CapitalBay says it allows SME suppliers to receive early payments at attractive rates
Malaysian fintech startup CapitalBay has raised RM 2 million (US$477,000) in funding in a seed round from KK Fund.
It will use the newly-raised financing to accelerate product development, build up its team and ramp up customer acquisition.
Founded by three Malaysians Ang Xing Xian, Dion Tan and Edwin Tan, CapitalBay’s objective is to ease the flow of invoice payments between businesses — SME suppliers and corporate buyers — in what is referred to as the supply chain financing ecosystem.
According to CapitalBay, SME suppliers in Malaysia have to wait 50 per cent longer to collect their invoice payments than just 3 years ago. Financing options and loans are available to help them tide over the waiting period but these options often require collateral, which most SMEs do not possess.
CapitalBay addresses this pain point by partnering financial institutions who help SME suppliers receive early payments at attractive rates. The financers conduct risk assessments based on the buyers’ credit strengths before issuing the money, with no collateral required.
Corporate buyers with enough cash can also stand to receive high returns on their stash by funding the financing supply chains themselves.
“Suppliers request early payment of their approved invoices at a rate that works for them, and buyers indicate their cash availability. CapitalBay’s proprietary algorithm will then route and match the orders, at the same time automating all other related operations,” said CapitalBay.
Beyond its marketplace applications, CapitalBay’s platform also serves to bolster all stakeholders in the invoicing ecosystem, providing services such as security features, risk algorithms, credit assessment, and trade data analysis.
“Supply Chain Finance market is a potentially huge market (more than US$2 trillion opportunity globally), but due to the complexity, it is still largely untapped in Southeast Asia. CapitalBay is the one, and the only player who is minimizing this complexity, in Southeast Asia and this would be an excellent opportunity for both Buyers and Suppliers.”, said KK Fund’s general partner, Koichi Saito, in an official press statement.
“Our Bursa-listed clients have collectively more than 1000 suppliers that we are working to provide access to supply chain finance,” Brian Choong, Head of Marketing at CapitalBay, told e27.
The genesis for CapitalBay actually began two years ago, but the platform was only officially launched recently. A lot of groundwork had to be done prior to the launch. establishing the legal framework — ensuring that it is legally compliant.
“After that, [we] actually spent a lot of time developing our proof of concept and building up the technical, legal and operational infrastructure. Our business model is in the corporate space, handling transactions for large clients and banks – therefore we need to ensure that everything goes through double / triple check before actually rolling that out,” said Brian Choong, Head of Marketing at CapitalBay.
Then, the team had to sell their idea to finance institutions, corporations and other businesses. Many of them were at first skeptical of CapitalBay’s ability to pull off something this ambitious — disrupting the invoicing process — Choong recalled.
“However, a few large corporations saw the opportunities to use this as a tool to gain a competitive edge over their peers. At the same time, a few local banks also were just starting to expand their capabilities in this space – and that’s where we felt like this would really work,” said Choong.
Going forward, CapitalBay’s key focus would be is to use technology to improve the user experience – from initial on-boarding to all the subsequent transactions. CapitalBay is also exploring blockchain applications with several partners.
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Image Credit: CapitalBay
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