First Circle is a fintech startup that uses technology to lend to small and medium-sized enterprises (SMEs) at scale, starting with the Philippines. It has developed proprietary software and credit scoring to increase access to financial services for the underserved.
The lack of access to financing for SMEs in Southeast Asia is widely discussed by governments and international agencies. The unmet demand for capital for SMEs in Southeast Asia is estimated at $50 billion by the Asian Development Bank. Alternative data sources, resulting in part from rising smartphone access and eCommerce penetration, enable technology-driven lenders to bridge this gap.
“Lack of access to capital is a big problem that needs to be fixed. If it isn’t, millions of hardworking entrepreneurs and their businesses will not be given the chance to reach their potential,” said First Circle CEO Patrick Lynch. “This is an uncharted territory in emerging economies. We believe the key is combining traditional and alternative data sources to accurately measure risk.”
The investment funds will be used to further develop First Circle’s technology and data analytics platform. To this end, they welcome Accion Venture Lab, the world’s leading seed-stage investor in fintech for the underserved. Venture Lab invests capital in, and provides support to, innovative fintech startups that increase access to, improve the quality of, or reduce the cost of financial services for the underserved at scale.
“Micro, small, and medium-sized enterprises account for more than 99 percent of Filipino businesses, but often can’t get the funding they need to grow and thrive,” said Michael Schlein, CEO and President of Accion. “First Circle can help these businesses and their employees by providing the financing they need – and ultimately developing a more inclusive financial sector.”
“We are thrilled to partner with Patrick and the First Circle team to advance access to capital for small businesses in the Philippines and beyond. The combined use of both traditional and alternative data and automated processes to acquire and understand potential borrowers can help First Circle expand access to credit quickly and efficiently at a low cost,” said Vikas Raj, Accion Venture Lab’s Managing Director.
First Circle plans to deepen its market leading position in the Philippines before venturing to new markets. “Providing small businesses with financing within a few days is complex. We will invest to improve our service here before we consider reaching SMEs in other parts of Southeast Asia,” said Lynch.
About First Circle
First Circle is the first fintech SME lender in South East Asia. It uses technology to minimise the time, effort and complexity associated with traditional financing options to provide SMEs in the region with fast, convenient and cost-effective financing. It’s building a community of dynamic SMEs and empowering them to grow their businesses and reach their full potential.
About Accion and Accion Venture Lab
Accion Venture Lab is the world’s leading seed-stage investor in fintech for the underserved. Venture Lab invests capital in, and provides support to, innovative fintech startups that increase access to, improve the quality of, or reduce the cost of financial services for the underserved at scale. Since launching in 2012, Venture Lab has deployed over US$10 million across more than 25 startups that work in over 20 countries worldwide. Venture Lab is a part of Accion, a global nonprofit dedicated to building a financially inclusive world by giving people the financial tools they need to improve their lives. Over more than 50 years, Accion has helped to build 65 next generation microfinance institutions on four continents that today reach millions of clients. Accion’s impact investing initiatives are pushing beyond microfinance to catalyze more than 30 innovative startups dedicated to improving the efficiency, reach, and scope of financial services for the poor. For further information, visit https://www.accion.org/venturelab.