01Fintech, a growth stage private equity firm founded by former Ant-Group executive and specializing in financial technology in Southeast Asia, has on Wednesday announced a significant $20-million investment in Validus, a small-and-medium-enterprises (SME) supply-chain financing platform with operations in Indonesia, Singapore, Thailand and Vietnam.

01Fintech said in a statement that the investment will enable Validus to accelerate its expansion plans in fast-growing markets like Indonesia, to enhance its technology innovation, and solidify its position as the market leader in the supply chain financing.

“This investment by 01Fintech is a significant milestone for us. We are excited about the opportunities this partnership will unlock for us,” said Nikhilesh Goel, Co-founder and Group CEO, Validus.

With the support of 01Fintech, he said the firm aims to cement its leadership as the number one digital SME financing company in the region.

“We will be able to tap into their expertise and vast network in the region. The in-depth due diligence 01Fintech has done has shown their deep domain expertise and willingness to identify areas of growth to bring the company to the next level,

“We continue to stay focused on our mission of providing more accessible financial products and services to SMEs across Southeast Asia, and look forward to a successful collaboration that will continue to drive innovation in supply chain financing,” he added.

Validus is a firm drives financial inclusion and prosperity for small businesses by leveraging proprietary data and artificial intelligence (AI) to drive growth financing to the under-served SME sector, resulting in faster and effortless one-stop financial solutions that increase SMEs’ productivity and cost savings.

Since its inception in 2015, Validus has disbursed more than $3 billion in loans to small businesses across Southeast Asia.

Against the backdrop of a challenging macroeconomic environment, Validus has continued to deliver quality growth, and show positive upward trends across all key performance metrics, including 50 percent in revenue growth and 40 percent decrease in losses this year.

Validus is backed by highly-reputed investors including Vertex Ventures Southeast Asia and India, Vertex Growth, FMO, and several major East Asian financial institutions including NorinChukin Bank and NongHyup Financial Group.

According to the statement, Southeast Asia represents a tremendous $490 billion SME financing gap opportunity for specialized digital lenders with strong credit assessment capabilities.

The Asian Development Bank estimates micro, small, and medium-sized enterprises (MSMEs) make up 97 percent of all regional enterprises, employ 69 percent of the labor force and contribute significantly to 42 percent of the gross domestic product (GDP).

Still, most SMEs do not have access to sufficient credit and liquidity required for their daily working capital needs.

It is noted that over 60 percent of these private enterprises cannot get loans when they need them; operators and their employees are forced to live cash-in-hand which creates a bottleneck for growth.

Thus, Validus’ focus on addressing the unmet financing needs of SMEs aligns with 01Fintech’s mission of supporting financial technologies that enhance inclusion for the under-banked and under-served communities.

It is also noted that 01Fintech recognizes the tremendous potential of Validus’ unique approach to SME financing which has led to its rapid growth and partnerships with the world’s largest financial institutions such as Citibank and other major global banks.

“Validus innovative data-driven approach, strong credit assessment capabilities, and continuous learning technologies which automate the assessment process has proven to be a game-changer,” said Kenny Man, Managing Partner of 01Fintech.

According to him, Validus has a unique strategic ecosystem partnership model with brand owners, conglomerates, and public companies across Southeast Asia, which enables them to better serve the upstream SME suppliers and downstream buyers.

He said these partners provide critical proprietary supply chain data to Validus, which will continuously improve its risk underwriting models and algorithms, a unique strength that other similar companies do not have.

“By leveraging their existing approach to supply chain financing, we believe Validus can further tap into the merchant bases of other platforms and provide supply chain financing in a seamless, automated way,

“This investment reflects our conviction in the team’s capabilities and passion to address a huge pain point facing SMEs in Southeast Asia and its vision to be the number one supply chain financing service provider in the region,” he added.

01Fintech is a growth-stage Asia (ex-China) focused private equity firm which aids and empowers fintech entrepreneurs to scale their visions.

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