success and future plans.

Validus is a successful, Singapore-based startup that specialises in crowdfunded business loans. So far, the platform has generated S$132,824,551 in business loans for Singapore's SMEs. Validus leverages its expertise in data analytics, machine learning and artificial intelligence (AI) in order to minimise fees and logistical hurdles for both borrowers and investors. We reached out to Validus to learn about what else has made the company so successful as well as to hear their tips for aspiring startups in Singapore.

When did Validus begin its operations?

Validus was founded in July 2015. We've since built a highly experienced team and have scaled our operations up more than 400% in the last 2 years.

When and how did Validus first obtain funding? How long did it take to raise funding?

In July 2017, through a Series A round to raise funds for technology initiatives and to finance expansion into new markets in Southeast Asia. Vertex (member of Temasek Holdings) was the lead investor, and it took us 3 months to close the round.

What was the biggest challenge that Validus had to overcome to raise capital? What strategy, tactic or know-how was the most helpful in convincing investors to invest in the company?

Ensuring strategic alignment and finding the right fit in terms of our values and goals were key, and we also evaluated the non-capital ‘value-add’ that VCs could bring to start-ups. Our experienced management team (with over 200 years’ cumulative experience in finance) was key in convincing the investors. Also, we are the only platform in Singapore to have insurance for our lenders for invoice financing products.

How does Validus help businesses better manage their finances?

Validus’ smart marketplace empowers SMEs by connecting them to short-term financing to manage and maximise their cash-flow. With zero-collateral financing and affordable interest rates, our platform connects businesses to Institutional and Accredited Investors quickly and efficiently.

How does Validus distinguish itself from Singapore's other crowdfunding platforms?

We’re led by a highly experienced team, and have developed a robust risk algorithm in partnership with the Credit Research Initiative Team of NUS-RMI. In utilising machine-learning and AI to fund growing businesses, our team of data scientists analyses and utilises new, complex datasets that uncover new insights into local businesses, help us make better informed lending decisions and predict needs for businesses as they win new contracts and project.

Our data-driven, collaborative approach to business lending also mean we’ve forged strong industry partnerships to deliver innovative financing solutions, e.g. with Visa as their regional B2B lending partner; launched a partnership with a global bank in Singapore. In addition to being licensed and regulated by the Monetary Authority of Singapore, we’re also an approved financing partner on GeBIZ (Singapore Government’s one-stop e-procurement portal). Finally, a big differentiator for us is the ability to lend at bank-like rates given our institutional lenders. We are also the only platform in Singapore to have a $20M fund dedicated to lend to SMEs, which can be scaled to $200M.

What advice would you offer to other startups in Singapore who are looking for ways to finance their businesses and operations?

There are many options to finance your business and it will depend on your specific business needs. It’s very important to do your homework and find out what the available options are. For most small businesses, short-term financing could be more suitable to complete a job or take on new projects. However, sometimes longer-term financing may be necessary. Also, cash flows are important. Do not fund long-term cash flow needs through short-term financing options. This mismatch could be very difficult for a business to manage.

Did Validus consider any other locations besides Singapore as its headquarters? Why/why not?

Singapore was our first choice – from our Singapore base, we have the advantage of being in one of Asia’s financial centres with the security of robust IP protection. In addition, Singapore’s world-class infrastructure and digital ecosystem provided good support for businesses to create, commercialise and scale internationally, something we could tap into and leverage in our mission to help SMEs grow. We’re also expanding into Indonesia later this year and the next one has been planned for 2019, which is still in the works.

What makes Validus' work most challenging? Rewarding?

Being able to leverage technology and data to help local businesses grow has been hugely rewarding. SMEs on our platform are experiencing 20% annual growth on average, 10 times Singapore’s GDP. We’ve seen businesses who have had to forgo opportunities to grow and expand simply because they weren’t able to access flexible and affordable financing, or some who have struggled tremendously because of business loans that weren’t the right fit for them. The most rewarding experience is to see our SME borrowers grow their business (20% year on year on average) and use Validus to finance their growth.

To learn more about crowdfunding companies or how your business can obtain an SME loan, please refer to our website or follow us on Facebook. If you are interested in sharing your small business's story, please reach out to us at [email protected], we'd love to hear from you!

William Hofmann

William is a Product Manager at ValueChampion Singapore, helping consumers and SMEs find the best banking products through comprehensive analysis of data. He previously was an Economic Consultant at Industrial Economics Inc, where he conducted a variety of research and economic analyses. He graduated from University of Vermont with degrees in Economics and Psychology. His work has been featured on a variety of major media such as the Straits Times, the Business Times, the Edge, DailySocial, the Entrepreneur and more.