Funding Societies (Modalku), a unified small and medium enterprises (SME) digital finance platform in Southeast Asia, has announced raising $7.5 million in debt from Norfund, Development Financial Institution (DFI) operated by the Norwegian government.
DFIs have played a significant role in impact investments in Southeast Asia, with a consistent annual investment of around $2 billion between 2017 and 2022, totaling over $12 billion. More than half of these investments were directed towards the financial services sector, predominantly through debt instruments.
With a focus on increasing financial inclusion, Norfund has so far disbursed about $4.54 billion in loans, aiding 7.5 million clients.
Funding Societies has been on a mission to empower SMEs across Southeast Asia, providing over $3.2 billion in business financing to approximately 100,000 SMEs.
With this new debt financing, the startup said it is positioned to further extend its range of tailored financing solutions to SMEs across its operational markets.
“We’re honored to partner with Norfund. This is a testament to our resilient credit track record and provides a timely opportunity to cater to the capital needs of more underserved SMEs in Southeast Asia,” said Kelvin Teo, Co-Founder and Group Chief Executive Officer of Funding Societies | Modalku.
Micro, small, and medium enterprises (MSMEs) make up 99.9% of total establishments in the ASEAN region, playing a vital role in contributing to the gross domestic product (GDP). This debt transaction is poised to act as a conduit for Norfund’s funds, bridging the gap between public and private sectors and extending the reach of investments further into Southeast Asia.
Funding Societies | Modalku, backed by prominent investors, including SoftBank Vision Fund 2 and Sequoia Capital India, operates across Singapore, Indonesia, Thailand, Malaysia, and Vietnam, providing $1 billion annually in business financing to SMEs.
The company said the new funding marks a significant stride in its journey towards fostering a more inclusive and empowered SME ecosystem in Southeast Asia.