Investors back WeLab’s financial innovation

"To make or break a firm like us, it isn't about whether or not we're in P2P lending, but being able to acquire customers and do risk management. Once you can do this, capital will come," says Simon Loong, founder and CEO of WeLab. "We decided to focus on innovative online lending first and then worry about the investor side of P2P lending."

As a result, the investor side of the business does not follow conventional lines. WeLend, the lending platform set up in 2013, has attracted 14,000 members - mostly white-collar, 25-35 year-olds - and processed over HK$1 billion ($129 million) in loan applications, of which 20-30% get approved. But it does not follow a mass-market P2P model; initial loans were provided off balance sheet and by local high net worth individual backers as they came on board.

WeLend claims to provide financing cheaper and quicker than any other channel in Hong Kong. Loong notes that banks take 5-6 days to process applications and charge relatively high interest rates, while the terms offered by licensed money lenders are even more punishing. WeLend aims to match or better bank rates, with approved customers getting their money within 24 hours.

Last week, DST Global's Yuri Milner, Iconiq Capital and Ule - an e-commerce platform owned by Hong Kong's TOM Group and China Post - committed $6 million to WeLab's Series A round, taking the total to $20 million. The firm had previously announced investments from Sequoia Capital and TOM Group.

They are getting more than just exposure to WeLend. About three months ago, the company launched Wolaidai in mainland China, a mass-market P2P platform that provides small loans for college students. Its membership is already nearly twice the size that of WeLend. WeLab has also entered sales finance, forming a partnership with Hutchison Telecom in Hong Kong through which customers can secure a loan to purchase a phone while standing in the store.

More products are planned for mainland China, with Loong expecting to source opportunities just by working with Ule's customer base. One of the WeLab's goals is to establish itself as a software and service provider that helps others get into internet finance.

Loong, who previously spent over a decade working in banking throughout Asia, adds that his team's background is another differentiating factor: they come from financial services whereas many internet finance businesses were set up by tech entrepreneurs. "You don't know risk management until you have seen a crisis," he says. "China has not seen a credit crisis yet; Singapore, Hong Kong and Taiwan all have."

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• Topics
• Greater China
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• Hong Kong (China)
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• DST Advisors
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