IFC investment in First Circle unlocks significant funding and smarter banking solutions for SMEs in the Philippines

Manila, Philippines, October 3, 2024—To expand digital financial services for small and medium-sized enterprises (SMEs) in the Philippines, the International Finance Corporation (IFC), the largest global development institution focused on the private sector in emerging markets and a member of the World Bank Group, has invested $7 million into First Circle, a pioneering technology company providing smart banking solutions to SMEs in the country. IFC was joined by Endeavor Catalyst and Fasanara Capital, as well as existing investors Insignia Ventures Partners and Accion. 

“We are thrilled to welcome IFC, the pre-eminent investor in emerging market financial services, as new shareholders at this terrific inflection point in our company’s expansion,” said Patrick Lynch, CEO of First Circle. “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.”

Since its inception in 2016, First Circle has funded over 3,000 unique customers, of which over two-thirds are SMEs accessing credit for the first time. First Circle’s innovative credit systems provide SMEs with higher credit limits, flexible repayment options, and the lowest unsecured pricing in the market. First Circle has recently expanded its services to include fee-free business banking & payment solutions.

“We are proud to be a part of this funding round for First Circle and help the company expand its operations to support more Filipino businesses, especially those accessing credit for the first time,” said Jean-Marc Arbogast, Country Manager for the Philippines at IFC. “Through this strategic investment, we aim to catalyze First Circle’s development of new products for which will help to foster better financial inclusion in the country.”

The fintech industry in the Philippines has witnessed significant growth in recent years. According to the 2023 Fintech Philippines report, the number of fintech companies rose from 115 in 2017 to close to 30,000 as of 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. Credit penetration for SMEs in the Philippines stands at 2.2 percent of the country’s GDP as of 2023^[1], trailing many regional neighbors.

Lack of access to financial services continues to hold back smaller businesses, particularly in the Philippines where credit penetration stands at 2.2 percent of the country’s GDP as of 2023, trailing many regional neighbors. “First Circle’s customers are growing trading, manufacturing, and services businesses who are the center of their own ecosystem of employees & trading partners, and all the livelihoods they support,” continued Lynch. “Our team is deeply motivated  by our mission, our win-win customer relationships, and the multiplicative impact of our products. Our partnership with IFC is much more than just investment; it underlines  our mission of economic empowerment and building for the long term.”

With SMEs achieving an average of 80% growth in their first two years as customers, First Circle’s funding is having the desired impact – demonstrating its vital role in driving SME success. IFC’s investment will unlock First Circle’s capacity to expand credit lines and deliver smarter banking solutions to the underserved SME market. 

Since 2018, First Circle has also been an official partner of the Department of Trade and Industry  (DTI), instrumental in advancing DTI’s mission to foster SME competitiveness and growth. Through its accessible financing solutions and financial literacy programs, First Circle has been instrumental in equipping SMEs with the resources they need to thrive, aligning with both DTI’s broader economic goals and IFC’s mission to empower this vital sector.

“The Department of Trade and Industry recognizes First Circle’s significant contribution in providing accessible financing to SMEs, which has directly supported our initiatives to boost economic activity and empower local businesses. Their commitment to financial inclusion aligns with DTI’s vision for a more competitive and resilient SME sector,” said DTI Undersecretary Blesila Lantayona. 

[1] Asian Development Bank SME Monitor, 2023