The International Finance Corporation (IFC) has invested $7 million in fintech firm First Circle to expand digital financial services for small and medium-sized enterprises (SMEs) in the Philippines.
The IFC board approved the project on June 13, signed on June 28, and invested the $7 million on July 25, documents showed.
Joined by other investors such as Endeavor Catalyst and Fasanara Capital, this funding aims to help First Circle provide more SMEs with access to credit, flexible repayment options, and fee-free banking solutions.
“We are particularly excited by IFC’s deep technical expertise in helping fintech companies expand their services, allowing us to serve more SMEs in the country,” Patrick Lynch, CEO of First Circle, said as he welcomed IFC as a key investor.
IFC's Country Manager Jean-Marc Arbogast said that with this investment, “we aim to catalyze First Circle’s development of new products for which will help to foster better financial inclusion in the country.”
Since 2016, the firm has funded over 3,000 SMEs and now offers fee-free business banking.
According to the 2023 Fintech Philippines report, the country’s fintech industry has grown significantly, increasing from 115 companies in 2017 to nearly 30,000 by December 2022.
“Despite the industry’s growth, only a handful of companies focus on providing services specifically for MSMEs. Access to finance remains a key challenge for smaller businesses,” the report added, noting that the country’s SMEs receive only 2.2 percent of the country's total economic output in credit, which is much lower relative to other countries in the region.
Lynch said the firm serves expanding trading, manufacturing, and service businesses that support their employees and trading partners.
First Circle's funding is effectively driving SME success, with an average growth of 80 percent in the first two years, while the investment will help expand credit lines and enhance banking solutions for underserved SMEs, the IFC said.
Department of Trade and Industry (DTI) Undersecretary Blesila Lantayona recognized the company's effort in providing accessible financing to entrepreneurs, building a competitive SME sector.
As a member of the World Bank Group, IFC is the largest global development institution focused on the private sector in emerging markets.
In 2024, the IFC invested a record $56 billion in private companies and financial institutions across over 100 developing countries to create opportunities and reduce poverty. (Derco Rosal)