Unlocking Sources of Capital for SMEs: Interview with P2B platform SmartFunding

ISSUE #63 – Access to external financing is an ongoing need of SMEs. Sandra Ernst, CEO of peer-to-business invoice financing platform SmartFunding shares her thoughts on Singapore’s FinTech landscape.

 

Many experts and industry observers see great potential in Singapore becoming Asia’s FinTech capital. What are your thoughts?

Singapore is definitely a key player in the global FinTech landscape. FinTech players here are in a good position to develop and cultivate novel and innovative products and services, thanks to the country’s strong background in tech and financial services, and a generous and supportive government.

And there’s the growth part. Just looking at FinTech applications on alternative finance, Singapore is already the market leader, having generated USD70.28m or approximately 84% of online alternative market volume between 2013 and 2015 in the APAC region (excluding China) [1]. Compared to the overall SME financing market this is a tiny amount, though it has grown rapidly since then, and will continue to do so in the future. With its position as a trading hub, highly educated workforce and supportive government that encourages digitalisation, Singapore is ideally positioned to be a test case (and possibly more if companies can leverage on cross border transactions) for FinTech startups that develop solutions for companies in the region.

Singapore is also leading the way for the growth and expansion of FinTech into many other areas like insurance, healthcare, and regulation. FinTech companies in Singapore, however, will need to work a little harder to tackle the immediate, bigger market in the region, South East Asia.

Singapore is definitely a key player in the global FinTech landscape.

What is the story behind SmartFunding?

The idea for SmartFunding began in April 2016. Seeing that SMEs are finding it more and more difficult to access finance in Singapore and in South East Asia, our main shareholder identified a potential for further disruption in the market. After several months of preparing our back office, operations, processes and IT development, we finally launched our web platform in November.

Focusing on implementing best practices from the early stage, we applied for a Capital Markets Services (CMS) licence, for which we received in-principle approval in April 2017. We also implemented an Escrow account structure with Vistra, our Escrow agent, to keep our client’s money separate from SmartFunding’s operations accounts.

After having put these important safeguards in place, we now focus on growing our business and deal flow – encouraging more investors to invest on our web platform and onboarding more SMEs as invoice sellers.

Seeing that SMEs are finding it more and more difficult to access finance in Singapore and in South East Asia, our main shareholder identified a potential for further disruption in the market.

Much has been said about FinTech start-ups as disruptors. How do you see the relationship between start-ups likes yours and traditional players in the ecosystem in Singapore?

Disruption is a big word and depends on how quickly the relevant players are willing to be disrupted. The ability of FinTech companies to disrupt also depends on how quickly digitalisation and automation happen.

Disruption for us doesn’t only mean targeting the same market as banks and offering a different service. For us, disruption – if we have to use this word – means serving underserved or unserved customers. When it comes to SME finance, nearly half of SMEs in Singapore consider themselves underserved or unserved by the financial sector. And if we look at the rest of South East Asia, the percentage of unserved or underserved SMEs is even bigger.

There is obviously room for cooperation between incumbents and FinTech companies like us. We truly believe in creating partnerships and leveraging the strength of both FinTech companies and incumbents, and achieving positive changes in the market.

We truly believe in creating partnerships and leveraging the strength of both FinTech companies and incumbents, and achieving positive changes in the market.

What are the next steps for your company?

Setting up operations and preparing for scaling up has been our focus in the last few months. We are now in a high-growth phase. Up to the end of 2017, we will focus on the current product (invoice financing) and the current territory (Singapore). Next year will be the year of product and geographical expansion.

Meanwhile, we are looking at some changes to our business model and differentiation factors, but to learn more about it, you will have to wait for a few months.

 

 

 


[1] Report: Harnessing Potential: Asia-Pacific Alternative Finance Benchmarking

Cover Photo Source: Tech in Asia

 

Founded in Singapore, SmartFunding is a platform that provides trustworthy alternative financing solutions that are 100% focused on small and medium businesses, so that taking out term loans is no longer necessary for dealing with the tightening credit conditions.

 

Interview with Sandra Ernst, CEO of SmartFunding

Published in FOCUS Magazine — Issue #2 2017 “Future Economy”

 

 

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