3 Reasons Why You Should Not Lend to This Company

Crowdfunding platforms do due diligence. After all, their reputation is at stake and MAS has its eyes on them. Is that a relief for you? We hope not.


You see, as a crowdfunding investor, you still must do your own due diligence. After all, it’s your money at stake. Risk, in varying degrees, are present in any deal. What level of risk can you afford? Only you, not the platform, can answer that question.


So, how good are you in answering that question? Those who have participated in our recently concluded Lend or Fend Contest, you may have already gauged your ability to assess risks. In our 30th May announcement on Facebook about the contest winners (Facebook), we got a question about “the reasons to fend the other 2 companies away”. This article seeks to answer why we think it’s wise to fend away Company C.

In going through the discussion below, feel free to refer to the information available in the contest page - https://ph.seedin.tech/lendorfend.


The company started operations in 1994. It was founded by a local upon returning to Singapore. It offers Beauty & Wellness services, Men Care services, Beauty Therapy & Professional makeup courses, and Beauty services. Their outlets are located near the MRT stations. They also have 1 outlet in Kuala Lumpur.

Was the choice of industry a good decision? Apparently so. The cosmetics and skin care industry is considered “recession-proof” (see Asian Scientist), particularly in Singapore with its very cosmopolitan population.

Fast forward 20 years, the business has secured a stable pool of clientele and achieved average of $3M annual revenue in recent years. As stated in their risk assessments, their net profits improved upon reducing its advertising expenses and focusing on committed clientele. They then invested their spare capital in growing their staff and purchasing more beauty equipment.

Indeed, we see no reason to fear, as far as the industry and revenues are concerned.

So, let us dig deeper into its financials.

The financials look perfect. Everything appears to be rising, except for this one tiny detail. With everything else rising, should the total liabilities also be rising?


Nothing in the information provided suggests that they are aggressively expanding. There is hint however that they investing in growing their staff and purchasing more beauty equipment. But weren’t they supposed to be using spare capital for that?

Another possibility is that they contracted a loan in 2015 that is still unpaid by the end of that year. If so, then that means that, by approaching you as a crowdfunding investor, they are stacking (see related post). Stacking should raise alarm bells to crowdfunding investors. When a fund seeker is stacking, the crowdsourcing investor should double their risk estimates.


That is why we think you should fend this company away, unless, of course, if the magnified risk estimate is still acceptable to you.

Tell us what you think.