Curlec, a Malaysia-based fintech company, said it has raised an undisclosed amount of investment from 500 Startups. This follows the company’s seed round last year, which was led by Captii Ventures.
Launched in early 2018, Curlec helps businesses collect recurring payments and manage their cash flow more easily. It offers an API that facilitates direct debit bank-to-bank payments and automates the collection workflow. The startup will use the new funds primarily to scale its team and operations in its home market as it ramps up sales and focuses on merchant acquisition for its target industries such as education, financial services, and property management.
It also looks to add more payment types to its solution and develop banking and software integration partnerships to help it scale in Southeast Asia eventually.
How is it different? Many businesses, especially small and medium-sized enterprises, still struggle with managing their cash flow and getting paid on time.
“Some of the stats are scary: In Malaysia, over 30% of businesses have less than one month cash in the bank and, on average, it takes around 90 days to get invoices paid. This has been particularly magnified during [the Covid-19] lockdown,” Zac Liew, CEO and co-founder of Curlec, told Tech in Asia.
Traditional payment options such as cash, check, bank transfers, and credit cards haven’t been effective in solving this pain point, Liew said. Instead, he sees great potential in direct debit, which is an automated payment method that allows merchants to pull payments directly from their customers’ bank accounts.
The concept of direct debit has been in Malaysia for many years, but only large companies have access to it, as they have the resources to deal with the cumbersome and paper-based processes involved. Liew believes that this leaves SMEs underserved. Curlec is now bringing direct debit online so that even SMEs can take advantage of this payment type.
Some established names in the region offering similar solutions include Stripe, Revolut, and Ezypay. According to Liew, while other players are more focused on eCommerce and e-wallet transactions, Curlec targets direct debit payments.
“This is an area that nobody else here has been focusing on and is a differentiator for us,” he added.
What are its challenges? Curlec has to educate businesses that direct debit is the “best way” to collect payments, get paid on time, and take control of their cash flow, said the CEO. It also has to convince consumers that its solution is a safe, secure, and a convenient way to pay.
What’s the opportunity? The startup aims to build an end-to-end product for managing recurring payments and looks to enter the subscription economy soon.
According to Google, Temasek, and Bain & Company, the digital payments sector in Southeast Asia is expected to reach US$1 trillion by 2025. Meanwhile, the global subscription economy is estimated to reach US$530 billion this year.
For now, Curlec generates revenue by charging a payment transaction fee and subscription fees. With maximum charges set at 1% per transaction and capped at US$2.34, it claims that its service is cheaper than some international card networks.
“From day one, we’ve always set out to build a sustainable company that doesn’t burn cash like crazy,” said Liew, adding that the company is aiming to hit profitability this year.
Amid Covid-19, the company said it has seen a surge in traditional businesses switching from offline to online. Moreover, more merchants are turning to subscription-based business models to obtain predictable revenue and take control of cash flow.
How much traction has it gotten? Curlec currently serves over 300 businesses including AXA Affin Life Insurance, telecom conglomerate Axiata Group Berhad, and online investment management company StashAway, among others.
It also claims to have processed over US$50 million worth of transactions since its inception. And despite the lockdown in Malaysia, its transaction volume continues to grow by 20% month on month, said Liew.
Who are the team members? Liew built Curlec with Steve Kucia, who has extensive experience in banking technology and was also the managing director of information technology company Unisys in Hong Kong. Liew, on the other hand, previously worked at multinational financial company Barclays.
Raj Lorenz, who was formerly group CEO of payments company GHL, is also part of Curlec as an early investor and board advisor.