What does Mr-Stingy, Dividend Magic, KC Lau, Blackbelt Millionaire and myself have in common? Aside from the fact that we all maintain websites with personal finance content, that is.
All of us do P2P financing as one of our investments. We lend money to companies.
In particular, and most strikingly, all of us chose Funding Societies Malaysia as the P2P financing platform of choice (note: referral code. You get RM50, I get RM50).
My experience with Funding Societies Malaysia so far
(scroll down if you just want to read the interview with Kah Meng)
When Funding Societies Malaysia contacted me for a collaboration opportunity, I was excited. I was already an existing user, with RM10,000 in my account.
I deposited money in Funding Societies Malaysia way back in March 2017, but took it out as the notes (businesses to lend money to) kept getting over-subscribed (too many people want to invest!). Procrastinated until October 2018, where I finally deposited money again.
This time around was much better, because I can use the autobot feature to make automatic investments according to my preferences.
You can set up to two bots – one for invoice factoring and another for business term financing. The biggest difference is the former is for super short-term investment (30-120 days), and the latter is for short-term investment (1-24 months).
So far, my annualised portfolio performance stands at 12.52% in 20 invested loans and 0 defaults (default is if the company that borrow your money end up not able to pay back). I think I can do better with diversifying my loans – something to tweak as I go along.
If you want to try out P2P financing, start with small amounts or an amount you’re comfortable to lose. It’s still considered higher risk than other types of ‘safe’ investments like fixed deposits, gold, mutual funds and things like that.
Questions I Asked Kah Meng, the CEO of Funding Societies
On the meeting date, Kah Meng and I met up at Old Town White Coffee at Bangsar LRT. I admit that I took an immediate liking to him – he’s around my age (he’s 32), polite and nice to look at in real life.
Here are some questions I asked him:
#1 – What’s your daily routine like as the CEO of a fintech startup?
You are what you do and all, right? I’m always fascinated to know what startup founders do on a day-to-day basis.
Here’s (almost) everything he does:
- Attend a lot of meetings. “My day starts early and ends late. I meet whoever I need to meet to get the job done.”
- Give a lot of media interviews. “About 8-10 interviews a week,” he says
- Conduct job interviews. “The right fit is everything. I’m involved in everyone’s interview process, all the way to the interns. It’s not just skills, but cultural fit as well.”
- Make micro-decisions. “I trust my team to do their job well, and I’m only hands-on where needed. I meet them in the office throughout the day to give final inputs and make micro-decisions to progress things along.”
That whole hiring and delegation part intrigued me. As a small business owner, I’ve thought of expanding many times, but the idea of hiring staff intimidates me. It’s part control issues (ie ‘no one can do it better than me’) and part fear (ie ‘what if I can’t pay them?’). So we talked about that for a bit.
“I’m good at time management, but after a certain point you can’t create more time, you know? If you want to grow, you need to learn how to delegate,” Kah Meng said after he shared productivity apps he uses in his daily life (Google Calendar and Remember the Milk), “The hiring process is something I emphasised right from the beginning. I conducted hundreds of interviews to get Funding Societies Malaysia’s first few hires.”
“Yes. It was hard and long and tedious but completely worth the effort – the right hires compounded into more right hires for Funding Societies. We started in Malaysia in 2017 and already expanded to 50 people by end of 2018 because we got the first few hires right”
#2 – Funding Societies Malaysia boasts low default rates. Last I checked, it’s at 0.93%, which is ridiculously low for a high-risk investment. How?
(Note: Data was taken from Funding Societies Malaysia Progress Page. Defaulted means the business that borrowed the money was not able to pay it back. Like say for example you borrowed money from the bank and promised to pay back X amount every month, but you missed a few consecutive payments. Like that lah.)
Additionally, how many companies exactly make up that 0.93%? And… which industries are they from?
“Three,” Kah Meng said easily, “Two from trading, one construction. But let’s not discriminate against any industries. It just so happens the defaulted loans were from those industries!”
What happened to them?
“I can’t share the details, since that info is P&C, but I can share that we actively work together with the defaulted companies and other companies that missed payments (but have not yet defaulted) – we reach out to them and together, try to work things out, restructure their payments plans. Ultimately, we want to see the companies committing to their repayments.”
“Obviously on our end we want to keep the default rate low so investors have confidence with us. This is something we keep in mind when considering every SME that apply to be listed on our platform.”
#3 – Say I’m a company and I want to borrow money via your platform. What would cause my application to be rejected?
Kah Meng explained how Funding Societies’ business plan includes a risk management section. The ‘acceptable’ default rate they will tolerate is between 3-5%, which makes them overachievers at the current 0.93% default rate. As an investor, I liked hearing that. Remember, I’m an actual investor with them, with RM10k in!
Borrowers are rejected if they:
- Are not clear about their business model or how they plan to use the borrowed money
- Have poor credit history
- Plans to use the money for long-term asset
The last part required a bit of explaining from Kah Meng’s part – I wasn’t familiar with the term. “So what that means is Funding Societies is not suitable for long-term business development activities, for example if the company wants to use the money to build factories or buy land. It has to be more immediate than that.”
#4 – Which part of your job do you enjoy the most?
This was my favourite part of the interview. Kah Meng’s face lit up.
“My favourite part is definitely going through company applications and discovering the variety we have within the SME space in Malaysia,” he said excitedly, “There’s just so much colour.”
I egged him on.
“It’s so fascinating to learn about the value propositions and strategies from different companies. You’d think they are similar, but they always have a twist in conducting business, something that separates them from competitors. My favourite industries to go through are the services, B2B and retail industries.”
Can you give an example of a company that made you go, ‘brilliant’?
“I can’t give too much away, but there is an SME in the retail industry that offers personalised products. The products combined with the business model has amazing potential.”
#5 – Last question… Why did you call yourself a boring person?
At one point during the interview, Kah Meng literally said, word-for-word, “I am a boring person”. When I brought it up, Kah Meng appeared sheepish.
“I repeat a lot of the same things,” he said slowly, “I like structure. My daily and weekend routine doesn’t change that much. On weekdays, I work. On weekends, I go for workout and rest. I eat the same lunch. I wear the same type of clothes (Suraya’s note: that explains all the Google images of him).”
Honestly, I don’t see the problem. This is the holy grail of productivity – when the habits are so ingrained that you don’t have to motivate yourself daily, you just do it because that’s what you do. And it sounds like he’s repeating the right habits over and over again. Not a bad thing at all.
But he did appear genuinely self-conscious about it so I tried, “There must be something you tried a bit differently recently?”
“…The other day I decided to eat chicken rice for lunch instead of my usual meal…”
Well, if you like the idea of someone like that working to grow your P2P financing-earmarked investment… Someone who has a hyper-practical worldview and whose definition of fun is way different from other people… Here’s my referral code for Funding Societies Malaysia. You get RM50 from this link, and I get RM50 too.