SME lender nearly doubles revenue as it shifts to balance sheet lending, expects profitability by 2024
Highlighting Glimmers of Growth
Singapore-based SME financing platform Validus experienced substantial growth in 2022, nearly doubling its revenue from the previous year, according to regulatory filings tracked by research firm Alternatives.pe.
The Vertex Ventures-backed fintech company saw its revenue rise to US$10.1 million last year, up from US$5.3 million in 2021.
However, pre-tax losses widened slightly from US$13.5 million to US$13.3 million over the same period. As a percentage of revenue, though, losses narrowed from 255% in 2021 to 132% in 2022.
Recognizing Signs of Progress
“We expect revenue to grow another 50% this year, with losses projected to fall by 40%,” said Validus co-founder and group CEO Nikhilesh Goel in an interview with Tech in Asia. “We’re on track to hit EBITDA profitability by Q4 2024.”
Validus generates revenue mainly from commissions on loans disbursed to borrowers and interest earned by lenders on its platform. It also directly provides financing and earns interest income.
Spotting Signs of Recovery
Last year, the firm launched neobanking services like business accounts, corporate cards, forex transfers, and expense tools.
As it shifts to a hybrid model with increased balance sheet lending, critical expenses like salaries, other operating costs, and finance charges have risen. But as a percentage of revenue, wages and OP costs fell amid economies of scale.
Embracing Optimism
Validus used US$27.1 million in operating cash flow last year with US$21.3 million cash on hand. “Based on our growth, we expect to be cash flow positive by the end of 2024,” said Goel, citing a 40% reduction in cash burn this year.
“We’ll continue launching custom supply chain and digital financing products for SMEs across our markets,” he added. Validus’ largest market is Indonesia, where it had the lowest NPL ratio among peers at 0.4% in 2022.
