Supporting 65,000 Businesses in Southeast Asia Validus: Online Lending

*This article is adapted from * Validus.

On September 19, 2024, Validus was featured in NNA Asia, highlighting an interview with Milena Naitoh, Head of the Group’s Corporate Development and Capital Markets, regarding the company’s operations in online lending and its support for 65,000 businesses in Southeast Asia. For the convenience of English-speaking readers, the article below has been translated into English as the feature was originally written in Japanese. To read the Japanese version, please click here: NNA Asia Article.

Validus Group, a Singapore-based online lending company, is facilitating funding for SMEs in Southeast Asia with innovative solutions utilising artificial intelligence (AI). To date, it has rapidly provided loans to over 65,000 companies, promoting their business expansion. We spoke with Milena Naitoh, head of the group’s corporate development and capital markets division, about the company’s operations.

Validus has focused on closing the credit access gap for small and medium-sized enterprises through partnerships within the supply chain ecosystem, supporting over 65,000 SMEs in Singapore, Indonesia, Thailand, and Vietnam. By leveraging AI, they have streamlined the lending process and improved access to funding for businesses. Their solutions include “Invoice Financing,” which accelerates delivery cycles, and “PO Financing,” which covers costs like staffing and procurement to fulfill orders on time. SMEs can secure working capital within a day with minimal documentation.

Plans for Growth in Indonesia, the Most Thriving Market

Validus has rapidly provided over 120,000 loans to small businesses. In the year leading up to August this year, the loan balance for its Indonesian operations has expanded 2.3 times, maintaining a trend of doubling compared to the previous year. Revenues have also increased by 1.5 times, with profit margins expanding to over 50%. Validus has become the only profitable SME lender in Indonesia.

The company is focusing on both vertical and horizontal expansion. Vertically, it plans to use supply chain data to extend deep-tier financing to lower tiers (from distributors to sub-distributors one tier down, and eventually to sub-distributors two tiers down). Horizontally, it is currently expanding partnerships with over 100 companies in consumer goods, retail, and food sectors, which are experiencing strong growth.

Validus also offers a “Vendor Financing Program” designed to strengthen the relationships between buyers and SME vendors by mitigating risks and reducing costs throughout the financing cycle. This helps ensure that suppliers and vendors have the working capital they need, benefiting all parties involved.

Which Industries and Countries Benefit from Validus’ Financing Solutions?

The main industries supported by Validus in the four Southeast Asian markets are crucial to the economic growth of each country. Specifically, these include SMEs in manufacturing, agriculture, fast-moving consumer goods and retail, construction and infrastructure, healthcare, education, tourism and hospitality, and IT services.

By country, business is growing steadily, especially in Indonesia and Thailand. In the medium to long term, Validus is also considering entering markets such as the Philippines and Malaysia.

Is the Joint Venture with Siam Cement Group in Thailand Going Well?

Siam Cement Group is one of Thailand’s leading conglomerates, and the joint venture Siam Validus, established with them, can receive integrated live data from Siam’s supply chain to provide fully automated, pre-approved loans to SMEs. We have become the market leader in Thailand’s digital lending sector, with an estimated market share of over 60%. Moving forward, we plan to deepen our involvement in the Siam Cement Group’s supply chain, similar to our approach in Indonesia, promoting financing through data and technology-driven initiatives.

How Has Validus Grown in Singapore, Where the Number of SMEs is Limited?

In Singapore, we focus on the underserved small and medium-sized enterprises. Based on our proprietary algorithm, we offer innovative products, such as fully digital working capital loans that can be approved (or rejected) online in under five minutes, with funding executed within as little as 24 hours. Our portfolio has seen an average annual growth rate of over 50% over the past five years. We are now focusing on expanding this portfolio through digital partnerships. Specifically, we are strengthening our underwriting capacity by partnering with platforms in food and beverage, construction, and procurement sectors to obtain transaction data, allowing us to provide these platform customers with access to capital.

What is Validus’ Approach in the Vietnamese Market, Which Has Many Small Family-Owned Businesses?

Similar to Singapore, we are focusing on providing micro-loans to family businesses in Vietnam through partnerships with digital platforms that present significant business opportunities. Our current partners include companies operating platforms for e-commerce management, point-of-sale (POS) systems using debit cards, taxation, invoicing, and procurement. Validus is based in Ho Chi Minh City, where the majority of our customers are located. (Email interview: Celine Chen)

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