FINTECH

Philippine-Based Fintech Startup First Circle Raises $26m VC Fund, Launches Credit Facility For SMEs

Philippine-based fintech startup First Circle has raised fresh investments of $26 million (P1.5 billion) in a Series A round led by Venturra Capital even as it launched a new credit facility backed by the Department of Trade and Industry (DTI), and the Bangko Sentral ng Pilipinas (BSP).

The funding round is a follow-on investment from international firms Insignia Ventures Partners, Silverhorn Investment Advisors, and tryb Group underscoring continued strong venture capital (VC) interest in Southeast Asia.

First Circle is using the fund for its new P1.5 billion online-based credit facility as part of its nationwide business expansion while it plans to hit similar markets in Southeast Asia in the midterm. It also seeks to increase its capital base to over $100 million next year.

Founded in 2015, First Circle does business-to-business (B2B) funding, and through its technology provides supply chain financing to small and medium enterprises (SMEs).

First Circle co-founder and CEO Patrick Lynch noted its latest business expansion and credit facility are results of the startup’s relentless focus on customer experience, realizing in billions of pesos in loan applications from thousands of SMEs.

Venturra Capital Stefan Jung, who has joined the startup’s board, said what sold them on First Circle was its unique risk-management capabilities.

first circle“They’re doing the hard things really well which enable them to keep prices low for customers, and at the same time deliver attractive, consistent returns for their funding partners,” Jung said.

Insignia Ventures founding managing partner Yinglan Tan, tagged cashflow management as the number one reason why small businesses go out of business, which First Circle is able to address through its wholly digital service in what is still a heavily paper-based environment

“This has opened up the market in the Philippines and we’re excited to support their regional expansion next year,” Tan said.

The credit gap in the Philippines, by some estimates, remains at $50 billion. Latest World Bank Findex data also ranks it as one of the countries with the highest ratio of business owners borrowing capital from relatives and friends.

“We believe First Circle will redefine how small businesses consume financial services first in the Philippines—then eventually the rest of Southeast Asia,” Jung added.

Throughout First Circle’s operations, it has raised up to $28.5 million in separate venture, and seed funding rounds led by global VC firms Accion Venture Lab, DeepBlue VC, and Key Capital. Among its other investors are 500 Startups, and IMJ Investment Partners.

In its bid to push for growth of SMEs, First Circle last December teamed up with Acudeen, also a local fintech startup that does receivable financing, a P2P (peer-to-peer) invoice marketplace that allows SMEs to convert their unclaimed receivables for cash to boost their cash flow.

Latest reports by BSP showed that while the number of Filipino adults with formal bank accounts jumped 22 per cent from 2015 to 2017, majority are still unbanked. It is because the figures represent only 15.8 million or 22.6 per cent of the Filipino adult population, which leaves plenty of room for improvement in financial inclusion.

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