Validus, a digital lending platform for small and medium businesses based in Singapore, has successfully secured $50 million in debt financing from HSBC as part of their ASEAN Growth Fund strategy.
Validus plans to utilise the funds to assist in the financial inclusion of micro, small, and medium enterprises (MSMEs) in Indonesia. This initiative aims to tackle the obstacles these businesses encounter when trying to access financial resources.
Given the staggering 64.2 million MSMEs in Indonesia and their significant 61% contribution to the country’s GDP, it is clear that there is a tremendous amount of room for growth. These MSMEs support a significant portion of the country’s workforce, employing approximately 119.6 million individuals, accounting for 97% of the total workforce. Regrettably, only around 17.5 million MSME players are underutilising the online ecosystem and e-commerce. According to a report by the World Bank in 2017, Indonesian MSMEs encounter considerable difficulties in obtaining financing. Commercial banks’ strict operational reporting and collateral requirements are primarily responsible for this. The World Bank reports that, despite government efforts, MSMEs receive only 20 percent of bank loans.
Validus growth over years
Vikas Nahata and Nihkilesh Goel joined forces to establish the company in Singapore back in 2015. They created a lending model with a strong focus on supply chain, using innovative data access methods through partnerships with traditional banks and international institutions. The company has now grown to encompass Indonesia (Batumbu), Thailand (Siam Validus), and Vietnam (Validus Vietnam).
“In the SEA region, traditional banks continue to depend on outdated credit evaluation methods for small businesses. Their reliance on historical financials and real estate-backed collateral is excessive,” Goel commented. Small businesses in a region with a steady GDP growth of 5–6% per year require reliable and easily accessible working capital to expand their operations and play a vital role in job creation and nation-building. Validus is a significant player in the ASEAN region, serving as the leading provider of digital SME financing.
The target audience for this platform consists of MSMEs seeking short-term working capital loans. The lenders on the platform include prominent international institutions such as Citi, HSBC, FMO, Credit Saison, and OikoCredit, as well as leading local banks like CIMB Niaga and Bank Mandiri in Indonesia and Thailand. One of its key strengths was Goel’s extensive network of over 100 exclusive partnerships across the Southeast Asia region.
“Validus is the leading SME financing marketplace in Southeast Asia, with an impressive track record of outstanding loan books and monthly loan disbursals,” stated Goel. “Currently, we are consistently achieving $150 million of new loan disbursals per month.”
Image Credits: Validus
Over the past three years, the startup has seen a significant increase in both revenue and net profits.
“In the past three years, our consolidated group revenues have experienced a remarkable 69% compound annual growth rate. What’s even more impressive is that our Indonesia business, our largest market among the four countries we operate in, has been consistently profitable since 2022 and has contributed positively to the group’s cash flow,” Goel shared with Eltrys. Our EBITDA margins exceed 50%, and our goal at a consolidated group level is to achieve positive cash flow by early next year.
The company boasts a workforce of over 300 employees spread across five different countries, although it has chosen not to reveal the exact number of customers it serves.
It has successfully secured a total of $75 million in equity funding. The list of previous investors is quite impressive, with names like Vertex Ventures Southeast Asia and India, Vertex Growth, FMO, 01 Fintech, NongHyup Financial Group, Norinchukin Bank, Aizawa Asset Management, and Lotte F&L.
