Alibaba has made its first FinTech investment in a Hong Kong-based startup, and the target is a B2B player.
Reports Monday (May 15) said Alibaba invested in Qupital, an alternative SME lender, and its largest online invoice discounting platform. Qupital links small business borrowers to professional investors, hedge funds and family offices to borrow money against outstanding invoices.
Alibaba Entrepreneurs Fund and MindWorks Ventures led the seed funding round of $2 million. DRL Capital, Aria Group and other backers also participated, according to reports. Qupital said it will use the funds to strengthen its underlying technology and expand in the region.
“We are happy to see Qupital continue to help other entrepreneurs in Hong Kong, and it is an exciting time to be part of the growing FinTech ecosystem,” said Alibaba Entrepreneurs Fund Executive Director Cindy Chow.
“Qupital is a textbook example of how internet and technology help to optimize a traditional industry,” said MindWorks Ventures Managing Partner David Chang in an interview with Forbes. “There is a large financing gap in Asia for underserved SMEs, and we look forward to Qupital becoming the dominant player in the market.”
The publication said more than a quarter of SMEs in Hong Kong are struggling to access working capital and, as a result, are challenged to grow and expand globally. According to Qupital Co-Founder Andy Chan, much of the issue is because SMEs are waiting so long to see their outstanding invoices get paid.
“This meant that the SMEs were being underserved by traditional lenders with slow and cumbersome processes,” he told the publication, which added that, in addition to the investment, Alibaba will also be partnering with the startup to help it grow.