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Southeast Asian fintech startup Acudeen Technologies is to shift its online receivables marketplace onto the blockchain.

The Singapore-based firm is targeting a US$2tn market opportunity, with its use of blockchain to provide a secure invoice factoring solution using its customised cryptocurrency. With a token pre-sale set to end on April 8, the group’s initial coin offering will launch on April 9.

Acudeen brands its platform as “an inclusive environment for small businesses who are having a hard time getting financing using traditional means”.

Magellan Fetalino, the company’s co-founder and CEO, explains to GTR how exporters in particular can access working capital by easily selling their receivables on the platform.

“The use of letters of credit is becoming less and less,” says Fetalino, whose company also operates in Myanmar and the Philippines. “It’s becoming harder even for medium-sized businesses to use letters of credit to get access to financing due to issues both in the market and regulatory environment.”

If a small business is about to ship its exports and has struggled to obtain a letter of credit, it can join the Acudeen platform – subject to a know your customer process, which according to Acudeen typically will take a few hours – and list its receivables for sale online instead. Upon upload, the receivable is immediately visible to multiple funders, including banks, financing companies and high-net-worth individuals, to purchase at a discount.

“Because of this, the SME now gets their money in advance as working capital and can use it for the growth of their business,” Fetalino says. “On the other hand, you have funders who have made money from the transaction.”

Having launched its online platform for invoice discounting in December 2017, Acudeen onboarded over 400 SMEs in just one month, and, to date, enjoys partnerships with two of the largest banks in the Philippines: RCBC and UnionBank.

Why, then, bring the platform, onto blockchain? Magellan says that smart contracts guarantee an authentic transfer of the receivable and prevent multiple sales of the same item.

“Peer-to-peer platforms work best when the people who are part of it trust the system,” he remarks. “What blockchain brings to the table, with the two technologies we’re using – Stellar and Hyperledger – is trust and reliability into the whole ecosystem, especially at the pace we’re growing.”

In addition, the use of cryptocurrency technology enables easy cross-border movable asset purchasing. The platform’s stable token, CryptoFiat, directly associates the coin’s value with its fiat equivalent, “eliminating the need to undergo a tedious and expensive process”, the firm explains in an analysis of how its platform works.

Acudeen currently holds US$7mn in under trust. Though investors in Dubai, Singapore and Hong Kong can already buy invoices over the platform via remittance, by 2019, the platform is expected to extend to funders from a further 10 countries. “There has been some difficulty in onboarding funders outside of the Philippines and Myanmar,” Fetalino reveals.

Under the current business model, the company charges the seller a transaction fee of between 1% and 2% of the total transaction value. However, this is set to switch in the second quarter of next year, when users will be charged “per microservice”, for instance, upon uploading an invoice. According to Fetalino, this new model will work out cheaper for users.