This document discusses financial challenges facing small and medium enterprises (SMEs) in obtaining funding from traditional sources like banks. It introduces fintech platforms like Velotrade that use innovative methods to connect SMEs needing funding with investors online, providing more efficient, flexible funding options. Major hurdles for trade finance include fraud prevention and lack of standardized products, but emerging technologies like blockchain may help address these issues if widely adopted. Collaboration between banks and fintech is also emphasized as a way forward.

1. www.velotrade.com

2. Solving Financing Constraints with
Innovative Funding Solution
• Financial challenges that SMEs or Start-up business
enterprises are encountering
• What are the traditional ways to deal with SMEs
financing?
• Is Fintech the only ONE that causing disruption to
Banks?
• How Fintech helps reshape the new ecosystem of
Trade Finance
• What are the major hurdles?
• Some food for thoughts

3. Financial Challenges for SMEs & Start-ups
Small and medium-sized enterprises (SMEs), which account for 80 to 90 per cent of
Asia-Pacific businesses, have played a crucial role in stimulating domestic demand
and international trade in the region through innovation, job creation and technology.
After credit crunch in 2008, left with less capital to lend, banks have raised interest
rates for SMEs, which they are already reluctant to lend to. As a result, the SMEs
now have little bargaining power over lenders because of a lack of fixed assets and
poor credit records.
But even as their role in strengthening national economic growth seems to have
received much attention, lack of access to finance has been a key constraint on
the growth of SMEs. Financial systems in Asia and the Pacific have improved in
the past two decades, however, inadequate infrastructure, weak networks of
financial institutions and poor coverage of banking facilities inhibit the timely
availability of trade finance to SMEs.

4. What are the traditional ways to Handle SMEs
Financial issues problems
The "bricks and mortar" culture, which banks and SMEs are both accustomed to,
cannot be changed overnight. It takes time for banks to learn about the operation of
SMEs in order to have a better understanding of the credit risks of SMEs in general,
and to set up an effective support mechanism for assessing the credit risks.
Banks will require high equity contributions, collaterals, loan covenants, credit and
personal guarantees or even guarantors.

5. Is Fintech the only ONE that causing
Disruption
If traditional banks fail to keep up with the ever-changing demands of the
industry, they could face the danger of becoming obsolete
“The FinTech sector is a ‘double-edged sword’ for banks,”
Said Ms Susanne Chishti, chief executive and founder of FINTECH Circle
“On one side, the FinTech sector and the tech giants that have started to
offer financial services and lending, payments are clearly the most
disruptive threat the financial services industry has ever seen in its history.
On the other hand, FinTech firms provide solutions for banks which cannot
only speed up the internal innovation and transformation processes of
existing financial services players, unlock the power of Big Data internally
and most importantly help banks to survive long-term, as many tech firms
will start to offer financial services to their existing millions of customers
globally.”

6. Is Big Tech, Not Fintech, Causing The
Greatest Disruption To Banking?
· Amazon Web Services (AWS), which provides services to dozens of finance
companies, including Aon, Capital One, Carlyle, Nasdaq, Pacific Life and Stripe
· Brazil’s Banco Bradesco Facebook app, which allows customers to conduct day-
to-day banking from Facebook, relying on the social network’s customer data
analytics to target users
· Capital One and Liberty Mutual’s “Alexa” solution (a voice-activated personal
assistant), which allows customers to check balances, pay bills and track spending
through these devices

7. We address a market failure
Unfulfilled demand for credit
SMEs struggle to access export credit
markets at scale.
Large Exporters seek cost-effective,
sustainable and flexible sources of
liquidity.
1 2
Excess supply of liquidity
Professional Investors are interested in
trade receivables with attractive risk-
return and limited correlation to other
asset classes but cannot originate or
manage their operational complexity.

8. Trade receivable discounting at a glance
EXPORTER
HK Based SME
DEBTOR
European Buyer
VELOTRADE
For example: A HK based SME sells to a large European Buyer.
The payment is due in 60/90 days. The Exporter needs cash advance to be able to fulfil financial
commitments (such as rent, salaries, bills) without waiting for the invoice to become due.
INVESTORS
Velotrade Marketplace
1. Invoice
Also by discounting the invoice the Exporter would be able to get cash immediately deployable to
increase the production (selling more earning more money).

9. Very large addressable market
Source FCI & HKTDC
Growth
YoY:
Receivables discounting, not a niche!
HK SG
KR TWWORLD CHINA
USD 3 Trillion USD 400 Billion USD 200 Billion
EXPORT
Related:
7%
22%
12%
20%
8%
50%

10. End-to-end solution for corporates and investors
Velotrade provides the technical infrastructure, handles the origination, carries out
extensive due diligence and robust anti-fraud procedures. We also look after the
settlements pre and post auctions.
ORIGINATE
• In-house sales team targeting corporates
• Banks partnerships
• Corporate partnerships e.g., logistics companies
DE-RISK
• Banks’ grade DD
• External information gathering e.g., Rating Agencies
• Internal risk assessment
INSURE • Partnership with Specialised Trade Insurer
(Euler Hermes)
MANAGE
OPERATIONS
• Settlement
• Reporting
• Collection
MITIGATE • Recovery

11. We do this by using proprietary technology

12. model comparisons
Benefits Banks Velotrade Non-bank lenders
monetisation of invoices
scalability of funding
lighter regulatory burdens
fast, efficient and user-friendly
online service
swift transfer of funds to sellers with
no minimum threshold requirement
flexibility to discount individual
invoices
transparent fee structure
We are more efficient, user-friendly and flexible than banks.
We are more scalable, cost-effective and flexible than traditional non-bank lenders.

13. What are the major hurdles
How to prevent Fraud cases
The growing risks of fraud in the $4 trillion industry have led to heightened
regulatory measures, including increased checks around ‘know your clients’ (KYC)
and anti money laundering (AML) legislations.
As a result, 46% of the larger financiers have rationalised their funding away from
smaller businesses which are deemed to be riskier and cost-ineffective to serve.
The global trade finance gap is currently around $1.4 trillion, of which $693 billion
relates to developing Asia. 4 of products and offerings
Lack of products and offerings
In the fintech problem statement report produced by the Monetary Authority of
Singapore, the main problems of the industry were identified to be a lack of trade
credit products available for SMEs and inefficiencies in verification processes.
FinTech could potentially solve these via digitisation of trade finance processes and
building aggregator-type platforms to connect those who are seeking funding and
those who are providing funding.

14. What are the major hurdles
Blockchain enables trade information to be truthfully represented on the
centralised ledger. It will revolutionise the old, manual way of information
processing to enable trade processes becoming more optimised, more transparent,
and less risky. This would benefit businesses of any scale to secure trust from
financiers, overcoming the costs arising from KYC and AML checks.
While cryptotechnologies like the Blockchain can potentially address the problems
salient in trade finance, regulatory frameworks are still far from complete to ensure
a fair playing field for stakeholders while ensuring the stability of current payment
systems. With uncertainty in regulatory expectations, businesses and
financiers are unlikely to adopt the technology right away.
Benefits for all stakeholders will only be maximised where mass adoption is
reached. One of the biggest challenges would be convincing the stakeholders that
the security of the distributed ledgers is comparable, if not better than current
proven networks.

15. Some food for thoughts
1. Don’t build a Start-up, build a movement
2. Education is needed
3. Industry cooperation and active engagement issues is critical in bringing onboard
the adoption of such technologies to address the inherent gaps.
4. Banks and Fintech
Confrontation VS Collaboration
5. Disrupt and Create
6. Regulators
Forward looking VS Conservative

16. DISCLAIMER
The material in this presentation has been prepared by Velotrade Management Limited (Velotrade) and is general background information about Velotrade’s
activities current as at the date of this presentation. This information is given in summary form and does not purport to be complete. Information in this
presentation, including forecast financial information, should not be considered as advice or a recommendation to investors or potential investors in relation to
holding, purchasing or selling securities or other financial products or instruments and does not take into account your particular investment objectives, financial
situation or needs. Before acting on any information you should consider the appropriateness of the information having regard to these matters, any relevant offer
document and in particular, you should seek independent financial advice. All securities and financial product or instrument transactions involve risks, which include
(among others) the risk of adverse or unanticipated market, financial or political developments and, in international transactions, currency risk.
This presentation may contain forward looking statements including statements regarding our intent, belief or current expectations with respect to Velotrade’s
businesses and operations, market conditions, results of operation and financial condition, capital adequacy, specific provisions and risk management practices.
Readers are cautioned not to place undue reliance on these forward looking statements. Velotrade does not undertake any obligation to publicly release the result
of any revisions to these forward looking statements to reflect events or circumstances after the date hereof to reflect the occurrence of unanticipated events.
While due care has been used in the preparation of forecast information, actual results may vary in a materially positive or negative manner. Forecasts and
hypothetical examples are subject to uncertainty and contingencies outside Velotrade’ control. Past performance is not a reliable indication of future performance.
For further inquires, please contact us at:
Velotrade Management Limited
contacts@velotrade.com
www.velotrade.com
+852 5808 3777
contact
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