In the world of business and entrepreneurship, the story of Funding Societies and its co-founders is noteworthy.
Wong Kah Meng, a Co-founder and Group Chief Operating Officer at the platform, recently solidified his commitment by clinching the Founder of the Year award at the Fintech Frontiers Awards 2023. This honour is a testament to years of dedication, determination, and a vision to revolutionise the financial landscape.
In a Fireside Chat hosted by Roshan Kanesan, this conversation takes us deep into the heart of Wong Kah Meng’s entrepreneurial odyssey, revealing the struggles, triumphs, and invaluable lessons gleaned from a decade at the helm of Funding Societies.
The journey to founder of the year
Kah Meng’s journey from the inception of Funding Societies to being crowned Founder of the Year is nothing short of extraordinary. The award validates the blood, sweat, and tears he and his team have invested in their venture.
During the Fireside Chat, Kah Meng expressed his heartfelt gratitude for the recognition, acknowledging the industry’s role in celebrating entrepreneurship and innovation.
The timeline of Kah Meng’s entrepreneurial voyage aligns intriguingly with the Malaysian average exit time of 8.1 years. This statistic signifies the challenges and the endurance required to thrive in the competitive landscape.
He candidly discussed the hurdles encountered when filling out application forms, particularly the struggle to differentiate personal achievements from those of the company.
The co-founder emphasised Funding Societies’ impact on Malaysian MSMEs (Micro, Small, and Medium-sized Enterprises) and the FinTech community, proudly declaring it a positive change driving force.
The Co-founder role
As a co-founder, each member brings unique skills and attributes. Kah Meng shed light on his role as a “plumber” within the Funding Societies ecosystem—ensuring that all components work harmoniously.
Drawing from his technical background, he illustrated the significance of meticulous attention to detail and how it played a pivotal role in the company’s growth.
Early on, he earned a reputation for his curiosity, often posing numerous questions and displaying a penchant for micromanagement. However, these traits evolved into strengths, making him a detail-oriented operator—an essential asset in their journey.
Kah Meng elaborated on his entrepreneurial philosophy, asserting that his comfort zone lies in scaling from one to 100 rather than starting from scratch (zero to one).
He underscored the importance of innovation in scaling—a crucial factor in building a sustainable business. One-to-100 growth, in his perspective, is where monetisation, affordability, reserves, and sustainability converge.
Kah Meng’s influence within Funding Societies has been most pronounced in scaling the business and expanding its capabilities to other regional countries.
Navigating the challenges
Building a business from scratch is an endeavour fraught with challenges, and Funding Societies’ journey was no exception.
Kah Meng highlighted their obstacles, from acquiring the necessary licenses to scaling the team.
He discussed the tense period leading up to their first loan disbursement when they were processing a mere RM 100,000 per month. Today, their monthly transactions have soared to RM 200 million during peak months.
The conversation naturally pivoted to the post-COVID funding landscape—a terrain characterised by uncertainty and volatility.
He shared insights into Funding Societies’ cautious approach, noting that they anticipated a post-pandemic bounce but remained vigilant about its longevity.
Their strategy involved holding their breath in preparation for potential market fluctuations. The interviewee also stressed the importance of adaptability and retaining a lean, profitable business model in the current environment.
The conversation delved into the sensitive topic of layoffs within Funding Societies’ Indonesian unit.
Kah Meng openly discussed the rationale behind such decisions, acknowledging that layoffs are always the last resort. He emphasised their commitment to assisting impacted employees with smooth transitions and transparent communication.
Managing employee relationships
Scaling a company leads to challenges in maintaining personal relationships with every employee.
Kah Meng acknowledged this difficulty and even joked about employees wearing name tags to facilitate communication. However, he highlighted their continuous efforts to ensure transparency and consistency in their messaging.
He pointed out the importance of instilling and upholding the company’s values and vision among the management team. These individuals play a pivotal role in hiring and shaping the workforce.
Kah Meng offered invaluable lessons for fellow founders at various stages of building their businesses. He underscored the need for transparency and value alignment between managers and the leadership team.
He also emphasised the importance of calculated risk-taking and the ability to safeguard the company’s overall health when making significant decisions.
The evolution of Funding Societies
The Funding Societies journey has been marked by significant milestones, with Series A and Series B rounds in 2015 and 2016. According to Kah Meng, the funding landscape during those initial stages differed notably from today’s environment.
He pointed out that funding was more readily available, reflecting a period when investors were more willing to support promising fintech ventures. During this phase, the focus was primarily on equity funding, which was instrumental in building their loan book—a key component of Funding Societies’ growth strategy.
However, the landscape gradually shifted towards debt financing in more recent times. He mentioned that besides equity, they secured debt financing from institutions like HSBC, allowing them to extend financial assistance to a broader array of Micro, Small, and Medium-sized Enterprises (MSMEs).
This shift represented a strategic adaptation to capitalise on the potential of debt financing for expanding their loan portfolio.
Equity financing for assurance
When questioned about the role of equity financing today, Kah Meng clarified that it primarily serves to meet financial covenants, ensuring that the necessary capital ratios and other financial metrics are maintained.
He highlighted the dynamic where lenders are more inclined to provide funds when they see a company is financially stable, creating a symbiotic relationship between equity and debt financing.
The equity funding, therefore, assures their debt financiers and contributes to managing the balance between growth and profitability—a focal point in today’s financial landscape.
Building trust with investors
Kah Meng shared insights into managing critical relationships with notable investors, such as Softbank Vision Fund. He emphasised that building trust is the cornerstone of these relationships, often nurtured over several years.
For example, their association with Softbank began with Softbank Ventures Asia as a shareholder during the Series B funding round of 2018. Their interactions began before that, dating back to the Series A stage.
Trust is maintained through candid conversations and regular communication via WhatsApp, facilitating open dialogue on challenges and strategic decisions.
Early conversations are key
Reflecting on their experiences, Kah Meng offered valuable advice to aspiring entrepreneurs. He stressed the importance of initiating conversations with potential investors early in the journey, as building relationships takes time.
In the current business environment, he advised doubling the expected duration for fundraising preparations to ensure a smooth process.
The conversation then shifted to Funding Societies’ recent partnership with CGC, focusing on alternative data for credit assessment, particularly for MSMEs.
Kah Meng highlighted the significance of this collaboration, given the challenges of assessing creditworthiness in this sector where traditional data may be limited.
The partnership represents a strategic move to enhance the quality and stability of their investment notes. It aligns with Funding Societies’ mission of supporting MSMEs in their journey towards financial stability.
The future of Funding Societies
Regarding Funding Societies’ long-term vision, Wong Kah Meng underscored their commitment to helping MSMEs become more creditworthy.
While they have expanded their services into corporate cards and payments, their ambition is not to become a bank but to empower MSMEs with greater access to financial services and financing, catalysing their growth and success.
The Fireside Chat also delved into the evolving role of a founder. Kah Meng acknowledged that, over the years, his role had transformed significantly from being a hands-on pioneer to a leader responsible for managing multiple markets and complex operations.
The need to balance localisation and standardisation in different markets posed a unique challenge that required constant adaptation and refinement.
A marathon, not a sprint
When asked about his long-term commitment to Funding Societies, Kah Meng likened his journey to a marathon rather than a sprint. He expressed enthusiasm for the company’s future, stating that they had only scratched the surface of their potential.
With recent expansions and a continually evolving financial landscape, there is much more ground to cover.
Kah Meng’s Fireside Chat unveiled a decade-long journey of growth, adaptation, and a profound commitment to empowering MSMEs in Southeast Asia.
His insights into fundraising, investor relations, and the evolving role of a founder provide valuable lessons for aspiring entrepreneurs and established businesses navigating the complex terrain of fintech and financial services.
As Funding Societies continues to innovate and scale, its story serves as a beacon of inspiration for those seeking to make a lasting impact in finance and entrepreneurship.
Watch the full “Fireside Chat with Founder of the Year” at the Fintech Frontiers Conference.