Japan’s Credit Engine closes $970K seed round for data-driven small business loans

Japan’s Credit Engine closes $970K seed round for data-driven small business loans

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The Credit Engine team with investors
Image credit: Credit Engine

See the original story in Japanese.

Tokyo-based FinTech startup Credit Engine announced on Monday that it raised 110 million yen (about $970,000 US) in total in a seed round. The company had raised 50 million yen (around $440,000 US) from Draper Nexus Ventures and Voyage Group (TSE:3688) in September of 2016, and as a result of the Financial Services Agency issuing them a business license for lending money necessary for their business development, this time around they procured 60 million yen (about $530,000 US) from 500 Startups and  500 Startups Japan as well as Freebit Investment, the investment arm of Japanese leading Internet service provider Freebit (TSE:3843). While the fundraising occurred on two separate occasions, in both cases the terms for funding (valuation, etc.) meet that of a seed round. In addition to this, the company announced the beta launch on the 30th for their online loan service Lendy.

Credit Engine was established in July of 2016 by CEO Seiichiro Uchiyama (See above photo, the person on the right sitting in a chair) and CFO Tatsuki Inoue (Above photo, first person on the left). After a stint at Shinsei Bank, Uchiyama worked with an NPO offering financing support for small and mid-sized businesses in Sendai after the Tohoku earthquake, and then went on to get his MBA from UCLA. Until last year he was a manager in the Business Promotion Department at Japanese FinTech startup Money Forward. Inoue hails from Accenture, and has worked with Tokyo-based business incubation company Netage (now known as startup-focused VC firm United), among others. He also has experience starting his own mobile CRM service, leading to Yahoo Japan’s president office followed by managing a buyout fund, which had a hand in the formation of Credit Engine.

This makes it a so-called “neo-bank” in the field of financial inclusion, in the US Whole Foods Market (NASDAQ: WFM) provides loans to manufacturers, and in Indonesia there is a service in which Taralite cooperates with Uber’s API to offer loans to drivers dependent upon their earnings.

Lendy hopes to provide an environment where small and medium companies and individual business owners can borrow money in the event that funds are needed quickly so that they can concentrate on business management rather than cash flow. Currently, the service mainly covers restaurants, barber shops, hair salons, online shop operators, and the planned average loan amount per customer is 1.5 million yen (about $13,000 US) (maximum 10 million yen ≒ about $88,000 US). The average loan period is 3 months (maximum 1 year) and the interest rate is expected to be about 10-14% (the amount of the loan is specified at the beginning of service). As it is not so-called peer-to-peer lending, it appears Credit Engine obtains the funds necessary for lending from ordinary financial institutions, etc.

Even at FinTech events in Japan we have begun hearing of new financial inclusion services using artificial intelligence. Keep an eye out on The Bridge for more in the future.

Translated by Amanda Imasaka
Edited by Masaru Ikeda