Validus, a pioneering digital lending platform based in Singapore, has successfully obtained $50 million in debt financing through HSBC as part of the ASEAN Growth Fund strategy.
This financial injection is aimed at bolstering the financial inclusivity of micro, small, and medium enterprises (MSMEs) in Indonesia, specifically targeting the obstacles these enterprises encounter in securing financial backing.
Indonesia’s economy significantly benefits from the contributions of its 64.2 million MSMEs, which account for 61% of the nation’s GDP, as reported by Indonesia’s Ministry for Economic Affairs. These enterprises also provide employment to about 119.6 million people, representing 97% of the country’s total workforce. Despite their major role, a small fraction, approximately 17.5 million MSMEs, are leveraging the online ecosystem and e-commerce platforms. A major hurdle for Indonesian MSMEs in acquiring financing arises from the rigorous operational, reporting, and collateral prerequisites imposed by commercial banks, a 2017 World Bank report highlights. Additionally, despite various government-led initiatives, a mere 20 percent of bank loans are extended to MSMEs, according to the report.
Founded in Singapore in 2015 by Vikas Nahata (Executive Chairman) and Nihkilesh Goel (CEO), the duo introduced a supply chain-focused lending approach that capitalizes on non-traditional data through collaborations with both traditional banks and global institutions. The company’s footprint has since widened to encompass Indonesia (Batumbu), Thailand (Siam Validus), and Vietnam (Validus Vietnam).
Goel emphasized the critical role of Validus in the SEA region, highlighting the reliance of traditional banks on outdated credit evaluation methods for small businesses, including an excessive dependence on historical financials and real estate-backed collateral. “For a region experiencing consistent GDP growth, there is an urgent need for small businesses to access stable and readily available working capital to not only grow but also to contribute significantly to job creation and the economic development of their countries,” said Goel.
Validus serves primarily MSMEs in need of short-term working capital, with a lender base that includes major international and local banks across Indonesia and Thailand. According to Goel, Validus is distinguished by over 100 unique partnerships throughout Southeast Asia, affirming its position as the region’s leading SME financing marketplace in terms of both outstanding loan book and monthly loan disbursements, currently averaging $150 million.
In the last three years, Validus has seen commendable growth in both revenue and net profits, with the Indonesian market playing a key role. “Our Indonesia business, being the largest market among the four countries we operate in, has been net profit positive since 2022, contributing positively to the group’s cash flow,” stated Goel.
The company boasts a robust team of over 300 staff members spread across five nations. While exact customer numbers remain undisclosed, Validus has raised a total of approximately $75 million in equity funding. Its list of past investors includes noted names such as Vertex Ventures Southeast Asia and India, Vertex Growth, FMO, and several others.
With its Series B+ round, Validus raised an additional $20 million, earmarking these funds for further growth and expansion within the Southeast Asian market.