SE Asia fintech company Funding Societies [also known as Modalku in Indonesia] has bagged $7.5 million in debt financing from Norwegian government sovereign wealth fund Norfund, according to a company statement.
Norfund operates an investment fund for developing countries. The financing marks Norfund’s first debt transaction with a fintech lender focused on small and medium enterprises [SMEs] in SE Asia.
Funding Societies will channel the funds through its financing solutions to the SME segments across all of its five markets. “We’re honoured to partner with Norfund, backed by the Norwegian government,” said Funding Societies co-founder and Group CEO Kelvin Teo in a statement.
The funding not only represents the company’s credit track record through the pandemic and macro uncertainties, but it is also an opportunity to fill the capital needs of more underserved SMEs in the region, Teo continued.
Impact investments by development finance institutions (DFIs) in SE Asia amounted to about $2 billion annually between 2017 and 2022, or over $12 billion. More than half of these investments were channeled into the financial services sector, with the majority of capital deployed through debt instruments. Due to its steady financial position, DFIs can support SMEs.
One of Norfund’s core areas of investments is to increase financial inclusion where it has contributed about $4.54 billion in lending to 7.5 million clients to date. Meanwhile, Funding Societies has reached over $3.2 billion in business financing serving about 100,000 SMEs.
“We’ve been impressed with how Funding Societies has been able to serve SE Asia’s underserved businesses with its broad range of financing solutions and solving cash management challenges faced by these SMEs,” said Fay Chetnakarnkul, Norfund’s Regional Director (Asia).
Founded in 2015 by Teo and Reynold Wijaya, Funding Societies is licensed in Singapore, Indonesia, and Thailand, registered in Malaysia, and operates in Vietnam. It offers microloans from $500 to $1.5 million that can be disbursed within 24 hours, suitable for small businesses looking to manage their cash flow.
Last month, the company also raised $27 million in debt funding led by Asia-focused private credit financier AlteriQ Global.