Starts Operation, Modalku Thailand Receives Initial Funding of 500 TukTuk

Funding Societies (known as Modalku in Indonesia) announced the start of operations in Thailand, after obtaining a license through crowdfunding from Thailand Securities and Exchange Commission (SEC) in February 2021. Simultaneously, the company obtained initial stage funding with an undisclosed amount of 500 TukTuk.

Apart from Modalku, the company fintech Others who are also working on the same opportunity in the regional arena are investree. In addition, there is Danacita which is already present in Thailand.

500 TukTuk is a venture capital part of 500 Startups which focuses on early-stage funding for startups spread across Thailand and CLMV (Cambodia, Laos, Myanmar, and Vietnam).

Country Head of Funding Societies Thailand Varun Bhandari said, the company's vision is to always serve credit-worthy SMEs while growing wealth for investors. “[..] We believe that this will pave the way for Funding Societies to become the digital lender of choice for SMEs,” he said in an official statement.

Partner 500 TukTuk Krating Poonpol added, fintech is one of the up-and-coming industries that has grown exponentially in recent years. In Southeast Asia, there are many startups fintech which is successful due to many different factors including its large market size, size of the population, established financial institutions, and businesses that are open to new technologies and innovations.

We see an opportunity for Funding Societies to grow exponentially with its capacity to solve the challenges faced by SMEs and startups in the region. "We strongly believe that Funding Societies can strengthen the Thai economy by offering solutions for entrepreneurs in Thailand," he said.

Since launching in Thailand, Funding Societies has funded local Thai SMEs and startups of up to more than THB100 million (approximately 42 billion Rupiah) at affordable prices, with no bad credit. Also, partner with Central Retail, NocNoc, Freshket, and Accrevo as Actioncalendar the institution.

Funding Societies offer short-term financing to businesses, connecting them to retail and institutional clients seeking attractive alternative investment opportunities. In Thailand, there are more than 3 million SMEs operating in various industries, and more than 60% of them have experienced a decline in income due to the pandemic.

Many of these SMEs do not have access to adequate funding from traditional financial institutions. As small businesses are the backbone of the economy, Funding Societies is committed to bridging the SME financing gap in the region by providing flexible loan products to meet working capital and expansion needs such as invoice financing, PO financing, project financing and term loans of up to THB 50 million (approx. 21 billion Rupiah).

Modalku Group was founded in 2015 to address the S$300 billion SME funding gap, with the strong belief that every eligible SME deserves funding. Over the last six years, the company has disbursed more than THB 58 billion (over 21 trillion Rupiah) through 4,8 million loans to more than 70.000 SMEs throughout the Southeast Asia region.

Level defaultit remains less than 2% during the pandemic, supported by an AI-led credit scoring model. Platformit has been trusted by regional partners such as Lazada, Shopee, CIMB, and FoodPanda, to fund SMEs in the supply chain, such as suppliers, distributors or merchants.

MSME Market in Southeast Asia

Based on a study by the Asian Development Bank entitled "Asia Small and Medium Sized Enterprise Monitor 2020", MSMEs accounted for an average of 97% of all types/scale companies, 69% of the total workforce, and 41% of the country's gross domestic product (GDP). during 2010-2019.

The Covid-19 pandemic in 2020 exacerbated the already increasing global trade tensions and economic uncertainty in the region. In many ways, MSMEs hold the key to economic recovery in developing Asia.

Indonesia is a country in Southeast Asia that has the largest number of MSMEs in the region with 64 million, followed by Thailand with 3,5 million, and the Philippines with 1,2 million MSME units.

MSMEs are a major and important force to drive the Southeast Asian economy. The number is 97% of the business world and absorbs 97% of the national workforce in the period 2010 to 2019. MSMEs also contribute an average of 41% of GDP for each country in the same period.

However, there are still many business actors who do not have access to financing. Many of them are considered ineligible to borrow from banks and have no credit history.

Fintech can make it easier for MSMEs to optimize the effectiveness and efficiency of business operations, as well as make it easier for MSMEs that do not have sufficient requirements to access banking financing, in accessing working capital financing.