Invoice Discounting startup, ApexPeak, Raises 2.3M SGD in Seed Round
After only 7 months of offering invoice discounting services in Singapore and South Africa, ApexPeak has secured $2.3M SGD in their combined seed and convertible note round.
In a nutshell, invoice discounting is the sale of a business’ invoices to a third party. The third party is charged with processing the invoices, and the business lending the invoices is able to receive funds earlier based on the expected payments on the invoices. While this is nothing new, ApexPeak has managed to reinvent this financial instrument to be ready for the digital age.
To date, ApexPeak has already turned a neat profit with a zero default rate on funds dispersed. This type of performance in such a short time is unheard of in the startup or financial world.
“Robust vetting and process combined with automating standardised tasks and good risk management have contributed in making ApexPeak successful,” says Gakim Solomons, CEO and Co-founder of ApexPeak.”
Unlike traditional financing options, ApexPeak helps small and mid-sized enterprises (SMEs) turn invoices into cash in as little as 5 days. SMEs gain fast and affordable access to working capital. Up to 80% of the invoice amount is advanced upfront; the remaining 20% is dispersed when the invoice is processed with a 2% discount fee levied. Finally, insurance companies cover the counter party risk of these invoices so it is essentially risk-free.
While it sounds simple, there is also little to no competition in this space because it requires the right combination of technology, talent, experience and opportunity to create ApexPeak. After 10 years in private equity, Solomons linked up with college friend and serial technopreneur, John Fearon, to utilize their natural synergy in coming up with a financial technology business.
After an initial unsuccessful dabble in peer-to-peer foreign exchange, it occurred to them that the SMEs loans market is under-served. SMEs often suffer cash flow problems and without liquidity, many have been forced to shut down like Silicon-Valley based Singaporean startup, Chalkboard. Traditional banks require extensive paperwork and lengthy periods to evaluate risk while SME funds dry up.
Solomons and Fearon were particularly interested in the growing SME loans markets of Africa and South East Asia. ApexPeak managed to obtain an exemption from the Regulatory Authorities in Singapore and South Africa in order to operate its business.
With the business idea and legal documents ready, it was a whirlwind couple of months for the business. Joining the Google-backed accelerator in South Africa, 88mph, ApexPeak built a simple and elegant website for invoice discounting to go digital. The risk-free nature of the business and ease of use of the website, allowed Solomons and Fearon to raise $800k SGD even before Demo Day.
In fact, after that, business was picking up so fast strictly through the word-of-mouth that Solomons avoided all forms of marketing to ensure they will not be overwhelmed. Within 4 months of operation, ApexPeak had broken even and was looking for $2M SGD to expand faster.
Just like its SME customers, ApexPeak could not wait for the typical 3 to 6 month wait for funding from traditional sources. In Singapore, with Fearon’s extensive contacts, risk-seeking angel investors were given a chance to take a stake in the convertible round. In a mere 3 months, the business surpassed its goal to reach $2.3M SGD, making one of the biggest pre-Series A rounds in the region.
“A low interest rate environment in Asia has resulted in many investors looking for good risk adjusted returns. ApexPeak has been able to raise money from investors by offering investors the opportunity to obtain above average yields with no downside really,” says Solomons.
Not resting on their laurels, ApexPeak will continue to move at break-neck speed. Given the capital-intensive nature of the business, ApexPeak is looking at raising more money in order to help more SMEs in Asia and South East Asia grow their businesses.