Incomlend raises US$1m in second round of funding

It's total raised capital is nearly at US$1.5m.

When Singapore-based invoice funding platform Incomlend set its goals for next year after raising nearly US$1m in its second-round funding that closed in July, right at the top of the list was to build up its funded volumes. The start-up is mulling its third-round funding in 2018.

“To allow us to massively scale up our funded volumes, we are planning to strike major partnerships and system integration with third-party players such as banks, KYC (Know Your Customer) providers, accounting services providers and e-invoicing platforms,” says Dimitri Kouchnirenko, Co-Founder and Director of Incomlend, on the company’s near-term battle plan.

Establishing partnerships will be critical to Incomlend’s mission to assist even more small and medium-sized enterprises (SME) to fund their export and domestic account receivables by selling them to private investors at a discount. Kouchnirenko and another co-founder Morgan Terigi created Incomlend from a desire to increase funding access to SMEs for their working capital needs, filling a chasm created by risk-averse banks lowering their exposure to SMEs.

Kouchnirenko recalls that one of the first Incomlend clients was a Hong Kong-based supplier of wrapping bags for famous European luxury brands, which had been abandoned by its longtime factoring provider, a large international bank of French origin. Caught in a bind, the supplier turned to Incomlend to obtain funding on its receivables.

“Our client’s buyer was paying their invoices with a term of over 60 days, which created a cash flow gap for our client, struggling to ensure next deliveries. We started funding our client’s receivables, with amounts ranging from US$30,000 to US$50,000 per invoice,” says Kouchnirenko.

Incomlend’s matchmaking platform worked like a charm, providing benefits to all three parties involved in the trading of credit-insured domestic and cross-border receivables.

“Our client obtained immediate cash which allowed him to better anticipate the next production cycle and reduce delivery delays. The invoice funders were very happy with the profit from discount they received. Our client’s buyer has noticed a significant improvement in its supplier deliveries and started increasing its orders, hence improving our client’s sales.”

Incomlend has added on many features and evolved its processes since its beginnings as a PowerPoint presentation in October 2015.

In the summer of 2016 when Incomlend was in dire need of financing, the two co-founders, who were in their early 40s, even flew to Europe and traveled to the deepest parts of the countryside to woo agrarians to invest in their start-up.

“During our stay, we were pitching our digital fintech project in the middle of cow and pig farms, which was totally surrealistic.”

Kouchnirenko also recalls the challenge of arriving in Hong Kong and renting a tiny 8 sqm room to save money as the start-up was just getting on its feet.

Luckily, the tenacity paid off. The start-up’s first round of fundraising for equity raised US$465,000 in 2016 from private individuals and companies, including a French financial consulting firm keen to enter the lucrative financial technology sector.

Having secured enough funding, Incomlend launched its first public trades in December 2016. The start-up then initiated its second-round funding in January 2017 and attracted US$1m from angel investors, bringing its raised capital to nearly US$1.5m.

The current iteration of Incomlend enables companies and investors to live trade invoices in multiple currencies and countries around the world. SMEs, in particular, find this service appealing since they can access funding without collateral or personal guarantees.

Kouchnirenko says the company will be working to reduce the onboarding process to a minimum of few days and fully automate the whole interaction, investment decision making, including risk assessment and client due diligence processing. It is also planning for a mobile app to make the service more convenient.

“Today 200 million companies in the world do not have access to finance. The WTO estimates that there are over US$2t trapped in receivables, and this unmet finance gap only increases with time,” says Kouchnirenko.

“At the same time, investors with capital are facing more and more challenges to get decent returns on their cash whilst controlling their risk. And whilst many crowdfunding and peer-to-peer platforms have appeared to fill the finance gap, we observed that they did not provide enough international scope and security for companies as well as investors to fulfil their needs.”

“Our mission is to digitalise global trade by automating and integrating document exchange, money flow and finance. We strive to make finance accessible for SMEs around the world.”