By Sharon Lewis and Reethu Ravi This article is the first of a four-part Tech’s Year in Review series reviewing developments across industries in 2020. This first installation discusses some industries spotlighted by the COVID-19 pandemic, namely edtech, logistics and supply chains, fintech, [...]
Reap, a Hong Kong-based fintech startup, closed its seed fund round with US$5 million from multiple investors, per a company statement released today. The fresh funding will be used to widen the company’s range of products and services across Asia. Investors in the company include Global Founders Capital, Bertelsmann Asia Investments, Index Venture, Fresco Capital and Hustle Fund.
The company provides small and medium-sized enterprises (SMEs), which often have limited access to traditional financing solutions, with credit card-based corporate payment solutions.
In a survey conducted by Visa recently, 25% of SMEs in Hong Kong cited cash flow management as one of their main challenges, partially because they rely largely on retained earnings for working capital, and also because they lack adequate access to traditional financing options. A recent OECD report indicates that less than 20% of small companies have access to overdraft facilities or bank lines of credit.
“The Visa survey showed that only 21% of SMEs in Hong Kong have invested in digital transformation tools to boost productivity, and cash flow management is a key component of this. We want to help businesses across Asia access these tools via a cloud-based platform that requires minimal investment but has the potential to deliver outsize returns,” said Reap Co-founder Kevin Kang in the statement.
By digitizing day-to-day financing solutions and providing quick access to alternative sources of liquidity, Reap facilitates smoother cash flow and increased capital efficiency for small businesses. This is particularly relevant for driving growth in the post-Covid-19 economy.
“We launched the company because small businesses need a reliable partner who understands their financing challenges and delivers solutions designed to meet their needs,” said Daren Guo, another company co-founder. “We are deploying these newly raised funds at a time when many small businesses in Hong Kong are struggling to help rebuild the local economy. SMEs constitute over 98% of Hong Kong business establishments and employ about 45% of the city’s private sector workforce.”
Reap is recognized by Visa as a Business Payments Solution Provider. The company’s solution is delivered securely to users alongside its technology partner, Stripe, one of the world’s largest online payment processing firms. Reap’s transaction volume has grown at a CAGR of 40% per month over the past year, amounting to more than US$100 million since it was initialized two years ago. The company currently provides innovative financial technology solutions in Hong Kong, Singapore, and Vietnam, and will soon launch in Malaysia and South Korea as well.
“We are excited to partner with the team as Reap continues to support small businesses in Asia with innovative payment and credit solutions. In these uncertain times, the company is filling a critical gap by helping small businesses digitize and manage their working capital and cash flow needs,” said Tito Costa, Partner at Global Founders Capital.