The Top Up is Tech in Asiaâs free newsletter that breaks down the biggest stories and trends in fintech. [Read from your browser]( The Top Up ðµ Welcome to The Top Up! Delivered every Wednesday via email and through the Tech in Asia website, this free newsletter breaks down the biggest stories and trends in fintech. If youâre not a subscriber, get access by [registering here](. Written by Melissa Goh
Fintech Journalist Hello {NAME} In the fragmented online lending market, one firmâs downfall is anotherâs gain. This week, we investigated [investor allegations against Capital Match]( a Singapore-based P2P firm that specializes in invoice financing. The P2P lending sector is no stranger to controversy, and Capital Match isnât the first firm to go south. It also definitely wonât be the last. In recent times, youâd recall [CoAssetsâ fall from grace]( a story Tech in Asia broke in December 2020. And just last week, we covered the plight of Indonesia-based UangTemanâs investors and their futile efforts to [claw back their money]( since early 2021. P2P firms - at least in their most traditional sense - arenât set up to be aligned with the investors they represent and the deals they enable. Unlike [balance sheet lenders]( many P2P firms do not have skin in the game - they purely provide a platform for lenders to connect with borrowers. When loans go bad, itâs the lenders who risk losing their capital, while P2P firms risk losing only interest on repayments. Thereâs also limited incentive for platforms to take an active role in loan recovery and maintain the credit quality of the assets theyâre taking on. That said, to players serious about the long haul, having a good reputation matters. That means delivering on projected investment returns and keeping non-performing and default rates to a minimum, without compromising on credit quality even as loan books grow. But not all is bad. Several online lending platforms are going from strength to strength even as they emerge from whatâs hopefully the worst of the pandemic. We examine one of them - Funding Societies and its US$144 million-backed push into Vietnam - in this weekâs Hot Take. -- Melissa THE BIG STORY [Another P2P lender goes south: millions on the line for Capital Matchâs investors]( Image credit: Timmy Loen Investors charge that years of poor oversight and irresponsible lending have compounded into a costly mistake for Capital Match. THE HOT TAKE
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Funding Societiesâ new heavyweight investor Funding Societies co-founder and director Kelvin Teo / Photo credit: Funding Societies Hereâs what happened: - Last week, Funding Societies [raised]( US$144 million in a series C+ round.
- The round was led by SoftBank Vision Fund 2 and joined by VNG Corporation and Rapyd Ventures, among others.
- The firm also received US$150 million in debt financing from institutional lenders from Europe, Asia, and the US. Hereâs our take: Until now, [Funding Societiesâ]( main market has been Indonesia, where it operates as Modalku. The Singapore-headquartered firm, which also operates in Thailand, Malaysia, and Vietnam, targets MSMEs. It offers various lending products such as invoice financing, term loans, and supply chain financing, and the values of these loans can range from US$500 to as much as US$1.5 million. Its most recent funding round, however, signals its ambitions in Vietnam, whose internet economy is expected to see a compound annual growth rate of 29% to US$57 billion between 2021 to 2025 - a rate of growth outstripping even Indonesiaâs - according to a report by Temasek and Bain & Co. Most notably, Funding Societies may have pulled a coup with a prominent backer in VNG Corporation, the Vietnam-based gaming and entertainment unicorn that also owns social media platform Zalo, online media platform Zing News, digital payments app ZaloPay, and cloud services solutions provider VNG Cloud. Without discussing specifics, Funding Societies CEO Kelvin Teo told Reuters last week that it plans to use its financing business to launch its ânew businesses.â VNG might offer some indication as to what those plans might be. Ryan Galloway, Funding Societiesâ country director in Vietnam, has said that Zalo messenger and ZaloPay wallet could create âendless possibilitiesâ for the fintech firmâs borrowers. In Vietnam, Zaloâs 52 million monthly active users place it even [ahead of WhatsApp](. As Funding Societies forges ahead with its neobanking ambitions in the country, Zaloâs âinnate data value and networkâ opens up a huge opportunity. Since being flagged by regulators in 2021, Zalo does not provide loans to customers, though it refers them to third-party financial providers through its platform Fiza (short for Finance Zalo). Funding Societies could potentially tap Zaloâs data on users - as well as merchants - to roll out microfinancing products for them. This will lower the lending platformâs customer acquisition costs. That said, Funding Societies is not yet licensed in Vietnam, though a company spokesperson tells Tech in Asia that it is working with the countryâs regulators. The spokesperson adds that customized or proprietary offerings will be rolled out as soon as âthis or next year.â Together, both Funding Societies and VNG Group can create a âseamless customer experienceâ across lending, payments, spend management, and other services for SMEs, the spokesperson adds. With Funding Societiesâ loan origination back on track after a [tough start to the pandemic]( as well as a firm hold on default rates, which it has maintained at 1% to 2% for the âpast few years,â Vietnam could hold the key to unlocking the lending platformâs next stage of growth. That said, Funding Societies is not the only SME lending platform setting its sights on Vietnam, or the only one pulling in partners with strong networks. In January, Singapore-headquartered Validusâ local unit, Validus Vietnam, formed a [joint venture]( with VC firm Do Ventures and conglomerate TTC Group. Together, they aim to support SMEs in Vietnam through various financial inclusion initiatives. -- Melissa NEWS YOU SHOULD KNOW Also check out Tech in Asiaâs coverage of the fintech scene [here](.
 1ï¸â£ [Tinder co-founderâs fund joins $31m round of PHL payments firm]( B2B fintech firm PayMongo will use the fresh funds to develop new services such as disbursements, capital lending, subscriptions, recurring payments, and buy now, pay later.
 2ï¸â£ [ShopBack in talks for $150m fundraise]( Since its acquisition of BNPL firm Hoolah in November 2021, the online rewards platform is strengthening its fintech muscle by adding executives from Fave and PayPal to its team.
 3ï¸â£ [AC Ventures leads $4m round of Indonesian crypto app]( Founded in 2018, Nobi facilitates the buying and selling of cryptocurrencies, among other services. The company says it currently manages around US$70.1 million worth of digital assets.
 4ï¸â£ [Bolttech buys SG insurance firm Ava]( The acquisition will accelerate Bolttechâs insurance exchange in Singapore that will connect insurers, distributors, and their customers. FYI
 Photo credit: UangTeman 1ï¸â£ [Investors in UangTeman struggle to claw back their money]( A group of 11 investors, who collectively put in US$628,000 into the Indonesia-based online lending platform since 2020, continue to question when their principal will be returned. Thatâs it for this edition - we hope you liked it! Do also check out previous issues of the newsletter [here](. Not your cup of tea? You can unsubscribe from this newsletter by going to your âedit profileâ page and choosing that option in our preference center. In the meantime, if you have any feedback or ideas, feel free to get in touch with Terence, our editor-in-chief, at terence@techinasia.com. See you next week! P.S. Don't miss out on the biggest tech news and analysis. Add newsletter@techinasia.com to your address book, contacts, or safe sender list. Or simply move us into your inbox. Too many emails?
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