A Thai unit of Investree, the Asean-based financial technology company, reported 200% growth in business in the first quarter this year as small and medium-sized enterprises (SMEs) relied more on crowdfunding platforms because banks tightened their SME lending criteria.
Natsuda Bhukkanasut, co-founder and chief executive of Investree Thailand, said Thailand's credit market faces strict constraints.
Despite growing demand for business loans as a result of the gradual economic and tourism recoveries, SMEs seeking loans for working capital or to ramp up production are still finding it hard to borrow from financial institutions because of stringent lending criteria following the Bank of Thailand's six interest rate hikes, she said.
"The tourism-driven economic recovery has certainly put business loans back in demand as the service sector slowly comes back to life. However, the same is not true for the manufacturing sector, as reflected in the recent export figures," said Ms Natsuda.
"Now more than ever, the Thai economy is going to be heavily reliant on domestic consumption. We really need to tackle the liquidity issues plaguing businesses, particularly SMEs."
The need for small business financing is reflected in Investree's growth. The funding platform has registered significant growth since its inception.
The platform has been used by 81 SMEs, raising more than 1.5 billion baht since its launch.
Overall SME crowdfunding grew threefold in 2022, and almost threefold for the first quarter of 2023 year-on-year.
As a leader in the crowdfunding portal business, Investree joined hands with T Broker, a subsidiary of Thanachart Capital Plc, to support SMEs in accessing capital, enhancing financial capabilities and improving risk management.
"This partnership will benefit both Investree and T Broker's customers by opening doors for entrepreneurs to propel their businesses forward despite a challenging lending environment," she said.
T Broker, which provides a brokerage service that covers a variety of investment and insurance products, said the T-Advisor network of 5,000 professionals aims to connect with customers who are looking for financing via Investree.
"The partnership will help broaden T Broker's client base from individual to corporate, particularly SMEs," said T Broker chief executive Suwimol Boonnak. "We will focus on leveraging our broad service portfolio and delivering comprehensive financial solutions tailored to meet the specific needs of our individual clients."
For the second half of 2023, the alliance believes it will continue to see a resurgence in several businesses, notably those that have benefited from the nation's reopening and the influx of tourists.
"Despite these positive signs, uncertainty still looms over the economic forecast, driven by anticipated policy shifts and the incoming government," said Ms Natsuda. "Entrepreneurs are grappling with escalating costs, a factor that could significantly affect SMEs. Addressing these challenges promptly and efficiently stands as a critical task for the government."
More than 800 SMEs have used crowdfunding platforms to raise over 7.7 billion baht to fund their business operations to date. For the first four months of 2023, 429 companies raised a total of 2.1 billion baht through these platforms.
Investree's market share is roughly 20%, up 4 percentage points from 2022. The average return on investment is 11.5%.