Startup Talks, FundPark Revolutionizes Loan Underwriting by Leveraging Real-Time Data

In our last newsletter, we presented the initial part of an?exclusive interview with Anson, the?co-founder?and?CEO of FundPark. We covered Anson’s background, exploring his journey as both an e-commerce entrepreneur and a commercial banker at HSBC. Anson shared valuable insights gained from his experiences and shed light on the remarkable potential of FundPark in driving?positive social change. FundPark aims to?bridge the funding gap?that often hinders e-commerce SMEs with solid credit profiles, thus making a?tangible impact?on their?growth and success.

Today, we will take an in-depth look at the?product features?offered by?FundPark. We’ll explore the different types of financing provided by FundPark, as well as how FundPark leverages?real-time data?to?streamline the loan approval process?and?enhance post-drawdown risk management. Furthermore, Anson will share how FundPark extracts?valuable business insights from digital and live data?from various sources, such as?products sold on e-commerce platforms, the?strengths of various e-commerce platforms, and the?overall performance of SMEs. These insights play a pivotal role in helping?e-commerce SMEs?realize?their true?growth potential?and?achieve remarkable success.

This article is also available on QIDS Venture Partners website?and we invite you to share your thoughts by leaving a comment.

FundPark Product Features

Edward:?What type of financing does FundPark provide?

Anson:?At FundPark, we service both?Business-to-Business?(“B2B”) and?Business-to-Consumer?(“B2C”) e-commerce SMEs. For?B2B e-commerce SMEs, these are typically?suppliers to prominent e-commerce platforms?like T-Mall, Vipshop, Jingdong, and Amazon, we offer an?array of financing solutions?that?cater to every step of the supply chain. These include?Purchase Order Financing,?Receivables Financing, and?Inventory Financing.

For?B2C e-commerce SMEs, we provide?Working Capital Financing, which can be used for various?operational needs, such as?placing orders,?covering logistics costs,?supporting marketing campaigns, etc. Those activities typically facilitate their business growth.

To best address the financing needs,?FundPark?leverages our?data-driven proprietary credit model?to?assess businesses?and subsequently?underwrite loans. We utilize a variety of?data types, including?invoices, purchase orders, inventory details, and?conversion rates. Our expertise in data analytics allows us to?forecast the future cash flow?of these?e-commerce SMEs?and then apply this information to provide?financing solutions?specifically?tailored to their requirements.

The illustration below shows the mechanism of one of our financing solutions -?Trade Asset Based Financing (Export).

Edward:?What sets FundPark apart from traditional lenders, and what unique services does it offer to e-commerce SMEs?

Anson:?FundPark stands apart by serving as a comprehensive?partner to e-commerce SMEs, rather than just a lending company. Our services go?beyond providing Working Capital Financing, a high-demand service in this sector. We have a?vast database of e-commerce and SMEs, as well as?strong data analytics?capabilities to?turn these data into valuable insights.

These?insights?assist our clients in?enhancing their operations?and?business performance, ultimately?propelling their growth. We also offer?'Data as a Service'?(“DaaS”), which, along with our financing products specifically?tailored to the requirements?of?digital businesses,?sets us apart from traditional lenders.?

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Edward:?How does FundPark's use of digital data differ from traditional lenders and how does this approach benefit the underwriting process and the risk management?

Anson:?The way FundPark utilizes?digital data?is our?key differentiator. Our?credit model?and?post-drawdown risk management?rely entirely on?real-time data, which is in stark contrast to?traditional banks?that often use?limited or outdated data. This approach allows us to achieve?dynamic post-drawdown risk management?by?real-time monitoring?of?e-commerce SMEs' business performance. FundPark's utilization of?real-time data?allows us to assess the?credit quality?of a company significantly?better than?the approach followed by?traditional banks, which relies on?yearly financial reports?and?semi-annual?or?quarterly management accounts?for risk management. In terms of?underwriting, we focus on?accurately forecasting future cash flow?using?real-time data, while?traditional lenders?heavily rely on?balance sheets, which may be?outdated?and?less reflective?of?SMEs' strengths.

The?frequency of monitoring?is crucial for an?effective risk management?of loans provided to SMEs, as?SMEs' business performance?can?fluctuate quickly.?FundPark, therefore, is well-equipped to?meet the evolving financing demands?of?fast-growing e-commerce SMEs.?

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Edward:?How does FundPark's loan application process benefit from your unique data approach, and what advantages does this bring to both your company and your clients?

Anson:?As part of our?loan application process,?e-commerce SMEs authorize?us to?access their business data?on platforms like Amazon. This method helps us?save significant time?and?resources?during loan application reviews, as?only SMEs confident?in their?business performance?would?complete?the?on-boarding process. This?depth of transparency?gives FundPark the?visibility?and?capability to detect suspicious transactions, further ensuring the credibility of our process.

In essence, FundPark not only provides?financial services?but also leverages?extensive data?to offer?actionable insights, supporting our clients in?expanding their businesses?and?improving their profit margins.?

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Edward:?Are the Loans provided by FundPark secured or unsecured? If secured, what are the collaterals?

Anson:?FundPark takes a?unique approach?to?securing loans, by leveraging the?'future cashflow' of e-commerce SMEs. We place an?account charge?on the?collection accounts?of the SMEs. This means that the money generated from their business operations, or their?'future cashflow,' is effectively controlled by FundPark.

Furthermore, with our strong?data analytics capability, we can?predict the cashflow?generated from the?ongoing business operations?of these SMEs. In doing so, we?transform this future cashflow?into a form of?collateral for the loans?we provide.

Our?proprietary dynamic ‘watermark system’?exemplifies the effectiveness of this strategy. This system closely?monitors the health of the businesses?we support. If we notice a?decline in business performance, we have the ability to?enforce partial repayments?of the loans. This mechanism not only?reduces our risk, but it also?encourages our clients?to?maintain their business performance?at a healthy level.?

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How FundPark Stand Out from Traditional Lenders?

Edward:?What are the advantages for the SME borrowers working together with FundPark??

Anson:?One of FundPark's significant advantages lies in our abilities to be?dynamic?and?support the evolving working capital needs of SMEs. By using?real-time business performance data, we can?swiftly respond to an e-commerce SME's growing funding needs. For instance, if an?SME?is on a?fast growth trajectory, they can?seamlessly secure increased financing?from us, thereby enabling them to capitalize on their growth opportunities.

Moreover, FundPark prides itself on?speed, an aspect vital in the?fast-paced e-commerce landscape. Our?streamlined processes?and?innovative technology?platform ensure?quick access to funds. This?swiftness?is not just about disbursing loans; it extends to every interaction with us. From the?initial application?to the?final loan disbursement, we are committed to providing a?rapid, hassle-free experience. Thus, SMEs can focus on their core business operations without getting caught up in lengthy financial procedures.?

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Edward:?As you outlined before, FundPark puts a lot of emphasis on data. Can you provide some more details on the type of technologies you are using?

Anson:?FundPark is committed to building a?robust, scalable lending platform?that harnesses the?power of data analytics?to offer?tailored financial solutions. A crucial component of our strategy involves leveraging?machine learning technology. This helps us?constantly refine our underwriting model, thus ensuring a?more accurate assessment?of?loan viability. The result is a?sustained decrease?in our?non-performing loans ratio?and?late payment rates. Both indicators show our model's effectiveness and the robustness of our risk management processes.

Moreover, to keep our operations efficient and agile, we employ?Robotic Process Automation?(“RPA”). By?automating routine and repetitive tasks, we not only free up valuable time and resources but also?improve accuracy?and?minimize potential human errors. This approach further aids in?enhancing our operational efficiency?and allows our team to focus more on?strategic tasks, like?improving customer service?and?crafting more innovative solutions?for our clients. In essence, our use of machine learning and RPA underscores our?commitment?to?leveraging advanced technology?in our quest to better?serve the needs of e-commerce SMEs.?

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Edward:?Anson, thank you for introducing us to FundPark, your vision and the positive social impact via bridging the financing gaps of e-commerce SMEs. Thank you very much for taking the time and best wishes for the success of FundPark.

QIDS Venture Partners?is dedicated to supporting and catalysing the developments in FinTech by sharing with our audience FinTech trends and interesting FinTech business ideas. You may forward this article to other investors who are interested in FinTech as well. If you need more information or would like to arrange a meeting with us, please feel free to contact our Managing Partner Edward Shen via?LinkedIn?or?email.