How This Alibaba-backed Hong Kong SME Financing Platform is Creating China Route Qupital bills itself as the region's largest trade financing platform for small and medium enterprises

The small and medium enterprises (SMEs) play a vital role in a country's economic growth. Unlike startups, this sector has less funding options to choose from. However, many online lending platforms are aiding this sector by providing different financing options.

Fintech startup Qupital, which claims itself to be the Hong Kong's largest online, small and medium enterprise trade financing platform, helps SMEs gain access to quick quality capital so that entrepreneurs can focus on what they love and what matters to them—growing business, instead of worrying about cash flow. The startup has recently raised USD 15 million in a Series A round led by CreditEaseFinTech Investment Fund (CEFIF), a leading fintech fund under CreditEase, with additional capital injections from the Alibaba Hong Kong Entrepreneurs Fund and MindWorks Ventures, following their initial investments in the seed round.

Stepping Up Expansion

The Alibaba-backed financing platform plans to use the funds to expand their presence in mainland China, enlarge their technology development and risk management teams, and strengthen its fast-growing, cross-border e-commerce expansion. CreditEase will provide marketplace lending access and networks to facilitate the geographical expansion of Qupital, as well as bringing on-ground operational expertise. In addition, the wealth management team of CreditEase is also considering providing new capital to fund SMEs' trades.

"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," says Dennis Cong, managing director of CEFIF.

With new capital, the startup will further enhance its internal credit control systems, e-commerce finance product, and overall technological capabilities to cope with future demand. To penetrate into the Chinese market, it aims to open branches in key cities including Shanghai, Hangzhou, Guangzhou, and Shenzhen, while also taking advantage of the flourishing Greater Bay Area to set up a technology center for talent sourcing and development.

"In tandem with our flourishing partnership with Alibaba.com last year, we achieved a successful expansion into the cross-border e-commerce market (supply chain financing). We plan to further expand our regional business towards mainland China and seize the opportunity arising from the development of the Greater Bay Area in the future," says Andy Chan, founder of Qupital.

The Alibaba Connection

In 2018, Qupital launched its strategic partnership with Alibaba.com, the leading B2B business platform, aiming to help more Hong Kong B2B businesses in their transformation to e-commerce. This was Alibaba's first fintech investment in the city.

"We are pleased to witness the rapid growth of Qupital, from a local Hong Kong startup to a well-organized corporate team in the region. Through this follow-on round of financing and the business opportunities that Alibaba Group has facilitated, we have confidence in the future success of Qupital," says Cindy Chow, Executive Director at the Alibaba Hong Kong Entrepreneurs Fund.