This startup nabbed Alibaba and MindWorks Ventures’ first ever HK fintech investment

Photo credit: stockbroker / 123RF Stock Photo.

Disclosure: The author of this post is not affiliated with any of the organizations mentioned in the article below.

Qupital is a Hong Kong-based online trading platform that helps businesses raise cash against unpaid invoices. It has also recently received US$2 million in a funding round led by MindWorks Ventures and Alibaba Entrepreneurs Fund. 

What makes this funding round particularly noteworthy is that it is both MindWorks and Alibaba’s first ever fintech investment in Hong Kong.

According to MindWorks Ventures managing partner David Chang, the reason they invested in Qupital is because “[It] is a textbook example of how technology and the internet help to optimize a traditional industry. Invoice discounting in Asia is ripe for disruption, with Hong Kong as the perfect starting point.”

I had the opportunity to sit down and chat with the company’s co-founder and CEO, Andy Chan. Here, we talk about who he is, his business, and his future plans.

Who is Andy Chan?

Chan grew up in New Zealand but went to the US to study economics and computer science at Brown University. After graduating, he got a job in Denmark working as a software engineer for a legal tech startup that was creating a platform for online arbitration (resolving disputes online instead of the public courts system). This is how he realized that technology could disrupt antiquated processes.

It was around this same time that he started noticing a number of platforms overseas doing accounts receivable exchanges, and when he looked to Hong Kong, he realized there was no real player in the space.

According to Chan:

“I started doing research on these different receivables market places around the world and saw that there were some in the UK, Spain, and the US, so that’s when I really thought that there was an underserved market in Hong Kong for SMEs. I have friends and family who work in SMEs in Hong Kong, especially in the trading sector, and they have a lot of long unpaid invoices—30, 90, 120 days—and we saw that this product could really help these people and help grow their businesses and improve their liquidity in the market.”

Chan met his co-founder, Winston Wong, while playing basketball. Wong had prior experience in the accounts receivables factoring space, and the two set out immediately to build their prototype, acquire customers, and gain initial traction and proof of concept.

What is Qupital?    

We’ve all heard the saying “cash is king” and this is particularly true for SMEs that have heavy working capital requirements as part of their core business. More often than not, SMEs have a large portion of their receivables tied up in unpaid invoices, which won’t settle for up to 180 days. This void could be detrimental to a business which relies on cash for reinvestment and future growth.

The company aims to solve this problem by using technology to create a platform for SMEs to receive immediate financing for their unpaid invoices by connecting them to a pool of investors looking for a diversified investment.

How does it work?  

How does it make money?

What are the company’s challenges?

Expansion plans