Fresh off $110m raise, Lendable eyes ‘huge opportunity’ among SEA fintech firms

Lendable, the London-headquartered debt finance provider whose portfolio companies include Southeast Asian fintech firms KoinWorks, Amartha, Fazz, and F88, is doubling down on the region, where it’s seeing a “huge opportunity” in the fintech space.

In January, the financier closed a US$110 million impact fund – the Lendable MSME Fintech Credit Fund – of which it has deployed 60% to Southeast Asia so far.

“What we’ve found is, the general opportunity set is probably larger in Southeast Asia and also in Latin America. But also in terms of this macro climate, we think the Southeast Asian region is much more resilient than Africa,” Lendable CEO Chris Wehbé tells Tech in Asia.

The firm, which also has offices in Singapore and Nairobi, was established by co-founders Daniel Fried and Dylan Goldfarb in 2014. Its vision is to improve access to financial services for those who aren’t able to avail them, starting in Africa, where the concept of mobile money already took off by the early 2000s.

While a majority of Lendable’s allocation is directed to Africa (45.4%), Asia is a close second (44.6%), with the remainder being allocated to Latin America. Across its various funds, the financier has deployed approximately US$150 million to Southeast Asian fintech firms to date, and Wehbé says he’s expecting the allocation for Asia to rise.

Lendable provides capital to fintech firms in the form of debt facilities, which they can in turn use to extend credit to their end-borrowers – either individuals or other small businesses. These fintech startups include MSME lenders, consumer lenders, asset finance providers for microentrepreneurs, embedded finance platforms, payment companies, and software-as-a-service firms.

Indonesia-based Amartha, for instance, grants small loans to housewives in the country’s rural areas, who use the money to fund their microventures. Bangladesh-based ShopUp, a B2B commerce platform providing sourcing and logistics, extends digital credit to mom and pop stores unable to access formal financial services.

Amartha CEO Andi Taufan with borrowers / Photo credit: Amartha

Lendable views the MSME space in particular as one of the biggest opportunities. “It’s been a market that’s been historically underserved by the banking sector,” Wehbé says.

Southeast Asia’s “resilience”

In Southeast Asia, Lendable joins other debt financiers such as Genesis Alternative Ventures and InnoVen Capital SEA, which are seeing more appetite from startups. Banks, too, are hopping into the space – last year, HSBC loaned US$50 million to SME lender Funding Societies and another US$100 million to buy now, pay later firm Atome Financial.

As valuations calibrate lower in a challenging fundraising environment, startups are increasingly turning to alternatives to equity financing so that they can avoid excessive – and unnecessary – dilution.

Compared to Europe and the US, Southeast Asia hasn’t been hit as hard by supply chain disruptions brought about by the Covid-19 pandemic and the Russia-Ukraine war, Wehbé notes. Inflation in the region has remained in the single digits and “hasn’t gotten out of control,” he says.

Consequently, loss rates in the region appear to have held up well, at least compared to those in Africa.

Passing on interest rates

“We’re a fintech ourselves”