Hong Kong-Based Fintech Start-Up Qupital Raises $15M To Expand Into Mainland China

Qupital, a Hong Kong-based trade finance platform for small and medium-sized enterprises (SMEs), has raised US$15 million in a series A round of financing led by CreditEase FinTech Investment Fund (CEFIF), with participation from returning investors Alibaba Hong Kong Entrepreneurs Fund and MindWorks Ventures, said Qupital in a statement released on Wednesday.

The series A round, which came after a US$2 million seed round in May 2017, took the total capital raised by Qupital to over US$17 million. The company plans to use the fresh funds to expand its presence in mainland China.

CreditEase, a fintech firm specialized in peer-to-peer (P2P) lending business in China, will act as a strategic investor to provide "marketplace lending access and networks to facilitate the geographical expansion of Qupital, as well as bringing on-the-ground operational expertise," said Qupital in the statement.

The company aims to open branches in key Chinese cities including Shanghai, Hangzhou, Guangzhou, and Shenzhen, along with setting up a new technology center for talent sourcing and development in the Greater Bay Area.

Qupital was founded in March 2016 to operate an online invoice trading platform that allows companies to raise finance against their receivables by connecting them with investors interested in a new asset class. The company makes money by charging SMEs a service fee that is a fixed percentage of the total invoice value and then a discount fee, and taking a percentage of net gains made by investors. It has recorded over 8,000 transactions on its platform as of the writing, totaling HK$2.07 billion (US$263.72 million) in value.

"The growing volume of SME and cross-border trading drives a huge demand for alternative financing for SME’s who are underserved in the market and opportunities for investors to earn a decent risk-adjusted return," said CEFIF managing director Dennis Cong in the statement. "We look forward to working with Qupital to broaden its source of capital base and create unparalleled investment opportunities for CreditEase."

Proceeds of the new round will also be used to further enhance its internal credit control systems, e-commerce finance product, and overall technological capabilities to cope with future demand.