The International Finance Corporation (IFC), a member of the World Bank Group, has invested $7 million into First Circle, a technology company providing smart banking solutions to small and medium-sized enterprises (SMEs) in the Philippines.
IFC said in a statement on Thursday that the move is to expand digital financial services for SMEs in the Philippines.
It is noted that IFC was joined by Endeavor Catalyst and Fasanara Capital, as well as existing investors Insignia Ventures Partners and Accion.
“We are thrilled to welcome IFC, the pre-eminent investor in emerging market financial services, as new shareholders at this terrific inflection point in our company’s expansion,
“We are particularly excited by IFC’s deep technical expertise in helping fintech companies expand their services, allowing us to serve more SMEs in the country,” said Patrick Lynch, Chief Executive Officer of First Circle.
Since its inception in 2016, First Circle has funded over 3,000 unique customers, of which over two-thirds are SMEs accessing credit for the first time.
First Circle’s innovative credit systems provide SMEs with higher credit limits, flexible repayment options, and the lowest unsecured pricing in the market.
First Circle has also recently expanded its services to include fee-free business banking and payment solutions.
“We are proud to be a part of this funding round for First Circle and help the company expand its operations to support more Filipino businesses, especially those accessing credit for the first time,
“Through this strategic investment, we aim to catalyze First Circle’s development of new products for which will help to foster better financial inclusion in the country,” said Jean-Marc Arbogast, Country Manager for the Philippines at IFC.
According to the statement, the fintech industry in the Philippines has witnessed significant growth in recent years.
Cited the 2023 Fintech Philippines report, it said the number of fintech companies rose from 115 in 2017 to close to 30,000 as of December 2022.
Despite the industry’s growth, it noted only a handful of companies focus on providing services specifically for micro, small and medium Enterprises (MSMEs).
Access to finance remains a key challenge for smaller businesses, it added.
It also noted that lack of access to financial services continues to hold back smaller businesses, particularly in the Philippines where credit penetration stands at 2.2 percent of the country’s gross domestic product (GDP) as of 2023, trailing many regional neighbors.
“First Circle’s customers are growing trading, manufacturing, and services businesses who are the center of their own ecosystem of employees and trading partners, and all the livelihoods they support,” continued Lynch.
“Our team is deeply motivated by our mission, our win-win customer relationships, and the multiplicative impact of our products,
“Our partnership with IFC is much more than just investment; it underlines our mission of economic empowerment and building for the long term,” he added.
With SMEs achieving an average of 80 percent growth in their first two years as customers, First Circle’s funding is having the desired impact – demonstrating its vital role in driving SME success, according to the statement.
It said IFC’s investment will unlock First Circle’s capacity to expand credit lines and deliver smarter banking solutions to the underserved SME market.
It is noted that since 2018, First Circle has also been an official partner of the Department of Trade and Industry (DTI), instrumental in advancing DTI’s mission to foster SME competitiveness and growth.
Through its accessible financing solutions and financial literacy programs, First Circle has been instrumental in equipping SMEs with the resources they need to thrive, aligning with both DTI’s broader economic goals and IFC’s mission to empower this vital sector.
“The Department of Trade and Industry recognizes First Circle’s significant contribution in providing accessible financing to SMEs, which has directly supported our initiatives to boost economic activity and empower local businesses,
“Their commitment to financial inclusion aligns with DTI’s vision for a more competitive and resilient SME sector,” said DTI Undersecretary Blesila Lantayona.
IFC, HSBC Asset Management expand partnership to support sustainability in emerging markets