Ex-Lazada vets started a lending company for SMEs. Over 100 clients later, they raised $9m

The co-founders of Aspire / Photo credit: Aspire

The lending woes of small and medium-sized enterprises have been a focus for many startups. A 2017 collaborative study published last year found that more than US$245 billion worth of financing was disbursed by alternative lending platforms in Asia Pacific in 2016. Singapore accounted for US$163.7 million of that amount, with China and Australia identified as the largest markets.

To snatch the rising opportunity, former Lazada executive Andrea Baronchelli and startup vet Giovanni Casinelli set up their own firm. Aspire offers fast and affordable loans to small businesses, using its tech to assess risk and collect real-time data.

Founded in January 2018, the Singapore-based firm has raised a seed round worth US$9 million from US, European, and Asian investors, including ex-Sequoia partner Yinglan Tan’s Insignia Ventures Partners, Mark 2 Capital, and Hummingbird Ventures.

Aspire was part of Y Combinator’s Winter 2018 batch. The Silicon Valley accelerator participated in the round.

Same-day loans for small businesses

It was during his time as at Lazada that Baronchelli, who serves as Aspire’s CEO, identified the working capital shortages that a lot of small-business owners face. Sellers on Lazada’s marketplace are usually small enterprises that are underserved by banks. That’s because they might not have sufficient collateral to put up for a loan or they might need smaller sums than what banks usually disburse.

While moneylenders are an option, these arrangements usually involve extraordinarily high interest rates and hidden fees. Moreover, small businesses usually need capital pretty fast and traditional financing takes a while to get approved.

Tech startups have moved in to fill that gap. Most of the active ones in the market focus on crowdfunding to source money for lending to small businesses. Aspire takes a different tack: it operates on a balance sheet model, where the money comes out of its own funds. The startup also controls how it disburses funds to borrowers.

This strategy, combined with what Aspire says is proprietary tech for risk assessment, allows the company to approve and pay out loans quickly. The application is made online through Aspire’s website without the need for extensive paperwork. The firm promises to review it and respond on the same day, and then send the money within one business day. Loan tickets range from US$3,700 to US$74,000 and can be repaid over a period of 12 or 24 weeks.

Baronchelli claims that Aspire’s tech enables real-time collection of data like business transactions, online ratings, and social activities, which in turn helps the company scale its lending service.

The startup is looking to fully automate the review and approval process eventually, although Baronchelli says manual validation will still be part of the process for the next year or so. Aspire also aims to use that data and insights it generates to explore more financial products down the line.

Aspire started out by targeting online merchants – the primary type of business that Baronchelli had experience with during his time at Lazada. But once the ball got rolling, the founders saw they could work with a number of other small businesses as well. Now Aspire also lends to enterprises like retailers and restaurants.

Baronchelli declined to share any details about the startup’s current revenue but said the startup already has more than 100 clients. It was this traction that made it attractive to investors and helped it raise its seed round so soon after launch, he explains. It monetizes through fees (which it presents to the borrower up front) and interest rates. The flipside is that Aspire shoulders the risk of the loan by itself, unlike a crowdlending solution.

Alternative financing on the rise

Aspire is riding a rising wave in the alternative lending market worldwide. According to Statista, global transaction value for the alternative lending space amounts to US$502.6 billion this year and is expected to grow to US$978.4 billion by 2020.