Funding Societies Crowdfunding Platform - Review for Investors

Funding Societies Crowdfunding Platform - Review for Investors

Best platform for investors seeking to invest online using P2P/Crowdfunding

Editor's Rating

5.0/5.0

Good for

  • Investors who prefer an online P2P/Crowdfunding platform with a strong performance record and high asset quality
  • Individuals that value investing with a platform whose executives invest in the same deals

Bad for

  • Investors that want to purchase shares of equity of a business

Funding Societies stands out from other P2P/Crowdfunding investing platforms and SME lenders for several reasons. From an investing perspective, the platform's asset quality (1.4% default rate, 85% on-time repayments) is unmatched.

Summary of Funding Societies Investment Platform
One of the largest P2P/Crowdfunding platforms in Singapore with more than 2,100 completed deals totalling over S$110 million
Lowest default rate of P2P platforms (1.3%)
High on-time repayment rate (85%)
Low minimum investment per campaign (S$50)
Funding Societies' executives also invest through the platform, aligning their incentives with investors

Table of Contents

What Makes Funding Societies Stand Out to Investors

Funding Societies provides an excellent opportunity for P2P/Crowdfunding investing in Singapore SMEs. In general, SME P2P/Crowdfunding investing presents added risk, compared to other investments, given that companies seeking this financing tend to do so because they do not qualify for traditional bank loans. This highlights the need for a platform like Funding Societies, which features the best asset quality of all platforms in our review. Its default rate (1.3%) matches those of high quality commercial banks and it features exceptional rate of on-time payments (85%). It has completed over 2,100 deals totalling more than S$110 million, which further supports its strong performance track record.

Additionally, Funding Societies founders and employees are unique in this space for investing in every opportunity on the platform along with their users, which indicates that the platform is incentivized to keep investors' best interests in mind. Finally, Funding Societies offers "Auto-Invest", a free tool that allows investors to automatically allocate funds to investment opportunities based on preferences of tenure, interest rates, and industry.

There are a few drawbacks of the Funding Societies platform. First, it does not offer equity investing. Also, its S$1,000 initial deposit, while standard for most platforms, is greater than few other platforms, such as MoolahSense that require S$500 less. Similarly, its 18% (of interest earned) investor fee is comparable to some of its competitors, but MoolahSense's investor fee (1% on total repayment) is generally lower for investments with durations of 6 months or longer.

Column chart comparing the Investor Service Fee (as a percentage of investment)  given a 15% annualized rate of return. MoolahSense's fee is cheaper than Funding Societies' fee fwith durations of 6 months year or longer

Investment Opportunities at Funding Societies

Funding Societies offers investors a variety investment opportunities. These include short to medium-term unsecured business loans and invoice financing. The tenure of these investments options ranges from 3 - 24 months and 30 - 90 days, respectively. Funding Societies business loans generally earn 16 - 30% annual effective interest rates. Effective interest rates assume that investors automatically reinvest their capital as it is paid back throughout the tenure of the loan. Invoice financing tends to return 8 - 15% annually.

All of Funding Societies investments are unsecured, meaning that borrowers do not provide collateral for the chance that they cannot repay. This increases both the risk and the potential return of these investments. Invoice financing tends to present lower risk and returns than unsecured business loans, because invoice financing is based on the value of goods/services that the borrower has already provided and is owed from its customers. This makes the loan more likely to be repaid compared to business financing, which can be used for any number of purposes. Funding Societies requires that business loans are personally guaranteed (a legal promise to repay) by the director(s) of the borrowing company.

Business LoanInvoice Financing
Annual Returns Range16 - 30%8 - 15%
Investor Service Fees18% of interested earned18% of interested earned
Minimum Investment per CampaignS$50S$50
Initial DepositS$1,000S$1,000
Loan Duration3 - 24 months30 - 90 days
SecurityUnsecuredSecured and unsecured

Investor Eligibility Criteria

  • At least 18 years old
  • S$1,000 initial deposit
  • Minimum investment per campaign S$50
  • Free application

Funding societies is easily accessible for most investors. For example, the minimum investment per campaign for both investment types is S$50, which is significantly lower than the requirements of some of its competitors. Additionally, there is no application fee. Finally, for investments yielding less than 15% with shorter than 6 months, Funding Societies' fee of 18% of interest earned is lower than MoolahSense's fee of 1% of all repayments received.

Graph showing the Minimum investment per financing campaign requirement of five major P2P platforms in Singapore. Funding Societies has the lowest required investment per campaign of S$50

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