Funding Societies | Modalku, the largest unified small and medium enterprises (SME) digital finance platform in Southeast Asia, has on Thursday announced that it has raised US$25 million in equity investment from Japan’s sovereign wealth fund Cool Japan Fund (CJF).

The investment from CJF signifies the fund’s first investment into a Fintech company in Southeast Asia, Funding Societies said in a statement.

Funding Societies said it will funnel the investment to deepen its core business in SME financing across its five markets (Singapore, Indonesia, Malaysia, Thailand and Vietnam); whilst further expanding its payments business since embarking on it in 2022.

Having served SMEs in fulfilling their business potential for a decade, the company will focus on helping businesses get paid faster through innovative receivables and financing solutions.

It will also leverage technology and artificial intelligence (AI) to digitize and automate lending origination processes.

These initiatives and synergies between payments and lending, align with the company’s objectives of achieving growth and profitability.

Through this investment, Funding Societies will also embark on a partnership with CJF, leveraging the former’s strong track record in serving SMEs in Southeast Asia, to provide financial services to support Japanese companies.

The partnership will foster positive commercial relations for Japanese companies and local SMEs in the region, and help expand overseas demand for attractive products and services unique to Japanese lifestyle and culture by supporting the overseas business expansion of Japanese companies engaged in providing them.

“We’re honored for the commitment from Cool Japan to collaborate and support Japanese companies expanding overseas,

“Many businesses we serve in Southeast Asia are Japanese firms, suppliers and/ or customers to them. Together with CJF, we intend to further strengthen these ties,” said Kelvin Teo, Co-founder and Group Chief Executive Officer of Funding Societies | Modalku.

It is noted that annually, Japanese direct investment in the ASEAN region averaged about $18.6 billion.

Furthermore, there are approximately 15,000 business establishments set up by Japanese companies in the region.

In a 2024 survey conducted by the Japan Bank for International Cooperation, asking 500 Japanese companies their top 10 promising countries for overseas business development, ASEAN countries made up half the list.

“We are excited to be backing Funding Societies through this investment. Their track record of supporting SMEs in Southeast Asia well places them to help Japanese companies overcome challenges when entering new overseas markets – particularly in this region,

“With the shift of interest from Japanese firms steering towards Southeast Asia, we believe our partnership with Funding Societies through this investment will grow the overseas demand of Japanese products and services, in turn, benefitting Japan’s economy as well as the local SMEs doing business with Japanese companies,” said Kenichi Kawasaki, President and Chief Executive Officer of CJF.

According to the statement, revenue of digital financial services in Southeast Asia is projected to be on the ascent, with digital lending to be the biggest driver – contributing approximately 65 percent of the total revenue.

The total loan book has a year-on-year growth of over 20 percent to $71 billion from 2023 to 2024 (only covering under 1 percent of the $2.5 trillion credit access gap in the region, and is expected to grow steadily to approximately $200-300 billion by 2030.

This injection follows successful milestones in 2024 achieved by Funding Societies including: a strategic equity investment from Maybank; and a third annual credit facility from HSBC’s ASEAN Growth Fund which is part of an accumulative commitment of over $100 million credit facility
with the bank.

To date, Funding Societies has achieved over $4 billion in business financing serving about 100,000 SMEs, and processed an annualized payments gross transactions value (GTV) of over $1.4 billion – since expanding into its payments business in 2022.

Funding Societies | Modalku is backed by SoftBank Vision Fund 2, Maybank, Khazanah Nasional Berhad, CGC Digital (the digital arm of the Credit Guarantee Corporation Malaysia Berhad), SBVA (previously SoftBank Ventures Asia), Peak XV Partners (previously Sequoia Capital India), Alpha JWC Ventures, SMBC Bank, BRI Ventures, VNG Corporation, Rapyd Ventures, Endeavor, EBDI, SGInnovative, Qualgro, and Golden Gate Ventures among others.

Licensed in Singapore, Indonesia, Thailand, registered in Malaysia, and operates in Vietnam, the finTech company provides $1 billion annually of business financing to SMEs.

Since embarking on its strategic milestone to expand into payments, the company processes an annualized $1.4 billion in gross transactions value, following the acquisition of regional digital payments platform CardUp in 2022.

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