The Asia-Pacific region is home to 4.3 billion people and includes the world’s most populous countries, China and India. However, 24% of this population struggles to access traditional financing. As a result, many businesses in the region with steady cash flow and strong balance sheets cannot access funding to grow. Estimates by the World Bank show the financing gap for such enterprises in the region stands at US$2.4 trillion.
Recognising this, KILDE, a Singaporean alternative investment platform is on a mission to fix the funding gap. The company has built a regulated investment platform where institutions and individuals discover and buy vetted alternative assets. The platform eliminates the need for intermediaries, saves investors from the usual fees, and reduces time to invest. KILDE is successfully bridging the information gap between investors and borrowers – which is the number one constraint on the investors’ ability to access the profitable deals, and the key reason for persistent lack of financing across the region.
How does the KILDE platform work?
Within the KILDE ecosystem, there are two key stakeholders: investors and digital lending firms. For the vast population of unbanked individuals and SMEs, digital lending firms are an alternative source of financing. But these firms also need to borrow money and they do so from investors. Private debt to the digital lending companies has become a profitable and low-risk asset class for investors.
Despite growing interest, Radek Jezbera, CEO of Kilde, explains, “Investors are looking for yield, but most lack the access and expertise in the consumer and SME asset class. Hence, we help investors to get access to this profitable and low-risk investment, and also digital lenders to raise funds for their loans.”
KILDE does so by operating a two-sided investment platform. The process involves digital lenders issuing private bonds. Investors are then able to purchase these bonds and receive regular returns. Before issuing bonds, KILDE runs a thorough assessment of each digital lender. Only afterwards does the company arrange the bond issuance and let investors subscribe to these bonds. Both of these activities are conducted in line with regulations set out by the Monetary Authority of Singapore. Even after, KILDE monitors the performance and covenants of the bond until it’s repaid.
To get started with KILDE, accredited investors need to create an account, and, following the conclusion of the KYC process, can begin investing. When it comes to digital lenders, the fintech startup has a more elaborate process. Taking the example of Robocash, Aleksandra shared, “When selecting a new deal provider on our platform, we focus on analysing their finances and loan portfolios, as well as technology and lending practices.”
With its unique approach, KILDE removes several pain points that previously existed across the financial system. As Radek describes it, “Our platform allows investors to access an exclusive asset class, which was previously only available to financial institutions. Meanwhile, digital lenders now have a gateway to potentially cheaper and ample funding, which they would have otherwise had to obtain via private equity or expensive debt.”
The origins of KILDE and building a trusted investment platform
KILDE was founded in 2019 by Radek Jezbera, Oleg Kryukovskiy, and Ilgvars Jecis. At the time, the trio noticed three trends that were reshaping the financial landscape. “Investors were increasingly keen to eliminate barriers. Second, new alternative assets also were emerging as credible alternatives to traditional ones. Thirdly, banks were also retreating from many roles they traditionally played in the ecosystem,” explained Radek.
KILDE was born to capitalise on these trends and help improve the financial system to better serve everyone. Collectively, the founding trio brought a wealth of experience in digital banking, consumer lending and credit risk. At the same time, there was a keen awareness to ensure decisions were backed by accurate data.
Hence, the founders built a robust data-driven platform that allows KILDE to thoroughly analyze digital lenders’ loan portfolios. While most firms opt to use pre-existing software, Aleksandra stated that KILDE built its own platform to meet its ambitious vision. Across the board, the platform utilises automation at many points in the process. Thereby ensuring it effectively bridges the information gap between investors and lenders while operating at scale.
At the same time, KILDE was also focused on building trust with the investors. KILDE holds a Dealing in Capital Markets License and is supervised by the Monetary Authority of Singapore. Working closely with the regulator, Radek stated the platform is continuously evolving to meet the requirements of institutional investors. He goes on to explain, “If we’re ready for institutional investors, then we’re ready to offer a trusted platform for retail investors truly democratising investments.”
Navigating Asia’s fintech landscape in a pandemic
Not long after the company was born, KILDE was faced with its most significant challenge with the emergence of COVID-19. As markets crashed, following the subsequent lockdowns, Radek recalls, “We were all shellshocked at the time!” In turn, many institutional investors also retreated, noted Aleksandra, as they preferred to make moves that were deemed safe.
Despite the initial grim forecast, things soon began looking up. After 2 to 3 months of losses, digital lenders in our portfolio cautiously recovered and eventually strengthened their market position. Today, they’ve recovered to pre-pandemic levels and beyond. Thus, the pandemic served as validation for KILDE’s data-driven approach to investments. Likewise, investors have also been reminded of the importance of diversification and are now actively looking at alternative assets.
Over the last 12 months, private debt as an asset class has shown strong growth. This trend is poised to continue due to increasing cash-flow needs due to the pandemic, accommodative monetary policies, and low-interest rates. Yet, private debt’s potential in South-East Asia remains relatively underutilised.
Hence, when adjusted for risk, the asset class presents an opportunity for investors with attractive returns. Granted, while Asia accounts for a small portion of the global private debt market, investors are eying the region with keen interest. Moreover, the growth of fintech startups is also set to remove barriers to further fuel this growth. As they do so, the financial landscape of the region is set to evolve.
Tapping into his experience, Radek believes that there is room for several players in the fintech space. Elaborating on this view, he explained, “There’ll be multiple winners across regional specific markets. In fragmented markets like South-East Asia, localisation plays a critical role. Each country has different cultures and unique market dynamics. Once you localise a solution, it’ll take off like a rocket.”
Adding on to these views, Aleksandra shared, “We’ll see more collaboration between the banks and fintech companies. Already we’re seeing established banking institutions partnering with buy-now-pay-later firms and investment platforms. This rapid growth will also mean we can expect stronger regulation to come into effect as more retail investors start utilising these platforms.”
The rapid rise and promising future of KILDE
In just a little over a year, KILDE has grown rapidly. Earlier this year, the company raised US$450,000 led by Purple Ventures in pre-seed funding round, supported by Startupbootcamp Fintech Dubai. With this funding, it’s looking at expanding its global presence. At the same time, the fintech startup has also made strategic partnerships.
The latest of these partnerships is with Hg Exchange – South-East Asia’s First Member-Driven Exchange Platform. Commenting on KILDE being the fourth member to join the exchange, Radek said, “Membership at HGX, in the first place, benefits clients of all the Member Firms. KILDE’s clients get access to a broader range of investment opportunities while our income products will enhance the products on HGX. Our team is looking forward to working with them and the Member Firms to build a strong member-driven exchange platform.”
Further, KILDE is also now in the process of setting up an office in Abu Dhabi. “This is the first step in our bid to expand our global footprint. In Abu Dhabi, we’ll be working to onboard local investors that are interested in investment opportunities in both South-East Asia and the Middle-East North Africa regions,” said Aleksandra.
So as the fintech landscape evolves, where does KILDE see itself? Radek’s answer to the question was a simple yet ambitious one. With an optimistic smile, he states, “We want KILDE to be a supermarket for alternative investments. We’ll be the place where both big institutional investors and individuals can come and buy vetted income assets in a secure regulated manner.”