Validus, a Singapore-based SME lending platform, secures $50 million in debt financing to help businesses in Indonesia

Validus, a Singapore-based small and medium-sized enterprise lending platform, has raised $50 million in debt financing from HSBC under its ASEAN Growth Fund strategy.

Validus will use the funds raised to support the financial inclusion of micro, small and medium-sized enterprises (SMEs) in Indonesia by addressing the challenges they face in accessing finance.

With 64.2 million SMEs contributing 61% of Indonesia’s GDP, according to the Indonesian Ministry of Economic Affairs, the potential for growth is huge. These SMEs employ about 119.6 million people, accounting for 97% of the country’s total workforce. However, only about 17.5 million SMEs use the online ecosystem and e-commerce. Indonesian SMEs face significant challenges in accessing finance, largely due to the stringent operational, reporting and security requirements of commercial banks, according to a 2017 World Bank report. Despite government initiatives, only about 20 percent of bank loans go to SMEs, the World Bank report said.

Vikas Nahata (CEO) and Nihkilesh Goel co-founded the company in Singapore in 2015. They developed a supply chain-focused lending model that leveraged custom data access through partnerships with traditional banks and international institutions. The company has since expanded to include Indonesia (Batumbu), Thailand (Siam Validus) and Vietnam (Validus Vietnam).

“Traditional banks in the SEA region still rely on traditional methods of credit assessment for small businesses and are overly dependent on historical financial data and collateral secured by real estate,” Goel said. “In a region where GDP is growing at 5-6% annually, small businesses need access to stable and affordable working capital to grow their businesses and contribute to job creation and nation building. This is where Validus plays a major role as the largest provider of financing to small and medium-sized enterprises in the entire ASEAN.”

Its users are SMEs that borrow mainly for short-term working capital needs, Goel told TechCrunch, while lenders include large international institutions (Citi, HSBC, FMO, Credit Saison, OikoCredit) and leading local banks (CIMB Niaga, Bank Mandiri) in Indonesia and Thailand. Goel mentioned that one of its differentiators is its 100-plus unique partnerships across the Southeast Asian region.

“Validus is the largest SME financing marketplace in the Southeast Asian region in terms of outstanding loans or monthly loan disbursements. We currently disburse an average of $150 million in new loans per month,” Goel said.

Over the past three years, the startup has seen growth in both revenue and net profit.

“We have grown our consolidated Group revenue by 69% CAGR over the last three years and more importantly, our Indonesia business, which is our largest market out of the four countries we operate in, has been net profit positive and cash flow positive for the Group since 2022,” Goel told TechCrunch. “Our EBITDA margins are over 50% and at the consolidated Group level, we are targeting cash flow positive by early next year.”

The company employs more than 300 people in five countries but did not disclose how many customers it has.

It has raised approximately $75 million in total equity funding. Its previous investors include Vertex Ventures Southeast Asia and India, Vertex Growth, FMO, 01Fintech, NongHyup Financial Group, Norinchukin Bank, Aizawa Asset Management, and Lotte F&L.