Jenfi is a fintech company that provides revenue-based financing to digital businesses and startups in Asia. Headquartered in Singapore, the fintech firm has a signature “Growth Capital as a Service” (GCAAS) that offers non-dilutive capital of up to USD 500,000 for businesses to scale their operations.
KrASIA had a chat with Jeffrey Liu, co-founder and CEO of Jenfi, on how the firm aims to unlock improvements in productivity and risk management for businesses.
The following interview has been consolidated and edited for brevity and clarity.
KrASIA (Kr): Share with us how and why you started Jenfi.
Jeffrey Liu (JL): I was previously the co-founder of GuavaPass, a fitness subscription service that was launched in over 12 markets across Asia and the Middle East.
Despite our success in building a subscriber base of over 25,000 active paying members, we were still getting turned down by banks when we needed more funds to scale our business.
We saw the same thing happening with other fast-growing startups and consumer technology companies. This made us realize there was a huge demand for providing “smart” capital to fund marketing and growth activities for these future rising stars.
Kr: Could you please tell us more about Jenfi’s fintech solutions?
JL: In 2019, Jenfi launched one of Southeast Asia’s first revenue-based financing products. Jenfi funds the ads and growth spend of digitally native companies so they can acquire more customers and generate more sales as a result. In exchange, the companies agree to repay Jenfi a small percentage of their future sales.
Unlike traditional loan products that require fixed repayments, Jenfi offers significantly more flexibility with its dynamic repayment model, which varies based on the actual performance of the underlying business.
Jenfi utilizes an array of alternative data sources, such as payment processing (credit card transactions), e-commerce transactions, and online advertising accounts, to understand these businesses’ revenue quality and marketing spending behavior.
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Kr: What are the key technologies (proprietary) used in your fintech solutions?
JL: We use a variety of technology applications in our fintech solutions. The key components include:
- Jenfi’s data capture technology allows us to consume real-time data from sources such as Stripe, Braintree, Shopify, Kiot Viet, Shopee, Lazada, Facebook, Google ads, and transaction-level data from local banks in Singapore, Vietnam, and Indonesia, to name a few.
- Jenfi’s data processing technology allows us to parse, clean up, and transform data so that it can be ingested into our internal underwriting processes;
- Jenfi’s underwriting technology includes automated client scoring algorithms, automated fraud detection and eKYC, which allows us to efficiently asses risk and score clients based on their credit risk; and
- Jenfi’s online dashboard allows clients to upload or connect data via API, receive online proposals, monitor their own revenue performance, and track their repayment history.
Kr: Any updates on your funding rounds?
JL: We previously raised USD 6.3 million in a series A round led by Monk’s Hill Ventures. Other investors such as Korea Investment Partners, Golden Equator Capital, 8VC, ICU Ventures, and Taurus Ventures also participated in the round.
Kr: Share with us the significance of alternative data: specifically, how does it unlock improvements in growth, productivity, and risk management for businesses?
JL: Alternative data, when used correctly, can be a powerful tool. For example, knowing the daily sales transactions and the composition of the transactions such as average order value (basket size), the unit price of items, and the number of customers (including those that are new versus recurring) provides us with more granular, real-time insights compared to traditional financial statements, which tend to be on an aggregate level and stale (historical).
We extract a similar level of detail from other types of alternative data sources. Powerful insights are uncovered when we start to synthesize the various data sources.
Once we understand the complete picture behind the business performance of each client, Jenfi can put together an appropriate financing solution that is tailored to the customer’s requirements.
The net benefit for clients is that they can get the appropriate amount of funding and repayment model, which allows them to have sufficient capital to deploy towards their most efficient customer acquisition channels to scale efficiently without being over-leveraged.
Kr: How can fintech companies reshape the way traditional financing companies work?
JL: Traditional financial institutions are still biased towards what they know, which involves assessing asset values (for collateral purposes) or free cash flow (for debt servicing). This framework misses out on a lot of successful upcoming businesses, which may be asset-light (technology company) or cash-flow negative (scaling during a startup phase).
Fintech companies can utilize technology to be more efficient at analyzing digitally native companies. With better integrations and automated processes to extract and analyze data, these fintech companies can qualify a larger cohort of such companies for underwriting and do a more efficient job in using technology to monitor these companies after capital has been deployed.
Kr: What are the major challenges you face?
JL: The data quality and data integrity of companies in this segment are not consistent. This is due to the fragmented technology offerings that lead to companies utilizing different options to operate their business. At Jenfi, we start with the lowest common denominator and focus on API data integrations with the largest technology platforms. Over time, we’ll work on integrating with additional data partners as we uncover the companies that use them.
Another challenge is knowledge and awareness of alternative fintech. Many digitally native companies in this segment still believe that traditional financial institutions are their primary funding source. This is despite the fact that they are in a better position to tap alternative fintech due to the richness of their data compared to traditional offline businesses.
Kr: What about the issue of bad debt, especially in Asia’s fragmented market? How do you overcome this challenge?
JL: The only way to overcome the issue of bad debt is to utilize the right set of reliable data and develop better dynamic underwriting models that can handle these disparate data sources reliably. This includes developing capabilities to iterate underwriting models quickly.
We were able to accelerate our learnings when we launched into additional markets, as there were some similarities in client risk and performance that allowed us to fast-track our credit underwriting development without making the same mistakes.
Kr: Moving forward, where do you see new opportunities in terms of small business lending?
JL: We see financial product innovation as a big growth driver for small business lending. Revenue-based financing, which is based on a variable repayment compared to fixed repayments, is one such example. Over time, traditional financing products will evolve to match the requirements of new business models.
Another opportunity is in the democratizing of data with better technology infrastructure to aggregate data. These so-called data aggregators will play a critical role in ensuring strong data accessibility and integrity, allowing more financial institutions to participate and offer their solutions to these businesses.
Kr: What are your future plans?
JL: We are currently focusing on a few core markets in Southeast Asia, including Singapore, Vietnam, Indonesia, and Malaysia.
We plan to eventually serve clients in other Southeast Asian markets with our core revenue-based financing offering, while developing insights that can help these clients unlock their revenue and marketing spend potential.