Validus is a SME fund box that links Singaporean and Global investors to Singaporean SMEs.
Differentiated from p2p, it is a new asset class that connects investors who are prepared to put in $100,000 and above, looking for better than market returns with eligible Singaporean SMEs who require funding.
Formed by three partners Richard Hoon, Yash Poddar, and Vikas Nahata who met as members of worldwide Young Presidents’ Organization (YPO) and Entrepreneurs’ Organization (EO), Validus brings together many years of business experience and management expertise.
Mr Richard Hoon, Chairman, explained that “We see this as a new asset class that links Global investors looking for better than market returns with deserving Singaporean SMEs who require funding. A healthy eco-system comprising happy investors and borrowers will help create a positive social impact locally and we will spread this across other Asian countries.”
Borrowers’ financial data is checked with Credit Bureaus
Credit Bureau Ratings (from Dun & Bradstreet and DP Experian), Ability to Pay, Key Man’s Willingness to Pay and Buyers’ Payment Promptness are put into a proprietary algorithm to select the deserving SMEs. Once selected, the Validus Risk Management Team conducts personal interviews to ascertain factors such as past loan repayment history, borrowers’ ability and willingness to pay, before finally putting their Funding requirement on the Platform. All Borrowers are subject to ongoing monitoring by credit bureaus.
“Validus and the Credit Research Initiative (CRI) team of NUS-RMI have signed an in-principle agreement where the CRI team will provide a sensible and reasonably sophisticated solution in capturing the Probability Default (PD) of SME firms in terms of Micro, Small and Medium firm sizes and industry groups corresponding to a particular forward time horizon” - Prof Jin-Chuan Duan, Project Head of Credit Research Initiative (CRI), Risk Management Institute (RMI), National University of Singapore (NUS).
How investors interface
Individuals and Corporates Investors - Singaporean and Global - can register through the Validus website. Vistra Singapore (an MAS registered Trust) conducts Know Your Customer (KYC) and other statutory checks before registration ensuring that all compliances are in place. Vistra also acts as the Escrow Agent for all funds flowing from Investors to Borrowers and vice versa.
Investors send their funding commitments to their account with the Escrow Agent. The amount will reflect in their personal dashboard and all investments shall be made only as per their discretion. All un-invested funds remain in the Investor’s account with the Escrow Agent and can be withdrawn at any time. Investors are encouraged to fractionalize their investments into multiple offerings thereby diversifying their risks. The minimum commitment per offering is SGD 5,000.
Since Validus was established in July 2015, over SGD 1 million has been funded to companies in Logistics, IT Hardware/Supplies, IT Consulting, Engineering, Construction and Ship Repairing amongst other sectors.
According to Mr Yash Poddar, Director and COO, “Current offerings at Validus are balanced between medium risk and above average returns for the investor.”