Small businesses are the life-blood of any economy. This is particularly pronounced in Southeast Asia, where they make up approximately 50% of GDP and 65% of employment. But despite contributing the majority of economic activity, there’s still a big shortfall in the supports necessary to ensure they have maximum economic impact.
– Taken from First Circle website
First Circle, a fintech startup enabling SME lending in the Philippines, has raised $1.8 million. It had previously raised about $1.7 million last year. Its backers include Accion Venture Lab, Deep Blue Ventures, 500 Startups, IMJ, and Key Capital.
According to Accion CEO and President Michael Schlein in a press statement, SMEs account for “more than 99 per cent” Filipino businesses, but they are having problem with securing funding to grow their business.
The Asian Development Bank has also estimated that the unmet demand for capital for SMEs in Southeast Asia falls at US$50 billion.
Founded in 2015, First Circle has given out over $7 million in loans. And instead of traditional collateral, First Circle relies on basic data such as customer numbers and transactions to underwrite loans averaging $10,000. This means that a successful loan applicant would need to show the potential to repay the loan.
“Lack of access to capital is a big problem that needs to be fixed. If it isn’t, millions of hardworking entrepreneurs and their businesses will not be given the chance to reach their potential,” First Circle co-founder and CEO Patrick Lynch said.
Lynch is also eyeing potential expansion to Indonesia or Thailand, which are “markets where there are low levels of SME financing, increasing e-commerce penetration, and sub-optimal availability of capital.”