Fintech startup KOKU could raise US$10m more after Tencent co-founder's investment

FOREX technology enabler KOKU has secured US$2 million in pre-Series A funding led by Decent Capital, a Chinese angel investment firm started by Jason Zeng, co-founder of Chinese tech giant Tencent Holdings.

The total sum raised includes US$500,000 Decent invested in KOKU in end-2016.

Founded in 2016, KOKU designs and develops forex tech solutions for non-bank financial intermediaries (NBFIs), including remittance companies and liquidity providers, such as payments companies.

The startup launched its FX TechUP suite of solutions last year to help NBFIs scale their forex capabilities.

KOKU has six customers in Singapore, the Philippines and Hong Kong. With the pre-Series A funds, it plans to expand in South-east Asia, with potential markets including Vietnam, Myanmar, Indonesia and Cambodia.

The startup also aims to grow its headcount from about 27 currently to 37 in the next six months. It is looking to add more software engineers to the team, KOKU's CEO and founder Calvin Goh told The Business Times.

KOKU plans to further raise US$10 million in Series A funding by the first half of 2019. "For us, the ideal investors would be financial investors who have a strong network of strategic partners able to complement KOKU's business," said Mr Goh.

Initially, KOKU focused on serving the forex needs of small and medium enterprises by connecting them with NBFIs. However, it realised that the remittance players and liquidity providers themselves lacked technology in their operations.

The startup then saw an opportunity to "tech up" the NBFIs and realigned its business focus late last year, Mr Goh said.

One key component of KOKU's FX TechUP suite is the Liquidity Providers Connect solution, which enables wholesale trading of currencies between licensed liquidity partners screened and onboarded by KOKU. Through this, liquidity providers are able to conduct on-demand settlement.

The suite also features a white label remittance solution for businesses to add or build digital remittance offerings such as e-wallets. The suite's API (application programming interface) solution also allows KOKU's clients to integrate their offerings with external solutions.

"A general assumption is that established NBFIs such as remittance houses already have in place up-to-date technology. However this isn't the case... For one of our customers, which is a major remittance house, integrating technology was uncharted territory," Mr Goh said.

"With our expertise in tech-enablement, paired with their industry expertise, we're able to save on cost, time and risk management. As our customers aren't burdened with the responsibility of ensuring the technology works, they are able to focus on providing for their customers," he added.

KOKU's customers have processed about US$200 million in transactions per month enabled by the FX TechUP suite, he estimated.

In a press statement, Chris Cao, vice-president of Decent's angel investment department, expressed confidence that KOKU's products will "bring significant improvements to the business offerings" of the startup's customers.

Mr Goh and Mr Cao have known each other from attending the business school HEC Paris together.

KOKU is the first Singapore portfolio company of Decent, which was founded by Mr Zeng in 2007 after he left Tencent as its chief operating officer. Mr Zeng has said in previous media reports that Decent plans to target Singapore fintech startups.