Funding Societies' Framework for Building a Fintech Unicorn

The "Investor-in-Training" Advantage

Many founders start with deep domain expertise in a product or technology. Kelvin Teo, cofounder of Funding Societies, started with a different superpower: thinking like an investor. Before starting the company that would go on to lend over $1 billion to small businesses, Teo worked at McKinsey and the private equity giant KKR.

This experience is a massive, often overlooked, advantage. Working in consulting and private equity forces you to analyze hundreds of businesses from the outside in. You learn to spot weak market structures, analyze unit economics, and identify operational leverage. It’s a crash course in what makes a business truly defensible and valuable, long before you write a line of code.

You don’t need a KKR pedigree to cultivate this mindset. Start by analyzing public companies in your space. Read their shareholder letters, listen to earnings calls, and break down their financial statements. Ask yourself:

What is their core business model and unit economic engine? · What are their stated moats? Are they real? · How does the market leader defend its position? · What would it take for a new player to disrupt them?

This analytical rigor is the foundation for building something that lasts.

A Three-Filter Framework for Your Startup Idea

While at Harvard Business School, inspired by Peter Thiel’s Zero to One , Teo and his cofounder Reynold Wijaya developed a simple framework to find a world-class idea they could import from the US to Southeast Asia. They weren't just brainstorming; they were filtering opportunities through a rigorous system.

Most founders get this wrong. They fall in love with a solution, a technology, or a vague sense of "passion." Teo’s approach was different. He focused on the anatomy of the problem itself.

Filter 1: Are you obsessed with the problem?

This is more than "passion." It’s about founder-problem fit. Could you work on this for 10 years without a massive financial outcome? Do you understand the nuances of the customer’s pain so deeply that you can build a solution they can’t live without?

For Funding Societies, the problem was the massive credit gap for small and medium-sized enterprises (SMEs) in Southeast Asia—a problem Teo understood viscerally. Banks weren't serving them, leaving a huge engine of the economy starved for capital. This was a problem worth a decade of his life.

Filter 2: Is the problem genuinely huge?

Venture capitalists look for businesses that can return their fund. That means you need to be targeting a massive Total Addressable Market (TAM). A "huge problem" isn't a niche inconvenience; it’s a systemic pain point affecting a large number of customers who have the ability to pay for a solution.

A common founder mistake: Confusing a cool product with a large market. You might have the best solution in the world for a tiny group of people, but that’s a lifestyle business, not a venture-scale company.

How to quantify it: For SME lending in Southeast Asia, the TAM calculation is straightforward: (Number of SMEs) x (Average loan size) x (Frequency of borrowing). The numbers are astronomical, running into the hundreds of billions—a clear signal of a venture-scale opportunity.

Filter 3: Is there a reasonable path to #1?

This is the strategy question. Having a big market isn’t enough if you can’t build a sustainable competitive advantage, or "moat." In the world of fintech lending, moats aren’t just about a slick user interface.

A proprietary data advantage: Building a credit-scoring model that is fundamentally better at assessing risk than incumbents, allowing you to approve more loans with lower defaults. · A lower cost of capital: Securing funding sources that your competitors can't access. · Superior distribution: Finding a scalable, cost-effective channel to acquire borrowers. · Regulatory capture: In some markets, being the first to get licensed can create a powerful, long-term moat.

The only idea that survived this three-filter test was peer-to-peer (P2P) business lending. It was a massive, underserved problem Teo was committed to solving, and they had a clear thesis on how to win.

How to Build an MVP While De-Risking Your career

Teo and Wijaya didn’t drop out of Harvard. Their parents would have never approved. Instead, they used the constraints of being students to their advantage, creating a playbook for anyone looking to de-risk their own startup leap.

They operated on a 12-hour time difference with their team in Singapore. Their schedule was brutal: they worked on Funding Societies from 8 PM to 4 AM, slept a few hours, and then went to their Harvard classes at 9 AM. This is the "night shift" method of building a startup.

The goal here is not to build a polished, scalable company. The goal is to hit critical validation milestones before you quit your day job (or graduate). Your objective is to use this period to answer the riskiest questions in your business plan.

For a business like Funding Societies, key milestones before "going full-time" might be:

Developing a preliminary credit model. · Signing up the first 10-20 potential borrowers. · Getting soft-circle commitments from a few initial lenders/investors on the platform. · Securing a pre-seed check.

They achieved the last one, getting their first funding commitment from Alpha JWC Ventures during their summer break. This tangible validation—real money from a real VC—was the trigger. It proved the idea was more than a dorm room project.

Fundraising Lessons From $0 to a $58M Series C

Funding Societies’ journey from a student project to a regional powerhouse with $58M in equity funding offers critical lessons on fundraising, especially in emerging markets.

Lesson 1: Emerging Market Investors Need More Proof

Early on, the team was approached by the legendary firm Sequoia Capital India. But when the Sequoia partners realized Teo and Wijaya were still students, they hit pause. The message was clear: "Come back when you've graduated."

This is a crucial nuance. While a Silicon Valley investor might fund a team of brilliant dropouts with just an idea, investors in emerging markets often have a lower risk appetite. The ecosystem is less mature, the exits are less certain, and the operational hurdles are higher. They want to see full-time commitment and concrete traction before they write a check. Once the founders graduated, Sequoia came back and led their $7 million Series A round.

Lesson 2: Your "Story" Is a Narrative Backed by Data

Founders are told that "storytelling is everything." But for a data-driven business like fintech, your story is your numbers. A compelling narrative explains why your numbers are so good.

Don’t just present a pitch deck with 15-20 slides. Present a logical, data-backed argument.

Generic Story: "We have a unique AI-powered credit model to help SMEs."

Data-Backed Story: "The default rate for SME lending at incumbent banks is 4%. Our proprietary model, which analyzes real-time cash flow data via accounting integrations, has achieved a default rate of just 1.5% across our first $10M in loans. This superior risk assessment drives our 30% stronger unit economics and is our engine for scalable growth."

Lesson 3: Each Funding Round Solves a Different Problem

Don’t treat all fundraising the same. The purpose of each round is different.

Pre-Seed/Seed: You are selling the vision, the team, and early validation. The goal is to raise enough capital ($500k - $2M) to prove your core model works and you have product-market fit. · Series A: This is about proving you have a repeatable, scalable machine. For Funding Societies, their $7M Series A led by Sequoia was about proving they could deploy that capital efficiently across multiple markets while keeping default rates low. · Series B/C: This is pouring fuel on the fire. With a proven model and strong unit economics, you raise large rounds ($20M+) to cement your market leadership, expand geographically, and out-spend competitors. Funding Societies is now three times the size of its nearest competitor—that’s what a successful Series C buys you.

How to Apply This This Week

You don’t need to be at Harvard or have a PE background to apply these lessons. Here are three things you can do right now to build a more rigorous, defensible startup.

Run your idea through the three-filter framework. Be brutally honest. Is the market truly massive? Are you personally obsessed with the problem? What is your specific, credible path to becoming the market leader? Write one page on each question. · Map out your own "Night Shift" plan. If you’re still employed or in school, what is the single most important risk you need to de-risk? What validation milestone (e.g., 10 paying customers, a signed pilot, a working prototype) can you hit in the next 60 days by working nights and weekends? · Rewrite your core metrics slide. Go beyond vanity metrics. Frame your traction as a data-backed story about your unit economics and competitive advantage. Connect every number back to your core narrative about why you will win.