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Developing a trade portal to source for financing options

SGeBiz is looking beyond its procurement-to-payment platform to bring suppliers and buyers together with financiers.

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Mr Nathan's background as a former member of the Republic of Singapore Air Force contributed to the company having a business continuity plan in place even before Covid-19 emerged.

THE coronavirus pandemic may have brought about headwinds for Singapore E-Business (SGeBiz), which operates a procurement-to-payment platform for retail and food and beverage businesses, but it has also inspired the company's next product: a trade platform.

"In this period, we saw that small and medium enterprises (SMEs) were facing a few challenges: supplies, people, rental and the cost of money. But the biggest challenge that they have is actually how to get money to finance the business," said Soumen Sircar, the company's head of regional payments.

"So we thought, since we already digitised procurement and are holding information on the SMEs' buying and selling, how can we bring suppliers and buyers together with financiers?"

Therefore, SGeBiz is now developing a trade portal, on which SMEs would not only be able to procure and pay digitally, but also source financing options.

To give an idea of the data available, SGeBiz has more than 2,000 buyers and sellers using its EzyProcure platform, and onboards 18 to 30 new customers every month on average. On an annualised basis, throughput on the platform is worth S$70 million.

A pilot project is currently underway in Indonesia, as the result of SGeBiz forming an alliance with Mastercard, N-Frnds and Finastra - with the support of the Asian Development Bank - in September.

Under the pilot, Mastercard and Finastra aim to leverage supply chain data from N-Frnds and SGeBiz, so as to automate access to working capital finance.

A media statement by Mastercard then had said that the collaboration will increase the digital data available to assess creditworthiness and "create new models to evaluate it".

It added that access to the resulting lines of credit will enable wholesalers to "react more quickly to upcoming promotions, increase their inventory levels and build their businesses".

The pilot project is expected to onboard 5,000 retailers in Indonesia by the end of the first quarter of 2021.

Meanwhile, SGeBiz is also in talks with other interested lenders, said Mr Sircar. It is also in discussions with interested parties in Malaysia. The plan is to roll out the product across South-east Asia eventually.

Outlook on expansion

Yet, the pandemic has turned SGeBiz cautious on other forms of expansion.

For instance, the company set up an entity in Thailand amid the pandemic. But as to when it will be fully operational, co-founder and chief executive officer (CEO) Edmund Nathan said that the company is taking a "very conservative and cautious approach".

"We've learned from episodes around the world that when cities or countries reopen, the second wave (of virus cases) can be much worse than the first. We can't make predictions with such uncertainty," he added. "A wise man once told me, 'when you're not sure, pause'."

Limitations on physical interaction during the pandemic may have also put a dampener on SGeBiz's efforts to secure venture capital funding for expansion into South-east Asia.

Since the company last spoke to The Business Times in September 2019, it has been in advanced stages for its first major external fund-raising round, with the amount of capital it is aiming for comparable to a Series B round.

"The frequency and intensity of investor engagement has increased post-withdrawal of the lockdown ("circuit breaker") in Singapore," said Mr Sircar. "Now, it's back to where it was before the circuit breaker."

Mr Nathan said that the company is not in a rush anyway.

"We do have proposals on our table, it's just that we want to make sure that we've given due consideration in our selection of investor," he said.

"One of the key principles which we're looking for in our investors is the strategic alignment in terms of our vision and mission, and being able to understand how they contribute to further accelerate the growth of SGeBiz. There continues to be discussions and proposals, and we're evaluating them."

Aside from Thailand, countries that are at the top of SGeBiz's list for geographical expansion are Indonesia and the Philippines. The company is currently present in Malaysia, Taiwan and India (the offices there are for backend support).

Two factors draw the company to such markets, with the first being the presence of key partners, such as financial institutions, in the countries, said Mr Nathan.

The second is demand from Singapore restaurant chain owners to use SGeBiz's platforms in the overseas markets in which they also operate. In essence, "we are going to expand with the clients", Mr Sircar said.

"As our SME base grows and takes interest in markets outside of Singapore, we will follow them."

Green shoots

In Singapore, SGeBiz experienced "a sharp drop" in transaction volumes on its platform at the start of the circuit breaker period, when dining in was temporarily banned. But volumes have picked up, although not to where they were before the pandemic, said Mr Nathan.

Operationally, however, the company was less affected. It had a business continuity plan, which included working in split teams, in place even before Covid-19 emerged, as a result of Mr Nathan's background as a former member of the Republic of Singapore Air Force.

He said: "In the air force, we were trained to think about preventing a single point failure, and the way to do it is to have contingencies. In the company's case, a contingency means business continuity."

Mr Nathan left the air force after 15 years to start SGeBiz in 2014 with co-founder Ernie Heng, in the belief that they could digitise and automate what was then a manual procurement process in the food industry.

Buyers would call or message suppliers on various channels to place orders, for instance, while hard copy invoices would be manually keyed into systems.

For the first three years, the founders did not draw a salary. Today, the company is profitable and has grown to a team of 25.

 

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