Ask Me Anything! (AMA) With Kah Meng, CEO Funding Societies Malaysia.


  • Funding Societies

    Hi Crowdfunders,
    I will be hosting an AMA - Ask me anything session on on CrowdFund Talks Live at Tuesday 13th Feb, 4 PM (GMT + 8)
    During the AMA, I will be online and try to interact with all of you. If you have any questions or topics you want to discuss, please post them in this thread before hand.

    Introduction:

    From an early age, Kah Meng realised his passion for financial markets and since then has aspired to a career in the industry, one day hoping to contribute to its growth and development back home in Malaysia. Prior to Funding Societies, Kah Meng was based in Singapore as a management consultant with Oliver Wyman, a leading consulting firm with deep expertise in Financial Services. In his role, Kah Meng advised major banks across Southeast Asia on SME banking and risk management. Kah Meng has degrees in Actuarial Studies and Finance and graduated top of his class with First Class Honours. Kah Meng is also a CFA Charterholder and is a member of the CFA Society of Singapore and Malaysia.

    About Funding Societies
    Funding Societies is the largest regional P2P financing platform in Southeast Asia, connecting creditworthy SMEs with retail, high net worth and institutional investors. It is the only Southeast Asian P2P financing company selected to the Fintech 250, a global list of emerging private companies working on groundbreaking financial technology (FinTech).

    To date, Funding Societies has successfully crowdfunded more than RM330 million to more than 2000 SME financing in the Southeast Asia region. In September 2017, Funding Societies won the Global SME Excellence Award from ITU Telecom, a special agency of the United Nations, for its innovative solutions to create social impact.

    ----Posted at 5.30PM Tuesday 13 February 2018----
    Thanks everyone for joining us on the first of what will be many more AMAs to come. Hope you got your answers. If you missed the session, don't fret! You're welcome to add on your question here and we'll be happy to address them anytime.



  • @kahmeng Thanks a lot for taking the time.

    How do you see the default rate of P2P industry happening in Malaysia? Will the default rate increase significantly further if there is an economy downturn? What should we do to mitigate this risk?



  • Hi @kahmeng , thank you for availing yourself to your loyal investors. On behalf of many investors on your platform, kindly give us updates or the progress on any upgrading of deposit system. I believe you are pretty well aware that FS requires investors to use bank transfer + manual verification deposit system since the launching of FS Msia until now. Feedback was constantly voiced out to the platform via various channels and we investors were always being informed that some changes or implementation will be carried out soon, such as implementation of FPX. If FS is aiming to be best pioneer of this field, please consider this feedback seriously, expedite the upgrade process and at least update us the progress or challenges in achieving this. Honeslty speaking, it's far too outdated to use the current deposit system whilst your competitors have been using FPX ever since their first launch. It is a great downside of FS.

    Looking forward to your favorable reply.

    Sincerely,
    Joseph



  • Dear Kahmeng,

    Is their any limit to a person investing in your platform without necessary to declare his or her assets?
    How do we the Investor declared our income from your platform ? ( Example through your Statement or any summarized statement )



  • Dear Kah Meng,
    What is the difference between simple interest rate and effective interest rate. And how do I as an investor calculate my returns?



  • @eliteting said in Ask Me Anything! (AMA) With Kah Meng, CEO Funding Societies.:

    Dear Kahmeng,

    Is their any limit to a person investing in your platform without necessary to declare his or her assets?
    How do we the Investor declared our income from your platform ? ( Example through your Statement or any summarized statement )

    For Retail investors, the maximum you can invest is RM 50,000 across all your investments. There is no limit for High Net Worth and Institutional investors.

    Tax:-
    https://intercom.help/funding-societies-malaysia/investing-with-funding-societies/tax

    @ainunaida said in Ask Me Anything! (AMA) With Kah Meng, CEO Funding Societies.:

    Dear Kah Meng,
    What is the difference between simple interest rate and effective interest rate. And how do I as an investor calculate my returns?

    Understanding Simple vs Effective Interest:-
    https://intercom.help/funding-societies-malaysia/investing-with-funding-societies/understanding-simple-vs-effective-interest



  • very excited about this platform!
    I am mainly interested in measures taken to safeguard investors, thank you!



  • @ainunaida What if I had already invested more than Rm50k ? What should I do?



  • 1.Where do you see yourself in 5 years and 10 years down the road.

    1. What is your short term and long term goals.
    2. Is there a 'loyalty program for your loyal customers..e.g. reduced charges etc.

    Thanks!



  • @eliteting said in Ask Me Anything! (AMA) With Kah Meng, CEO Funding Societies.:

    @ainunaida What if I had already invested more than Rm50k ? What should I do?

    I highly doubt that Funding Societies will allow you to install more than 50K at the same time. They will be able to restrict this while you top up to load your account.



  • @jlhc My original question was " any limit to a person investing in FS platform " and not in one lump sum. My meaning is regularly TopUp until .......(any limit ? ). And if as a Retail Investor who had already Topup exceeding Rm50k what will happen or what next step should this Retail Investor take. My TopUp exceeded Rm50k



  • @eliteting So you mean your total top up is above RM50K? I don't think that's allowed so Funding Societies may have dropped the ball there.

    The only way to lift this restriction is if you are a High Net Worth individual.



  • @jlhc Can a retail investor like me to invest accumulatively more than rm50k? And how do you define high networth individuals?



  • Hi Kah Meng,

    Can FS include the investor ID in the factsheet of every new opportunities?



  • @richardchung85 sorry correction it should borrower ID.



  • @sherwei-vince These questions sound really like interview questions.. hmm..



  • @josephyiong ok, something different then. But not sure if he would reply. :)



  • What do you usually have for breakfast?



  • @richardchung85 No, you cannot invest more than a total of RM50K at any one time as a Retail Investor.

    The limit can only be lifted if you are an Angel Investor. The current requirement for that is either total net asset of RM3 Million or above, own salary of at least RM180K per year or combined salary with spouse of at least RM250K per year.



  • @kahmeng I would like to know if there is any progress on correcting the loan IDs that have appeared on the statements from 22 Jan. (5 digit number instead of usual MB*** format).
    Thank you



  • @kahmeng Would you consider including downloadable statements and portfolios in Excel csv format. This would make our account management much easier as the number of loans increases.
    Thank you



  • @jlhc How to be certified or verified as An Angel Investor ?



  • Hi Kah Meng, the statistic indicates 1.38% default, has this been fully recovered, is the cost of recover from part of the investment born by investors and how long in average?



  • @jlhc thank you for clarifying. I wonder how and why is this limit exist?



  • @eliteting said in Ask Me Anything! (AMA) With Kah Meng, CEO Funding Societies.:

    @jlhc How to be certified or verified as An Angel Investor ?

    Normally you are required to join the Malaysian Business Angel Network but Funding Societies may have different requirements so the best way is to contact them directly to check this.

    @richardchung85 said in Ask Me Anything! (AMA) With Kah Meng, CEO Funding Societies.:

    @jlhc thank you for clarifying. I wonder how and why is this limit exist?

    The limit is set by the government to reduce the exposure of unsophisticated investors to high risk or complex investments including P2P, Bonds and a few others.

    I think we can take this discussion into it's own forum post so as to not clutter up the AMA. :)



  • The statistics in the FSM website seems is across region from 3 countries. When will there shown Malaysia only statistics to reflect a true picture of FSM performance?



  • Hi, just like to request 2 simple reports for investors. What are the projects invested & completed and each ROI and overall ROI. Also, what are the ongoing projects invested, $ collected, $ outstanding, last payment date.

    I know some of these can be obtained on the screen (and monthly statements) but the bottom line is a lot of manual calculations needed to calculate above 2 reports.



  • What is the risk that Funding society will share with its investors when the funded SMEs went backcrupt out of sudden? and could you please explain further on default rate? does it mean repayment stops or delay or ceased to repay?



  • In your platform, can investors, we have information of particular company requesting fund to study the financial status of the company before invest in it?



  • @kahmeng, thanks for having such opportunity and initiative to connect with us.

    I have a few questions that I really do need your answers, appreciate it if you could take your time to clarify:

    1. Knowing that Funding Societies (FS) do invest in some/all Investment Note, would like to know on average how much FS invest (in %)? Is there a cap to the maximum amount allowable to FS?

    2. Please share and elaborate each of these actual scenario that FS has encountered in the past: (i) borrower default on payments (2) borrower failed to make punctual payment. ***Please include follow-up efforts undertaken by FS and also how the borrower responded.

    3. Understanding that borrower's company financial records are downloaded from SSM, is there any verification done and would there be a risk that the borrower not reporting them truthfully? (I am not too familiar with the accounting and auditing process).

    4. What would be the typical interest rate the bank is charging the SME for loans?

    5. Aware that FS is working on a new layout (https://new.fundingsocieties.com.my/), kindly explain how the "How Diversified Are You" bar was constructed?

    It would really be helpful to me if you can answer all the above! Thanks for your time.



  • I am mainly interested in measures taken to safeguard investors, thank you!

    Like if there is a default on the lenders side, does that mean that our investment is no longer recoverable?



  • I agree with @kc-lim. The data showing on the current dashboard is not clear enough. I think there are a lot of room for improvement. Please try to look at it from the investor perspective. What info would an investor care the most?


  • Funding Societies

    @rajni123 said in Ask Me Anything! (AMA) With Kah Meng, CEO Funding Societies.:

    @kahmeng Thanks a lot for taking the time.

    How do you see the default rate of P2P industry happening in Malaysia? Will the default rate increase significantly further if there is an economy downturn? What should we do to mitigate this risk?

    Hi Rajni - that is an excellent question and a point which we consistently emphasize to our investors: Defaults are inevitable as SMEs face the risk of financial distress, business failure, etc. in the course of running their business. Therefore, the current 0% default rate across P2P platforms may not be sustainable. Default rates in the single digits (%) may be expected over the longer term but given how young the P2P industry is generally, we'd expect some volatility / variability around the default rate. To your point, we'd generally expect default rates to rise and fall in line with the economic cycle and we manage this risk by focusing on shorter term financing solutions for SMEs.

    We would suggest investors to diversify their portfolio across many SMEs as this would help to cushion any losses due to a default. As a platform, we maintain a low investment amount (RM 100) to enable investors in all walks of life to do this effectively.


  • Funding Societies

    @josephyiong said in [LIVE NOW] Ask Me Anything! (AMA) With Kah Meng, CEO Funding Societies.:

    Hi @kahmeng , thank you for availing yourself to your loyal investors. On behalf of many investors on your platform, kindly give us updates or the progress on any upgrading of deposit system. I believe you are pretty well aware that FS requires investors to use bank transfer + manual verification deposit system since the launching of FS Msia until now. Feedback was constantly voiced out to the platform via various channels and we investors were always being informed that some changes or implementation will be carried out soon, such as implementation of FPX. If FS is aiming to be best pioneer of this field, please consider this feedback seriously, expedite the upgrade process and at least update us the progress or challenges in achieving this. Honeslty speaking, it's far too outdated to use the current deposit system whilst your competitors have been using FPX ever since their first launch. It is a great downside of FS.

    Looking forward to your favorable reply.

    Sincerely,
    Joseph

    Hi Joseph, thanks for your feedback! As investors ourselves, we know the pain of manual fund transfers for you, and have been working hard with our vendors to launch FPX in the midst of working on a few other improvements to the user experience, like the new version of our website and investor dashboards. Thanks for bearing with us while we thoroughly test and implement FPX. It's akan datang, we promise!


  • Funding Societies

    @eliteting said in [LIVE NOW] Ask Me Anything! (AMA) With Kah Meng, CEO Funding Societies.:

    Dear Kahmeng,

    Is their any limit to a person investing in your platform without necessary to declare his or her assets?
    How do we the Investor declared our income from your platform ? ( Example through your Statement or any summarized statement )

    Hi there! For retail investors (i.e. anyone who earns less than RM 180k per annum) we strongly recommend a RM50,000 limit for outstanding exposure (i.e. your principal in loans that have not yet been paid back). On the other hand, for angel investors / high income / high net worth investors (you may find the below definitions useful) there is no recommended limit as that would be driven primarily by the risk appetite and investment capacity of the individual.

    Angel Investors are either High Net Worth Individuals (Total Wealth Or Net Personal Assets Of RM 3 Million And Above Or Its Equivalent In Foreign Currencies) or High Income Earner (Gross Total Annual Income Of Not Less Than RM 180, 000 In The Preceding 12 Months; Or RM 250, 000 Jointly With One’s Spouse) and usually have higher risk appetite, or are more experienced with investments of varying risk.

    For context, we ask for source of wealth declaration (your employment / business / assets details) due to anti-money laundering and identity verification reasons and is not meant to invade your privacy. All your information is kept with the strictest confidence. Hope that addresses your concern about having to declare your income!



  • Is it true that the issuers who come to Funding Societies have bad credit rating? As the good ones would most probably have gone to bank for financing.



  • What are the main advantages of debt crowdfunding for businesses and investors?


  • Funding Societies

    @ainunaida said in [LIVE NOW] Ask Me Anything! (AMA) With Kah Meng, CEO Funding Societies.:

    Dear Kah Meng,
    What is the difference between simple interest rate and effective interest rate. And how do I as an investor calculate my returns?

    Hi Aida - the difference is driven by the repayment schedule of the financing. For example, under term financing, SMEs repay the financing on monthly installments so investors actually receive their investment capital back throughout the course of the financing tenure. This effectively lowers the investment amount of an investor (it actually works out to be about half the initial $ outlay) - this differs significantly from say, fixed deposits or mutual funds, whereby the invested capital is held throughout the term of the investment (until they are sold / mature). You might find the below link useful as well. Hope this helps!

    https://intercom.help/funding-societies-malaysia/investing-with-funding-societies/understanding-simple-vs-effective-interest


  • Funding Societies

    @lchch said in [LIVE NOW] Ask Me Anything! (AMA) With Kah Meng, CEO Funding Societies.:

    very excited about this platform!
    I am mainly interested in measures taken to safeguard investors, thank you!

    Hello! We're very excited about you coming on-board too! That's one of our key priorities (balancing it off against the rights / interest of SMEs as well). We take a variety of measures to safeguard investor funds, namely:

    1. Funds are managed by an independent licensed trustee (Malaysian Trustee Berhad) where we won't have direct access. Also, in the event that Funding Societies ceases to operate, your money will still be safe with the trustee.

    2. We minimize the risk of SMEs defaulting through a thorough due diligence and credit assessment of the SME, including performing site visits and interviews on the directors of the SME. We also review CTOS and CCRIS information of the SME and its directors as part of our risk assessment process. We obtain personal guarantees from directors and shareholders of the SME and can pursue legal action against the SME and guarantors in the event of a default.

    3. We practice a “Skin-in-the game philosophy” where approved employees (to ensure no conflict of interest) of Funding Societies personally invest into each SME that is being crowdfunded on the platform, therefore helping to align our interest with investors and mitigate any concerns / conflict of interest.


  • Funding Societies

    @sherwei-vince said in [LIVE NOW] Ask Me Anything! (AMA) With Kah Meng, CEO Funding Societies.:

    1.Where do you see yourself in 5 years and 10 years down the road.

    1. What is your short term and long term goals.
    2. Is there a 'loyalty program for your loyal customers..e.g. reduced charges etc.

    Thanks!

    Hi Vince! Interesting questions :)

    1, 2. Its been an exciting 2 years since I came home to Msia and am enjoying every bit of it! Time certainly flies. Would see myself and the team here at Funding Societies trying to continuously break new ground in the P2P financing space (balancing the interests and needs of SMEs and investors). The P2P space in Malaysia and SE Asia is still fairly young and there is just so much to look forward to. Ideally, we'd like to see P2P financing become a mainstream channel for SMEs financing and investments.

    1. We are really encouraged by the level of support investors have given us since we launched early last year. We're actually currently putting together a loyalty programe that rewards investors with promotions, discounts and early access to new user features, etc. You can look forward to announcements about this later in the year!

  • Funding Societies

    @athenaneo said in [LIVE NOW] Ask Me Anything! (AMA) With Kah Meng, CEO Funding Societies.:

    What do you usually have for breakfast?

    Hi Athena! Haha good one, being nocturnal, I trade off breakfast in order to make it on time for work :)


  • Funding Societies

    @alistair-black said in [LIVE NOW] Ask Me Anything! (AMA) With Kah Meng, CEO Funding Societies.:

    @kahmeng I would like to know if there is any progress on correcting the loan IDs that have appeared on the statements from 22 Jan. (5 digit number instead of usual MB*** format).
    Thank you

    Hi Alistair - thanks for following up and really sorry. Our team is working to revert to the regular MBBT/MBIF codes by early next week! Stay tuned :-)


  • Funding Societies

    @alistair-black said in [LIVE NOW] Ask Me Anything! (AMA) With Kah Meng, CEO Funding Societies.:

    @kahmeng Would you consider including downloadable statements and portfolios in Excel csv format. This would make our account management much easier as the number of loans increases.
    Thank you

    Yes, this feature is already in the pipeline. In the meantime, feel free to check out the new filters in the Portfolio page in our sneak preview of our new website (just click on the round purple circle once you log-in, fyi - you can easily toggle back to the current version of the website). Do note that we're still working on it but have opened it up for comments and feedback.

    Let us know how we can make it better!


  • Funding Societies

    @steven-ee said in [LIVE NOW] Ask Me Anything! (AMA) With Kah Meng, CEO Funding Societies.:

    Hi Kah Meng, the statistic indicates 1.38% default, has this been fully recovered, is the cost of recover from part of the investment born by investors and how long in average?

    Hi Steven! The default rate is based on the principal repayment amount that's been delayed 60 (invoice financing) or 90 (term financing) days past the due date of the repayment. [Do note that the 1.38% is a group-wide regional number]. We're still working to recover the amount through various debt collection efforts and legal processes but all these take time. Important point to note is that the debt collection fees are borne by the SME (on a success basis) whereas legal fees are pooled together by investors.


  • Funding Societies

    @eliteting said in [LIVE NOW] Ask Me Anything! (AMA) With Kah Meng, CEO Funding Societies.:

    @jlhc How to be certified or verified as An Angel Investor ?

    Hi there! Have responded to this in your earlier post :)


  • Funding Societies

    @richardchung85 said in [LIVE NOW] Ask Me Anything! (AMA) With Kah Meng, CEO Funding Societies.:

    @richardchung85 sorry correction it should borrower ID.

    Hi Richard - thanks for the suggestion! Sounds like a useful piece of information to have in the factsheet for easy reference. Let me take this up with the team!


  • Funding Societies

    @kt said in [LIVE NOW] Ask Me Anything! (AMA) With Kah Meng, CEO Funding Societies.:

    In your platform, can investors, we have information of particular company requesting fund to study the financial status of the company before invest in it?

    Hi KT - We provide a summary of the financials of the SME as well as other relevant information pertaining to the SME as part of the factsheet, which you can download via our website or mobile application. We include information such as nature of business, brief overview of the directors, bank statement information, etc. Do note that, however, we do not reveal the name of the SMEs because we need to protect their interest and privacy, too (but will be shared in the event of default).



  • Dear Kahmeng,
    Just another question.

    I notice there are some borrowers who have multiple loans with FS thats has yet to be settled and yet FS approved their new crowdfunding application. Worried that they might be raising funds to pay off the earlier loans.
    On top of that, are there any mechanisms that FS has implemented to detect/prevent evergreening of loans?

    Ps. High five!! I don't take breakfast too! Just to be at work on time :P


  • Funding Societies

    @bhlim1990 said in [LIVE NOW] Ask Me Anything! (AMA) With Kah Meng, CEO Funding Societies.:

    What is the risk that Funding society will share with its investors when the funded SMEs went backcrupt out of sudden? and could you please explain further on default rate? does it mean repayment stops or delay or ceased to repay?

    Hi Lim!

    We will certainly notify all affected investors in the event that an SME went into bankruptcy and we will work closely with the SME to help minimize the loss to our investors.

    The default rate is based on the principal repayment amount that's been delayed 60 (invoice financing) or 90 (term financing) days past the due date. In those circumstances, we'd still continue with our recovery efforts and potentially legal action unless we advise our investors otherwise.


  • Funding Societies

    @athenaneo said in [LIVE NOW] Ask Me Anything! (AMA) With Kah Meng, CEO Funding Societies.:

    Dear Kahmeng,
    Just another question.

    I notice there are some borrowers who have multiple loans with FS thats has yet to be settled and yet FS approved their new crowdfunding application. Worried that they might be raising funds to pay off the earlier loans.
    On top of that, are there any mechanisms that FS has implemented to detect/prevent evergreening of loans?

    Ps. High five!! I don't take breakfast too! Just to be at work on time :P

    Hi Athena!

    Appreciate the concern that, on the surface, there appears a risk of raising subsequent funds to pay off previous facilities. However, the rationale for granting subsequent / additional financing is typically due to the business growth of the SME after our initial engagement with them (unfortunately, given that our financing is typically short term in nature, this may not be reflected in the management accounts / audited financials but we verify it through analysis of their bank statements, debtor and creditor aging, etc.). There are also situations whereby we provide a relatively modest financing to engage with newer SMEs and once they have proven their repayment track record, we would be more comfortable extending them additional financing.

    There's actually a discussion thread you might find useful: https://www.crowdfundtalks.com/topic/132/repeated-borrowers-and-existing-exposure


  • Funding Societies

    @kc-lim said in [LIVE NOW] Ask Me Anything! (AMA) With Kah Meng, CEO Funding Societies.:

    Hi, just like to request 2 simple reports for investors. What are the projects invested & completed and each ROI and overall ROI. Also, what are the ongoing projects invested, $ collected, $ outstanding, last payment date.

    I know some of these can be obtained on the screen (and monthly statements) but the bottom line is a lot of manual calculations needed to calculate above 2 reports.

    Hi KC! Thanks for your detailed feedback. Coincidentally, this is something that the team is working on right now! We're reviewing the investor dashboard and compiling the most useful metrics for you and will be rolling this out on our new web interface in the next month or so. Do bear with us in the mean time!


  • Funding Societies

    @jj7102 said in [LIVE NOW] Ask Me Anything! (AMA) With Kah Meng, CEO Funding Societies.:

    The statistics in the FSM website seems is across region from 3 countries. When will there shown Malaysia only statistics to reflect a true picture of FSM performance?

    Hi JJ!

    We currently show our group / regional statistics on our website instead of country-level statistics as we believe it provides a more reflective picture of our overall performance. For example, we have a 0% default in Malaysia to-date but that may not necessarily hold in future as the business grows / matures (defaults are inevitable due to the risk SMEs face throughout the course of running their business). Hence, we believe that an aggregated view of our performance provide a more balanced view with a longer track record / repayment history (we are really 1 company across 3 countries).

    Hope this clarifies!


  • Funding Societies

    @t-siong-ong said in [LIVE NOW] Ask Me Anything! (AMA) With Kah Meng, CEO Funding Societies.:

    I agree with @kc-lim. The data showing on the current dashboard is not clear enough. I think there are a lot of room for improvement. Please try to look at it from the investor perspective. What info would an investor care the most?

    Thanks for the feedback, Ong! We're reviewing the dashboard and compiling the most useful metrics for investors (based on their feedback) and will be rolling this out on our new web interface in the next month or so!


  • Funding Societies

    Thanks Kah Meng and everyone here for your participation in our first but not the last AMA. Have a wonderful CNY week ahead everyone!


  • Funding Societies

    @azim-rahim-lajis said in Ask Me Anything! (AMA) With Kah Meng, CEO Funding Societies.:

    I am mainly interested in measures taken to safeguard investors, thank you!

    Like if there is a default on the lenders side, does that mean that our investment is no longer recoverable?

    Hi Azim - we take a number of measures to safeguard investors (let me quickly recap below from another post). And yes, investors face the risk of loss of their investment for the portion of the principal repayments which have yet to be repaid. This is an important distinction for our term finance product, since SMEs are required to make principal repayments throughout the tenure of the financing, hence lowering the exposure of investors.

    1. Funds are managed by an independent licensed trustee (Malaysian Trustee Berhad) where we won't have direct access. Also, in the event that Funding Societies ceases to operate, your money will still be safe with the trustee.

    2. We minimize the risk of SMEs defaulting through a thorough due diligence and credit assessment of the SME, including performing site visits and interviews on the directors of the SME. We also review CTOS and CCRIS information of the SME and its directors as part of our risk assessment process. We obtain personal guarantees from directors and shareholders of the SME and can pursue legal action against the SME and guarantors in the event of a default.

    3. We practice a “Skin-in-the game philosophy” where approved employees (to ensure no conflict of interest) of Funding Societies personally invest into each SME that is being crowdfunded on the platform, therefore helping to align our interest with investors and mitigate any concerns / conflict of interest.


  • Funding Societies

    @jonhan said in Ask Me Anything! (AMA) With Kah Meng, CEO Funding Societies.:

    Is it true that the issuers who come to Funding Societies have bad credit rating? As the good ones would most probably have gone to bank for financing.

    Hi Jonhan!

    We do get a lot of financing applications from SMEs (but am sure they would have approached banks too). For us, the focus is not to compete with banks for the "good" SMEs but rather we focus on solving a different financing need for SMEs - specifically, very short term cash flow requirements (whether for growth, expansion or working capital needs) and the speed at which we are able to disburse funds to the SMEs. Banks typically provide longer term working capital financing 5 - 7 years tenure and take collateral to protect against any risk of default, whilst we focus on financing typically less than 12 months but do not take collateral (in exchange for higher interest rates on an annualized basis, the total interest costs would still be lower compared to banks). Banks also take 1 - 2 months for disbursement of funds to SMEs whilst we typically take 1 - 2 weeks (depending on quantum).

    Ultimately, the reason why we are able to do what we do is because of our lean cost structure (e.g. no branch maintenance costs, etc.) driven by our technology-focused solutions.

    Hope this clarifies!


  • Funding Societies

    @nick said in Ask Me Anything! (AMA) With Kah Meng, CEO Funding Societies.:

    What are the main advantages of debt crowdfunding for businesses and investors?

    Hi Nick!

    The key advantage for SMEs is that we focus on short term financing and hence less need for collateral to protect against default risk. The other key advantage is disbursement speed whereby we are able to disburse funds much faster, typically within 1 - 2 weeks upon approval. We are also regulated by Securities Commission - so it's safe to get financing / invest with us!

    On the other hand, the key advantage for investors is that we provide short term (typically less than 12 months), liquid investment opportunities which are not market correlated (i.e. doesn't matter what happened yesterday on NYSE / NASDAQ / KLSE as the SME would still be running their business as usual). Also, our service fees are much lower compared to alternative investment options (e.g. mutual funds, etc.) and provide better returns than cash-based investment instruments (e.g. fixed deposits, etc.).

    Hope this helps!


  • Funding Societies

    @chuan_321 said in Ask Me Anything! (AMA) With Kah Meng, CEO Funding Societies.:

    @kahmeng, thanks for having such opportunity and initiative to connect with us.

    I have a few questions that I really do need your answers, appreciate it if you could take your time to clarify:

    1. Knowing that Funding Societies (FS) do invest in some/all Investment Note, would like to know on average how much FS invest (in %)? Is there a cap to the maximum amount allowable to FS?

    2. Please share and elaborate each of these actual scenario that FS has encountered in the past: (i) borrower default on payments (2) borrower failed to make punctual payment. ***Please include follow-up efforts undertaken by FS and also how the borrower responded.

    3. Understanding that borrower's company financial records are downloaded from SSM, is there any verification done and would there be a risk that the borrower not reporting them truthfully? (I am not too familiar with the accounting and auditing process).

    4. What would be the typical interest rate the bank is charging the SME for loans?

    5. Aware that FS is working on a new layout (https://new.fundingsocieties.com.my/), kindly explain how the "How Diversified Are You" bar was constructed?

    It would really be helpful to me if you can answer all the above! Thanks for your time.

    Hi Chuan - its actually my pleasure and privilege to be able to connect with you and the rest of the investors! To address your questions:

    1. As a company, we are not allowed to invest into SMEs on our platform. However, myself and other approved team members (to mitigate conflict of interest) invest our own personal funds into each of the SMEs (we are treated the same way as other investors when it comes to investing into each deal as well as in the event of defaults). There is no maximum cap as we are investing as private individuals but the intention is to align our interest with our investors and not to crowd them.

    2. There are no defaults (yet) in Malaysia. Based on our experience in Singapore, we follow-up closely with SMEs as soon as repayments are late. We have also engaged with our panel of external debt collection agencies and lawyers to support collection / legal efforts in the event of uncooperative SMEs (e.g. continually breaks their promise to pay, uncontactable, etc.). Having said that, we also need to ensure that we are fair to SMEs and help them through their difficult times - SMEs continually face the risk of business failure and/or financial distress, so we need to be understanding too.

    3. We actually go through the full version of the financial statements of the SMEs. Nevertheless, the financial statements is only one component of our risk assessment and due diligence process as we also review their CCRIS information (of the directors and of the SME), bank statements, company registration documents, etc. Essentially, we review every SME application holistically as we understand that each SME has a different set of circumstances in which they operate and a one-size-fits-all approach isn't effective.

    4. It varies a lot really, depending on whether the loan is secured and unsecured, risk profile of the SME, business strategy / risk appetite of the particular bank, etc. However, for unsecured loans (which is usually just a fraction of most bank's entire SME loan book portfolio), rates would be in the mid to high single digits. However, do bear in mind that bank loans are over a much longer period of time, so even whilst their annualised interest rate % is lower, they'd add up to a much larger amount (in both total % and $ amount) than what we charge on our platform.

    5. The "How diversified are you?" bar was constructed using a few parameters, including number of deals you invested in, type of deals you invested in, amount invested in each deal, number of financing missed out on, etc. Essentially, in order to achieve a good diversification score, you'd have to ensure you spread out your investments into as many deals as possible.



  • Hi, sorry I missed the AMA but I have a few questions:-

    1. I would like to see the reserves and retained earnings portion of the company's financial statement in the factsheet. Do you think FS can implement it?
    2. From the earlier days of FS Malaysia, FS used to divulge the company's name to the investors. As there is no default yet in Malaysia, I would like to know if the company's name will be let known to the investors in the event the company defaults?
    3. What is the percentage of the investment out of the total between retail investors like myself and institutional investors in FS Malaysia?

  • Funding Societies

    @edward-foong-pooi-sing said in Ask Me Anything! (AMA) With Kah Meng, CEO Funding Societies.:

    Hi, sorry I missed the AMA but I have a few questions:-

    1. I would like to see the reserves and retained earnings portion of the company's financial statement in the factsheet. Do you think FS can implement it?
    2. From the earlier days of FS Malaysia, FS used to divulge the company's name to the investors. As there is no default yet in Malaysia, I would like to know if the company's name will be let known to the investors in the event the company defaults?
    3. What is the percentage of the investment out of the total between retail investors like myself and institutional investors in FS Malaysia?

    Hi Edward - First off, a very happy CNY to you and your loved ones! Now, back to the questions at hand:

    1. Thanks for the feedback! We do keep track of our investors' feedback and where there is notable interest in a particular feature / enhancement, we'd look to implement the changes. At the moment, the factsheet does allow one to measure the retained earnings and reserves using the following formula: Retained earnings = Equity - Share Capital (both pieces of information can be found within the factsheet).

    2. Yes, we no longer reveal the company's name to investors as we aim to strike a better balance between the privacy and interests of both our SMEs and investors (imagine thousands of Malaysians know of a particular SME looking for financing). Nevertheless, we'd reveal the name of the SME in the event of a default as it would be fair to affected investors to have a more detailed understanding of the situation, nature of default and the recovery actions that are being taken.

    3. The majority of investments are still being made by retail investors - though we do have institutional investors onboard in both Msia and regionally. However, the balance between retail and institutional investors is something which we are keenly aware off and ponder upon so as to ensure that both parties have a fair chance of investing!


  • Funding Societies

    Hey everyone! For the people who still have some leftover questions, @kelvinteo is doing another AMA soon. Please tune in.
    https://crowdfundtalks.com/topic/447/ama-i-m-kelvin-teo-co-founder-ceo-of-funding-societies-modalku-ask-me-anything


 

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