Thursday, 2024 May 30

Fintech startup First Circle secures $26m as it eyes regional SME market

Philippines small medium enterprise (SME) lending startup First Circle raises US$26m in a Venturra Capital-led Series A financing round, bringing its total fundraising up to US$28.5m to-date. Other backers of this round include Tryb Group, Silverhorn Investment Advisors, and Insignia Ventures Partners.

This latest fundraising will provide the necessary ammunition for First Circle to foray into other Southeast Asian markets like Thailand and Indonesia to name a few, in addition to expanding nationwide to strengthen its domestic market leading position.

Founded in 2015, First Circle’s main goal was to provide Filipino SMEs the required financial support to optimize their business growth. The firm’s co-founder Patrick Lynch believes that the problem of lack of capital access in the Philippines and Southeast Asia in general needs to be solved.

Unlike the Western world where most would take small business lending for granted, it is far more difficult for small business owners in emerging markets to qualify for business loans. One common issue would be the lack of borrowers’ data for business lenders to operate like those in developed countries. And another would be the general perception of high default risks amongst small business owners.

Currently, First Circle relies on new and alternative data points to circumvent the problem to provide supply chain and trade financing loans to SMEs in the Philippines, without the prerequisite of prior loan histories. Though First Circle uses non-traditional metrics to underwrite loans, it still adheres to the main underlying logic of extending credit with a degree of certainty.

The expertise built in these specific areas and doing away with the laborious paper trails also allow First Circle to extend the loans in a quicker manner by effectively reducing the average loan approval time by as much as 5 hours.

As of now, the company has processed up more than $100 million loan deals to-date, and with more data to be stored and processed, it will help to make the process easier.

Editor: Ben Jiang


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