Funding Societies Co-founder and Group CEO Kelvin Teo
Khazanah and CGC Digital have announced a joint investment in Southeast Asian MSME digital finance platform Funding Societies (Modalku in Indonesia).
With this new investment, Funding Societies aims to expand its Malaysian coverage to areas beyond Kuala Lumpur, Selangor, Penang, and Johor. By the end of 2025, it targets to serve more than 25,000 MSMEs across Malaysia, thereby improving MSMEs’ access to financing, growth, and scalability while fostering job creation and income development for those employed by these businesses.
Also Read: Funding Societies raises US$7.5M debt financing from Norway’s state-owned Norfund
The investment follows the inking of CGC Digital’s partnership with Funding Societies earlier this year, where a new guarantee product was developed via a pilot programme. The product provides Credit Guarantee Corporation Malaysia’s guarantee at the transactional level of Funding Societies’s digital supply chain financing, thereby directly supporting the business activities of MSMEs and advancing financial inclusion.
Established in 2015, Funding Societies provides financing to micro, small and medium enterprises (MSMEs), especially micro and small businesses currently unserved by existing financial institutions. Since its inception, it claims to have disbursed over US$3.5 billion in business financing through five million transactions, positively impacting over 100,000 businesses across Malaysia, Singapore, Indonesia, Thailand, and Vietnam.
Also Read: Funding Societies hopes to move from alternative to mainstream financing one day
In Malaysia, Funding Societies aims to address the RM90 billion2 (US$19 billion) funding gap for MSMEs. Moreover, it intends to widen the reach of its Islamic financing solutions introduced earlier this year. Since its launch in May 2023, it has disbursed over RM100 (US$21) million in Shariah-compliant financing in Malaysia.
Khazanah’s investment in Funding Societies is made alongside CGC Digital, by which the government hopes to create a more significant impact on the Malaysian MSME ecosystem. CGC Digital aims to advance financial inclusion by developing innovative digital guarantee products and its own guarantee credit scoring model that can close the gap and address the pain points in micro and small businesses demand for financing.
It will continue to collaborate with CGC Digital to provide digital guarantee products on its platform, which will further aid Malaysian micro and small businesses in getting financing in the long term. A digital-first approach through its digital guarantee product leveraging alternative data will allow micro and small enterprises to have broader and more affordable access to financing.
Also Read: SME lender Funding Societies nets US$27M debt funding
In November 2023, the fintech lender secured US$7.5 million in debt funding from Norwegian government-owned development financial institution (DFI) Norfund.
While MSMEs represent 97 per cent of business establishments in Malaysia and contribute 38 per cent to the GDP, this group still faces significant challenges in obtaining credit, as evidenced by Malaysia’s RM90 billion financing gap.
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