The last five years have been boom times for Southeast Asia’s alternative lending companies, which issue loans to unbanked or underbanked individuals who make up 70% of the region’s population. Fintech investment platforms quickly became important sources for capital, especially for small business owners. One example is Singapore-based company Helicap.
David Z. Wang, co-founder and CEO of Helicap, left his career in banking after eight years to establish his first investment company, 33 Capital, in 2016. But he also realized that alternative lending was one of the most lucrative sectors, and he sought a way to enter this market, using tech to broaden financial inclusion in the region.
“By the end of 2017 and the start of 2018, we found that digital lending was growing at a really good pace,” Wang told CrASIA. “Not just the what we call peer-to-peer (P2P) players, but traditional lenders on the microfinance side as well.”
In 2017, he linked up with two friends, Quentin Vanoekel and Jeremy Tan, both of whom have experience in the field of venture capital, and founded Helicap.
The company facilitates lending capital to small and medium-sized enterprises (SMEs) and microbusiness owners across Southeast Asia, Hong Kong, and Australia, drawing capital from a network of investors such as family offices, impact funds, high net worth individuals, and institutional investors. Its proprietary software offers big data analysis to evaluate potential investments, Wang explained.
Helicap’s goal is to fill a USD 500 billion credit gap for SMEs by lending to about 300 million unbanked and underbanked people in the region, according to the firm’s website.
Instead of lending directly to borrowers, funds are channeled via systems such as microfinance institutions or peer-to-peer (P2P) crowdfunding platforms, which in turn disburse the cash.
Wang said this method allows Helicap to reach more borrowers without having to do extra legwork. “If we do it ourselves, we might only reach hundreds of borrowers. But if we channel into our partners, where each of them handles, let’s say, thousands of borrowers, we could reach millions.”
The company isn’t at that scale yet. For now, Helicap has assessed over 300 platforms, including micro financiers, peer-to-peer crowdfunding platforms, and small and medium enterprises (SMEs), to gather troves of data for potential investors. Helicap’s role is to provide reliable and detailed analysis of companies for investors, Wang said.
Helicap uses artificial intelligence to crunch data sent monthly by its partners to standardize financial metrics such as loan book sizes and return rates. “We put [the data] into our system and we generate reports [for investors] in just minutes,” Wang said, explaining that the same process could “take months” if executed manually.
In 2019, Helicap registered its fund management subsidiary, Helicap Investments, with the Monetary Authority of Singapore. This allows the company to conduct regulated fund management activities with as many as 30 accredited and institutional investors and with up to SGD 250 million (USD 176 million) of assets under management. Helicap also acquired Arcor Capital, who holds a capital market services license to deal in capital market products, in the same year.
The firm has invested in 15 platforms so far, but Wang declined to share additional information.
Helicap’s service is available in Indonesia, Vietnam, Cambodia, and the Philippines. Through the platforms that Helicap holds stakes in, the company has issued about USD 40 million in loans to more than 150,000 small and medium enterprises (SMEs) and individuals.
New business lines
In April, Helicap closed a USD 10 million Series A round led by Saison Capital, the venture capital arm of Japanese financial services company Credit Saison. The investment bumps Helicap’s total capital raised to USD 18 million, Wang said.
The firm has also formed a partnership with Credit Saison for a pilot project in Southeast Asia, where Credit Saison will use Helicap’s credit analytics tool to identify impact debt financing opportunities. The pilot will focus on sectors that bring about significant change for users, such as health or education. Helicap will provide data analysis and tech services for Credit Saison, Wang said.
In the next few years, Wang plans to establish regional teams for expansions into new Asian markets. The firm is also working to enhance its credit analytics platforms to perform predictive analytics. Helicap may venture into other subsectors of personal finance, such as pay later services, along with medtech and edtech loans.
This article is part of KrASIA’s “Startup Stories” series, where the writers of KrASIA speak with founders of tech companies in South and Southeast Asia.