Your business is growing and customers are willing to work with you yet you still feel poor. That was the feeling Ang Xing Xian, CEO and co-founder of Malaysia-based CapBay experienced watching his family manage their fish distribution business. Caught in between the demand for cash payments from fisherman and the delayed payments from supermarkets, Ang recounts how challenging it was for them to get financing to support their small business from banks without collateral.
As Ang soon found out their problem wasn’t unique but also applicable to thousands of Malaysian SMEs (small and medium enterprises) inspiring him to create CapBay in 2016, a peer-to-peer financing platform specializing in supply chain finance. Using his platform as a connector, Ang believed he could fulfill the needs of two groups, firstly businesses in search of short-term financing and secondly banks/investors looking to participate in high-quality financing deals.
Despite the initial challenges of finding the right talent for the business and educating the market of the business concept, Ang and his team eventually got their big break when the Securities Commission of Malaysia (SC) awarded CapBay with the first and only multi-bank supply chain finance platform license in the country. It not only validated the efforts of CapBay, but also highlighted the importance the Malaysian government has placed on supporting SMEs within the country.
Unlike traditional sources of finance, CapBay is flexible when it comes to onboarding SMEs claiming to take between 3 days to a week to give companies a decision on financing. “Instead of looking at typical credit risk we look at payment risk. The questions we ask is no longer on your leverage ratio or your P&L, but more about who you have been dealing with and how long have you been doing business together,” shares Ang.
As well as reaching out to SMEs, Ang and his team have spent time reaching out to potential financers for these SME loans including banks and institutional investors. “We worked with banks and institutional investors to finance all the SMEs on our platform. We loaned out more than 3000 transactions,” shares Ang.
Reshaping the way SMEs access financing in Malaysia, Ang hopes to expand the financier base on this platform away from only institutional investors. “We believe that these investment opportunities should be available not just to the institutional investor, it should also be open to retail investors,” highlights Ang. This similar thinking was confirmed by Malaysian regulators as well, and last year the company got approval from the SC to operate a P2P platform available for retail investors. “With the P2P license from the SC, we are opening up to public retail investors to invest alongside these large institutional funders,” says Ang.
Though bright, there is a long yet exciting road ahead for CapBay as it looks to bridge the financing gap, not only in Malaysia, but in the rest of Southeast Asia as well.