Validus, a groundbreaking digital lending platform based in Singapore, has recently secured $50 million in debt financing from HSBC as part of the ASEAN Growth Fund strategy. This funding will play a crucial role in supporting the financial inclusion of micro, small, and medium enterprises (MSMEs) in Indonesia, aiming to alleviate the challenges these businesses face when trying to access financial resources.
Indonesia boasts a staggering 64.2 million MSMEs, contributing a significant 61% to the country’s GDP. This sector also employs about 119.6 million individuals, making up 97% of the total workforce in Indonesia. Despite these impressive figures, only a fraction of around 17.5 million MSMEs are currently leveraging the online ecosystem and e-commerce platforms. The main roadblock hindering their growth is the difficulty in obtaining financing from commercial banks, mostly due to strict operational, reporting, and collateral requirements set forth in a 2017 report by the World Bank. Even with government initiatives in place, only a mere 20% of bank loans are directed towards MSMEs, as reported by the World Bank.
Founded in 2015 by Vikas Nahata and Nikhilesh Goel in Singapore, Validus has pioneered a supply chain-focused lending model that leverages non-traditional data access through partnerships with traditional banks and international institutions. Since its inception, the company has expanded its operations to Indonesia (Batumbu), Thailand (Siam Validus), and Vietnam (Validus Vietnam).
Goel, CEO of Validus, highlighted how traditional banks in Southeast Asia still rely on outdated credit evaluation methods for small businesses, often overly dependent on historical financials and property-backed collateral. In a region experiencing notable annual GDP growth, small businesses urgently need accessible working capital to expand their operations, create employment opportunities, and aid in nation-building. Validus has emerged as a key player, serving as the largest digital SME financing provider across ASEAN.
With MSMEs being its primary user base, Validus caters to their short-term working capital requirements. The platform’s lenders range from major international institutions like Citibank, HSBC, and Credit Saison, to leading local banks in Indonesia and Thailand. One of Validus’ standout features is its extensive network of over 100 partnerships throughout Southeast Asia, setting it apart as a leading SME financing marketplace in the region with an impressive monthly loan disbursal average of $150 million.
In the past three years, Validus has experienced substantial growth in both revenue and net profits, with Goel citing a 69% CAGR in consolidated group revenues. Notably, the Indonesia segment, Validus’ largest market, has been net profit positive since 2022, contributing positively to the group’s cash flow. With EBITDA margins exceeding 50%, Validus aims to achieve cash flow positivity at a consolidated group level by early next year.
Having raised approximately $75 million in total equity funding, Validus continues to attract support from notable investors such as Vertex Ventures Southeast Asia and India, FMO, and NongHyup Financial Group, among others. With offices in five countries and a strong team of over 300 professionals, Validus is on a mission to empower MSMEs across Southeast Asia and reshape the landscape of digital lending in the region.
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