Funding Societies sees overheating in crowdfunding

EVEN as regulations soon come into force for Singapore's crowdfunding scene, there are fears among a few that the floodgates have been flung open too soon for new players to enter this nascent segment.

Crowdfunding platform Funding Societies sees more "negative competition" ahead, said its co-founder Kelvin Teo in an interview with The Business Times, warning that the market remains opaque and that platforms can window-dress loan defaults to the disadvantage of yield-hungry investors.

"Our goal is always to make sure that the reputation of the industry is kept intact," said Mr Teo, whose platform has matched investors to S$8.7 million worth of loans since it started a year ago.

Crowdfunding platforms now come in various shapes and sizes. But at their core, peer-to-peer lending sites earn a fee by helping to matchmake small and medium enterprises (SMEs) seeking short-term loans, to investors. These platforms register regular investors for their contact details, screen businesses looking for loans, then get investors keen on earning the interest to subs…