Funding Societies raises $40m, but streamlines its business amid Covid-19

Funding Societies, a peer-to-peer lending platform targeting small and medium-sized enterprises, has shed 18% of its total workforce across its Singapore, Malaysia, and Indonesia offices, Tech in Asia has learned. It brings the total staff tally at the startup to more than 300 employees.

The layoffs, which took place at the end of March, were triggered by the Covid-19 pandemic and comes at a time when investor scrutiny on unprofitable startups has peaked. While the revenues of the Sequoia-backed firm haven’t yet been hit, it’s expecting further challenges ahead. The company is also looking to shore up its tech talent amid criticisms by former and current employees that the firm’s tech processes are problematic.

Funding Societies co-founders Reynold Wijaya (L) and Kelvin Teo (R) / Photo credit: Funding Societies

“It was a cost-cutting [measure] as a result of the uncertainty from Covid-19. At the same time, we took the opportunity to streamline the business,” co-founder and group CEO Kelvin Teo tells Tech in Asia. The company has also made changes to its operational plans, including shutting down products that weren’t profitable.

Corporate bankruptcies are set to rise in Singapore this year as the country heads toward its worst contraction in two decades. Analysts are forecasting that nonperforming loan ratios for the city-state’s two largest banks – DBS Bank and the Oversea-Chinese Banking Corporation – will increase to 1.8% this year from 1.5% in 2019, driven by the outbreak, according to Bloomberg.

As people and companies fall on hard times, microlending platforms such as Funding Societies are likely to be hit by a wave of loan defaults. However, no further layoffs are expected at the startup, Teo says. The firm had begun making the necessary adjustments in early February when Singapore raised its risk assessment of the pandemic to Dorscon Orange – the country’s second-highest alert level for diseases.

“We tried to do [the layoffs] early and ahead of the market,” Teo says, hoping that prompt action would give affected employees the best chance of finding a new job.

Source: Funding Societies / *Figures as of December 31, 2019

As things stand, the startup’s nonperforming loan rates – the measure of loans that have defaulted or are close to defaulting – have been steadily rising since 2017 and stood at 2.27% in 2019, public figures on its site show.

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