Startup Modalku Continues Regional Expansion to Vietnam

Modalku Group inaugurated its business expansion in Vietnam. This move marks the fifth expansion of the Modalku Group in Southeast Asia after Indonesia, Singapore, Malaysia, and Thailand, to accommodate MSME players who have limited access to capital.

Meanwhile, Modalku Group has been operating in Vietnam since December 2021. To date, the company has disbursed more than $20 million in loans, and the amount will be increased to $90 million this year.

With this expansion, Modalku Group will serve MSMEs in various sectors, such as education, retail, technology, and FMCG, by offering trade finance, inventory financing, receivables and debt financing products in Ho Chi Minh, Hanoi, and beyond.

“This is the right momentum to build a solid team and secure funding considering the global pandemic situation is starting to decline. We believe Vietnam will become one of our biggest markets by looking at its potential,” said Modalku Co-Founder & CEO Reynold Wijaya in his official statement.

Since the Covid-19 pandemic, access to capital has hampered the growth of MSMEs in Vietnam. Based on data from the Vietnam Ministry of Planning and Investment, MSMEs account for 98% of total business in 2020.

However, only 54% of registered MSMEs were actively operating in 2019. In fact, MSMEs have employed 5.6 million people and contributed more than $241 billion or 40% of GDP in Vietnam.

According to Country Director of Funding Societies Vietnam, Ryan Galloway, MSMEs in Vietnam do not have access to business entities with the same capital as other Southeast Asian regions. However, business actors in Vietnam have strong competitiveness with limited resources.

“We are excited to support the burgeoning MSME sector here so we can serve the needs of millions of MSMEs across Southeast Asia,” added Galloway.

Market Adaptation

Kicking off 2022, Vietnamese tech giant VNG Corporation is investing $22.5 million in the Modalku Group as part of a $144 million series C+ funding and $150 million loan facility.

Apart from VNG, this funding round also involved other investors, including SoftBank Vision Fund 2, Rapyd Ventures, EDBI, Indies Capital, Ascend Vietnam Ventures, and K3 Ventures.

According to Reynold, the involvement of VNG investment will enable the Modalku Group to adapt in the local market so that it can create solutions according to business needs in Vietnam.

Furthermore, following the success of the Modalku Group in other countries, Galloway said it would shorten the loan process completion time by automating the operational and underwriting processes for MSME actors in Vietnam.

In addition, the Modalku Group also plans to provide digital funding nationally with local currency in the middle of this year.

The Modalku Group also opens up opportunities for collaboration with various technology and banking platforms to support the medium and long term mission of becoming a neobank.

Modalku’s Achievements

For information, recently the Modalku Group together with the automotive buying and selling platform Carro announced a co-investment in PT Bank Index Selindo (Bank Index). There is no mention of the value of this joint investment.

The Modalku Group, otherwise known as Funding Societies, claims to be the only digital-based MSME funding platform that is licensed and registered in five countries in Southeast Asia.

In its seventh year of operation, Modalku Group has disbursed funding of more than Rp33.27 trillion to more than 5 million loans. Modalku seeks to address the financial gap for SMEs in Southeast Asia.

The products offered include term loan facilities to various trade-based financing options, such as invoice financing. Fintech P2P lending Modalku recorded the stability of its NPF.

“Modalku’s current NPF level is stable at under 1% of total lending in Indonesia,” said Reynold Wijaya, Co-Founder & CEO of Modalku.

The stability of Modalku’s NPF is influenced by interest rates that have been adjusted based on regulations so that it can suppress NPF increases. Reynold added that Modalku will continue to maintain a stable NPF below 1% until the end of 2022.

To achieve this, Modalku chooses to use the principle of responsible lending in assessing MSME borrowers and seeing their financial ability to pay off debt.