New Economic Impact Study shows that Singapore SMEs financed by SME financing platform Validus Capital contributed over S$400 million in GDP in 2018

• Validus Capital (Validus) is
  filling a critical financing gap for SMEs across industries to fuel SME growth
• GDP contribution from Validus
  financed SMEs grew by 18 per cent as compared to 8 per cent from
  businesses overall
• Validus lending has supported
  over 10,000 jobs in Singapore and SMEs who obtained financing from Validus
  experienced strong employment growth of 12 per cent

SINGAPORE -�Media OutReach - 7 November 2019 – Singapore’s top SME financing platform Validus
Capital (Validus)
today announced that small and medium-sized enterprises (SMEs) that received financing through  their platform has enabled them to grow their
business. It was found that these SMEs
contributed S$403 million to Singapore’s gross domestic
product (GDP) and supported over 10,000 jobs in the country, based on data from 2017
and 2018. With this trend, Validus expects that their financed SMEs are
expected to contribute an additional S$500 million in 2019 — given that
disbursals this year have exceeded the combined amount in the past two years —
bringing the total to close to S$1 billion in GDP contributions across 2017, 2018
and 2019.

Vikas Nahata, Executive Chairman & Co-founder of Validus, sharing the findings of Validus Economic Impact Study

 

The study was conducted by Steward Redqueen, a leading
consultancy firm focused on impact management and sustainable entrepreneurship.

 

SMEs are the backbone of Singapore’s economy and
workforce. In 2018, SMEs contributed 48 per cent to Singapore’s GDP and employ
72 per cent of the country’s workforce^[1].
However, many of them continue to face challenges in gaining access to
financing required to grow their business. Many do not have a solid track
record of having credit and collateral, and this prevents them from securing a
bank loan to grow their business. SMEs being light in fixed assets means that
banks will often take a longer period to approve their request.

 

Steward Redqueen’s study demonstrates how
Validus’ financing positively impact both the SMEs and wider economy. SMEs that
obtained financing from the platform experienced a 17
per cent increase in their annual revenue in 2018. GDP contribution from
Validus-assisted SMEs grew by 18 per cent. This is in contrast to the overall
GDP contribution by Singapore’s businesses of 5 per cent¹ in the
same year. In addition, SMEs who obtained financing from Validus experienced a
robust employment growth of 12 per cent as compared to 1 per cent the overall
employment growth of Singapore’s businesses¹.

 

“Validus is proud to be able to contribute to the
growth of Singapore SMEs. We want to provide growing SMEs faster access to zero-collateral
financing. The findings from Steward Redqueen’s study is a testament that our
online financing solutions are on track to make a significant impact in
plugging Singapore’s SME financing gap. As Validus prepares to apply for the
Digital Wholesale Banking licence in Singapore, we are confident that the
socio-economic impact will be positively higher given the digital
transformation that could be made possible through a digital banking licence,” said Vikas Nahata, Co-Founder and Executive Chairman,
Validus Capital. 

 

SMEs are seeking financing solutions to
drive sales, expand their local operations and internationalise their business.
Validus is filling a critical financing gap for SMEs across different
industries by leveraging the use of Validus’ proprietary technology to provide
efficient and flexible financing solutions that are customised to the needs of
the respective SME borrower.

 

Nahata added, “Many businesses continue to
hold the belief that having debt on their balance sheet is detrimental. Our
study reinforces that debt can be a growth-enabler when prudent capital
management is exercised. In order for us to continue serving the SME community,
we are partnering with banks and corporates who have SME vendor ecosystems to further facilitate affordable growth financing. This
allows more SMEs to tide through Singapore’s challenging economic environment,
while bringing innovative ideas to fruition and grow their business.”

 

“To estimate the impact results, we trace
how financial flows associated with Validus’ financing circulate in the
Singaporean economy. These flows are traced using the input-output (IO)
methodology; which is to a great extent developed by the Nobel Prize winning
economist Wassily Leontief and is commonly used by economists to quantify
indirect impacts. Notwithstanding its limitations, this approach provides
robust estimations and is the ‘go-to’ approach for many development finance
institutions around the globe,” said Tias van Moorsel, Managing Director of
Steward Redqueen Singapore.

 

Singapore’s economy grew by 0.1 per cent year-on-year (y-o-y) in the third quarter
of 2019,
narrowly avoiding a technical recession^[2].
On an annual basis, the Ministry of Trade and Industry (MTI) revised its growth
estimates to be between 0 and 1 per cent in 2019. Furthermore, SMEs are expecting their turnovers to be lower in the next two
quarters
owing to global macroeconomic conditions.

 

Earlier
in February 2019, Validus raised S$20.5 million in an oversubscribed Series B
funding round led by Dutch public-private development bank FMO and invests in
private sector growth in emerging markets. In July, Validus announced its plans
to be among the first Singapore fintechs to apply for a digital bank licence in
Singapore, with a vision to create
an inclusive, 360-degree solution for SMEs in
Southeast Asia. 

 

Validus also officially launched its
Vietnam entity, Validus Vietnam, yesterday in Ho Chi Minh City as part of
the company’s goal to drive business financing for SMEs in Southeast Asia.

About Validus Capital

Founded in 2015, Validus Capital is
Singapore’s largest SME financing platform, and has facilitated over S$300
million in business financing to SMEs in Singapore to date. Backed by AAA-rated
Dutch Development Bank FMO and Vertex Ventures, Validus holds a Capital Markets
Services Licence by the Monetary Authority of Singapore (MAS), and its
Indonesian arm Batumbu has received OJK registration in April 2019. As a
catalyst of sustainable growth for SMEs, Validus connects accredited investors
to SMEs through its peer-to-business lending platform, that is powered by
proprietary technology leveraging a secure and robust cloud infrastructure as a
delivery mechanism. For more information, please visit www.validus.sg.