A/R trading platform Qupital raises HK$20.5m

Qupital plans to expand in Taiwan and Southeast Asia.

For a small business with slow-paying clients, a cash flow problem can quickly escalate to an operational nightmare, especially if banks refuse to lend in time. This led Hong Kong start-up Qupital to propose an alternative: Why not raise financing against your account receivables by connecting with professional investors?

Qupital’s auction-based financial solutions seem to have found a ready market, and investors believe the start-up can scale up in Asia. So far it has received HK$20.5m in total funding from MindWorks Ventures, Alibaba Entrepreneurs Fund, Convoy Financial, Aria Group and other investors.

As part of its expansion plan, Qupital plans to expand in Taiwan and Southeast Asia, where there are many small and medium-sized enterprises (SMEs) with limited access to traditional bank financing. It is also looking to grow from an account receivables trading platform to offer other financial products to businesses and more asset classes to professional investors.

“We work with a client who retails and distributes confectionery products. They are a young but very successful company that has expanded rapidly. However, their operating cash has not been able to grow at the same rapid pace,” says Winston Wong, co-founder of Qupital.

“We approached them through cold calling, and introduced our solution to them. They were able to fund their invoices in 48 hours or less, and now have the strong confidence to be able to handle larger orders from big customers such as supermarkets, department stores and convenience stores.”

Wong says this is where Qupital’s competitive advantage lies: It quickly and efficiently provides an option for SMEs to fund their unpaid invoices, and in a fully online platform that is easily accessible.

“Using our online invoice discounting platform, we are able to help businesses raise funding against their unpaid invoices. Qupital currently serves a wide range of businesses in the export, manufacturing, and distribution sectors.”

Qupital began when Wong and another founder Andy Chan, twenty-somethings with backgrounds in traditional factoring and software engineering, saw a large underserved market in Hong Kong. They researched similar invoice financing platforms overseas and decided to launch one that could serve the unique needs of Asian SMEs amidst a trade environment that is moving towards open account payment terms with longer payment cycles.

“We started the business using our own software development skills and advice from our legal advisor,” says Wong.

Both founders worked hard to get the word out to companies that Qupital’s services would ease their cash flow worries. They cold-called SMEs, like the confectionary retailer client they assisted, and were not averse to taking any measure that would convince clients to take them more seriously.

“When our business was only our two founders, we would print multiple business cards with different titles when going to pitch to new clients to give the impression that our company has a larger size,” says Wong. “Andy also grew facial hair for a period to present a more mature look to potential clients and investors.”

Qupital also sought out the advice of experts. Whilst the founders were able to use their combined background in traditional factoring, computer engineering and software engineering, they still sought out a legal advisor. The guidance from Hong Kong-based venture capital firm MindWorks Ventures and Alibaba Entrepreneurs Fund has and will be critical as the start-up looks to conquer Taiwan and Southeast Asia.

“Qupital hopes to continue to help Hong Kong businesses grow and succeed on the international stage using our digital solution. The financial technology adoption rate for businesses in Asia is still behind other regions, and Qupital wants to be able to play a role in growing this market,” says Wong.