Helping the little guys: How startups are working with Visa to serve SMEs

As published in Tech in Asia and SMEPortal SG

All businesses need to balance their books. While small and medium enterprises (SMEs) are known to be innovative and agile, they are not spared from traditional accounting challenges, particularly with cash flow and resource management. Moreover, for businesses with limited means, poor management of resources can result in loss of efficiency.

Why help SMEs? What they may lack in muscle or size, they more than make up for it with numbers and impact. SMEs can power economic growth, especially when they constitute most of a country’s businesses. In Singapore, for example, they account for 99 percent of total enterprises.

To help SMEs manage their resources and cash flow, two Singapore-based startups are working with payments giant Visa. Validus is an online lending marketplace that caters to SMEs while iPaymy for Business enables small businesses to pay large, recurring expenses using a credit card.

Here’s the story of how this collaboration came about.

Step 1: Start the conversation

Option 1: A continuous process of talking

Nikhilesh Goel, chief operating officer at Validus, believes in working with industry leaders, especially when his startup builds innovative solutions in the fintech space.

Validus provides SMEs with short- and medium-term financing from accredited individuals and institutional lenders. SMEs can apply through the online platform 24/7, and get funding within 48 hours. What they lack in muscle or size, they more than make up with numbers and impact.

“Don’t grow in isolation – grow with a large partner,” Goel advises. “When you look at financial services, a lot of what we do has existed forever. Fintechs are either enabling services through technology or extending them to those who have missed out. To truly scale up, fintechs need to partner with major players.”

According to Goel, Validus had long been eager to work with Visa. “We’ve always been in touch with them at an informal level, updating them about what we do,” says Goel. Validus initiated discussions with Visa in January 2017 about potential partnerships, he adds.

The opportunity to collaborate finally came when a large bank approached Visa to sound out a cash flow challenge they were facing with their client. “This particular bank’s client is one of Singapore’s largest food suppliers. First, they needed money to fund their business. Second, they needed to reconcile their invoices to their customers,” Goel said.

Invoice reconciliation involves matching incoming money with invoices to make sure that customers have paid for their orders.

Even before Validus had an invoice reconciliation system, Visa had expressed confidence in its unique value proposition. Indeed, Validus had solid startup chops: it had institutional investors on its platform, access to data from the National University of Singapore’s credit rating bureau, and credible investors as backers, including Vertex Ventures. Its CEO, Ajit Raikar, had relevant market credentials, given his background in SME lending at Citibank, DBS Bank, and Danamon.

The solution went live with the first F&B customer on May 8, 2017.

“It’s really a new product that served a new segment for us. We went to Visa with an initial idea, and we sat down to think about how we could take our product to fit in with the larger scheme of things,” Goel recalls.

“Startups should just reach out to Visa and share their briefs,” he says.

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