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Qupital<\/a>, a one-year-old Hong Kong-based startup that addresses cash flow issues for SMEs, has closed a $2 million seed funding round.<\/p>\n The is certainly a notable size for an early stage investment in Hong Kong\u2019s nascent but growing startup scene. The financing was led by Hong Kong-London firm MindWorks Ventures and the $130 million Alibaba\u00a0Entrepreneurs Fund<\/a> which launched in 2015. Other investors that took part include\u00a0DRL Capital and Aria Group.<\/p>\n Founded by mid-20-year-olds\u00a0Andy Chan (26) and Winston Wong (25) who met playing basketball, the startup wants to free\u00a0small companies on tight budgets from the restraints of unpaid invoices. That\u2019s to say that a large chunk of an SME\u2019s working cash flow is locked up in invoices that may\u00a0take up to 90 days to actually pay out.\u00a0Qupital tackles that issue by companies\u00a0to take a loan to cover 80-95 percent of the value of the invoice, its platform matches this need with investors\/funders who cover the cash with the promise of a return.<\/p>\n With an estimated 300,000 SMEs located in Hong Kong, there\u2019s an attractive initial market to be tackled. Chan told TechCrunch in an interview that he believes that as many as 25 percent of Hong Kong\u2019s small businesses struggle to maintain\u00a0adequate working capital levels. They are the\u00a0target.<\/p>\n To date,\u00a0Qupital has processed 80 trades \u2014 with a total value of over $2 million \u2014 since its platform went online in August 2016. It\u00a0makes money by charging companies who take loans\u00a00.25-0.75 percent of the total invoice value, while it also makes\u00a020% of net\u00a0gains made by investors. The latter, Chan said, can expect to receive returns of around one percent per month, 12 percent annualized. The aim is for the business to\u00a0reach break-even inside the next 18 months by\u00a0scaling its customer base.<\/p>\n Beyond just money, strategic alignments in the deal will help.<\/p>\n The link with Alibaba will help\u00a0Qupital reach traders and SMEs \u2014 which represent its core focus\u00a0\u2014 while Chan said that MindWorks can open doors to other investors and family funds with an interest in investing in a new kind of asset class with returns.<\/p>\n There\u2019s no plan to expand the focus to new markets right now, but Chan said that potentially \u2014 after a year and a Series A round \u2014\u00a0Qupital may be in a position to move into\u00a0other places. While he said there\u2019s no precise plan on new locations yet, he hinted that\u00a0countries\u00a0with strong export sectors\u00a0\u2014 such as Vietnam, Taiwan or Thailand \u2014 would be among the obvious choices.<\/p>\n Beyond geographical forays, Qupital is looking into new products. Chan said the firm is\u00a0considering support for purchase order financing \u2014 which occurs at the pre-manufacturing stage and blends\u00a0higher risk with\u00a0higher potential returns \u2014 while it may rollout features that enable investors with capital but limited time to pay in money on an automated basis. Right now, investors pick deals themselves which could put a limit on potential money into the platform.<\/p>\n For now though, Chan said he is happy with the progress.<\/p>\n \u201cA friend of mine worked at [now defunct U.S. startup]\u00a0Receivables Exchange<\/a>\u00a0and there are similar businesses in Europe,\u201d he said in an interview. \u201cBut I\u00a0saw that in Hong Kong there was definitely\u00a0an opportunity because there are a lot of trading\u00a0firms and SMEs whose banks options aren\u2019t enough to cover\u00a0their capital needs.\u201d<\/p>\n He\u2019s also bullish on Hong Kong as a destination for startups, thanks to examples like Lalamove<\/a> and Tink Labs<\/a> which have raised significant sums of money for businesses that extend beyond the country and into China and other parts of Asia.<\/p>\n \u201cTheres a lot of potential angel investors here and firms that could move into startup investments but they\u2019ve been sticking to more traditional investments, like real estate, so far,\u201d Cham said. \u201cA\u00a0lot of investors are paying attention to the scene.\u201d<\/p>\n Featured Image: Rrraum<\/a>\/Shutterstock<\/a><\/small><\/p>\n","protected":false},"excerpt":{"rendered":"![\"\"](\"https:\/\/tctechcrunch2011.files.wordpress.com\/2016\/03\/shutterstock_320385341.jpg?w=680\")
Qupital, a one-year-old Hong Kong-based startup that addresses cash flow issues for SMEs, has closed a $2 million seed funding round. The is certainly a notable size for an early stage investment in Hong Kong’s nascent but growing startup scene. The financing was led by Hong Kong-London firm MindWorks Ventures and the $130 million Alibaba\u00a0Entrepreneurs Fund which launched in 2015.… Read More<\/a><\/p>\n\n<\/img><\/a>
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