Validus, a Singapore-based digital lending platform for small and medium businesses, has secured $50 million in debt financing from HSBC under the ASEAN Growth Fund strategy. This funding will be used to support the financial inclusion of micro, small, and medium enterprises (MSMEs) in Indonesia, addressing the challenges they face in accessing financial resources.
Indonesia has a staggering 64.2 million MSMEs that contribute 61% of the country’s GDP. These MSMEs employ about 119.6 million people, accounting for 97% of the total workforce. However, only around 17.5 million MSMEs are utilizing the online ecosystem and e-commerce platforms. The main hurdle they face is the difficulty in accessing financing due to the stringent requirements of commercial banks.
According to a 2017 report by the World Bank, commercial banks in Indonesia have strict operational, reporting, and collateral requirements, making it challenging for MSMEs to secure loans. Despite government initiatives, only about 20% of bank loans go to MSMEs. This presents a significant opportunity for Validus to step in and provide much-needed financial support to these businesses.
Validus was founded in Singapore in 2015 by Vikas Nahata and Nihkilesh Goel. They developed a supply chain-focused lending model that leverages non-traditional data access through partnerships with traditional banks and international institutions. The company has expanded to include operations in Indonesia (Batumbu), Thailand (Siam Validus), and Vietnam (Validus Vietnam).
Traditional banks in Southeast Asia still rely on legacy credit evaluation methods for small businesses, primarily relying on historical financials and real estate-backed collateral. Validus aims to disrupt this traditional approach by providing stable and accessible working capital to small businesses, enabling them to grow and contribute to job creation and nation-building.
Validus serves MSMEs that primarily borrow for their short-term working capital needs. The platform’s lenders include major international institutions such as Citi, HSBC, FMO, Credit Saison, and OikoCredit, as well as leading local banks including CIMB Niaga and Bank Mandiri. One of Validus’ key strengths is its extensive network of over 100 partnerships throughout the Southeast Asia region.
With an outstanding loan book or monthly loan disbursals averaging $150 million, Validus is the largest SME financing marketplace in Southeast Asia. In the past three years, the company has experienced significant growth in both revenue and net profits.
Validus has grown its consolidated group revenues at a 69% compound annual growth rate (CAGR). Its Indonesia business, the largest market among the four countries it operates in, has been net profit positive since 2022 and a source of positive cash flow for the group. The company aims to achieve consolidated group-level cash flow positivity by early next year.
The company has raised approximately $75 million in total equity funding from investors such as Vertex Ventures Southeast Asia and India, Vertex Growth, FMO, and NongHyup Financial Group, among others.
With the new funding from HSBC, Validus is well-positioned to continue its mission of supporting the financial inclusion of MSMEs in Indonesia. By providing accessible working capital to these businesses, Validus not only helps them grow but also contributes to job creation and economic development in the region.