SINGAPORE (May 7): Kelvin Tan, chief investment officer of investment firm GTR Ventures, scrambled to call a few of his portfolio companies early this week. On April 30, it emerged that crowdfunding platform Capital Springboard had sold $6.9 million in fake invoices. Tan, who has put more than $1 million in four local peer-to-peer (P2P) lenders, wanted to know if they faced similar risks. “I asked if they did non-notified [invoices or loans] and some said they did not, while others said only in exceptional cases,” he says with relief.

A non-notified loan means the borrower does not want to inform its customers that it is borrowing money on an invoice. Capital Springboard’s sham invoices were non-notified and came from a single small and medium-sized enterprise (SME): Vangard Project Management. When the invoices expired, Capital Springboard went after VPM’s customers. But some of these customers say they had no dealings with VPM and one says the invoices are fabricated. Capital Springboard has lodged a police report, but investors remain unpaid.

The incident has raised concerns about the due diligence processes of the dozens of crowdfunding platforms operating here. Offering returns of more than 1% a month, they have gained significant traction. Capital Springboard has funded $183 million in invoices, most offering annual returns of 11% to 25%. Funding Societies’ institutional client base doubled last year while the number of accredited investors using its platform increased 92%. It has over 67,000 registered users and has completed $154 million worth of deals since 2015.

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