Terence Wong and Dennis Goh have known each other for most of their lives, from the time they were schoolmates at what is now Hwa Chong Institution.
Wong is the CEO and executive director of Azure Capital and Goh is the co-founder and executive chairman of Lyte, a technology-based payments company that provides the risk and credit management system for Wong’s Azure-Lyte Fund.
“Azure-Lyte Fund is our dedicated private debt fund that funds all our activities in Singapore and the fund has consistently been performing with a 6.5% yield. We are boringly safe. In the tumultuous world of the volatile markets, our returns have been boringly similar since inception. We are an oasis of stability,” Wong says.
Whenever Wong’s grandmother asks what she can invest in, he disliked recommending stocks due to their volatility. However, he allowed her to invest in the Azure-Lyte Fund because it is so safe and boring.
The Azure-Lyte Fund is only for accredited investors, that is you must either have a minimum net worth or an institution that has a mandate to invest. The minimum investment is $250,000. The Azure-Lyte Fund is part of an ecosystem developed by Lyte, the brainchild of Goh. The fund primarily finances the commission advance service via LytePay that Lyte offers to its freelancers in its ecosystem. The freelancers that Lyte serves in its ecosystem include real estate agents, influencers and even salespeople working for retailers.
Lyte’s mission is to build an assured future for freelancers by solving all their pain points and getting them financial access on demand is the first step. To be more productive, freelancers constantly need working capital to invest in themselves and their work, such as marketing, leads generation, transport and networking expenses. Typically, freelancers spend between 10% and 25% of their income on such business expenses, often incurring them many weeks before their income is received. Lyte and the Azure-Lyte Fund are building a powerful ecosystem by helping all freelancers in Singapore invest productively in themselves without incurring debts.
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In summary, this ecosystem consists of Lyte, Azure-Lyte Fund, its manager Azure Capital and LytePay, the commission advance service offered to freelancers today. The Lyte app has the technology to crunch the data and work out where the credit risk lies based on transactions. The LytePay service is easy to use and works as seamlessly as any banking app.
This is how the commission advance flow works. The Azure-Lyte Fund provides the money for the advance on the agents’ receivables, while LytePay pays the agent, using its artificial intelligence (AI) and machine learning to work out the risk factor related to individual agents or any other freelancers. The AI embedded in the Lyte system determines the fee that agents pay for receiving their commissions earlier than they otherwise would have. In turn, the fee provides the yield for the fund’s investors.
Since the Azure-Lyte Fund was launched in 2019, Lyte has agreements with the biggest real estate agencies in Singapore, garnering an aggregate of 80%–90% share of the local market. This includes Gushcloud, which is the largest agency in Southeast Asia for influencers, and other partners paying out commissions to their freelancers.
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The fund has grown steadily to a commitment of around $50 million so far. It has also financed more than $200 million worth of disbursements, with the biggest proportion going to commission advances for real estate agents. “There’s been zero default,” Wong says.
But this track record does not happen by chance. “You need to have access to data. We need the macro universe of transactions to understand how to make LytePay, our commission advance service, safe,” Goh says.
The agency business
The initial sector targeted by Lyte was the real estate sector and real estate agents. Real estate agents are paid commissions for the properties they sell. For new launches, the time lag between an agent earning a commission and being paid the commission by the real estate agency is the most pronounced.
Often, this depends on the developer paying the agency which, in turn, pays the agents their commissions. Developers can take anything from four months to 12 months to pay the agencies. This is usually because of the process or the “paperwork” involved.
“For resale property and HDB flats, even though there is a fixed date for completion, there is a gap of two to three months before agents receive their commissions,” Wong explains.
Over the last couple of years, the fund has expanded its reach, targeting new groups of users.
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“We have spent the last few years consolidating the ideas. There are new markets we have entered, such as social media influencers and creators, ” Goh says.
Social media influencers usually create content to increase their followers. These influencers then promote themselves on videos either on TikTok, Lemon8, Instagram, YouTube or other platforms.
“When you are watching a YouTube video and an advertisement appears, the creator of the content [the influencer] makes money,” Goh explains. Usually, the medium — be it Instagram, TikTok, YouTube or other platforms — monitors the digital advertising that appears and controls the algorithms.
“For instance, YouTube [or other platforms] controls the algorithm. They will showcase advertisements for the same interest groups that you always watch. If you’re always watching travel channels, most of the ads could be about the next place to holiday or cheap flights,” Goh explains.
While influencers are viewed as freelancers, agencies manage the influencers and the endorsements. Companies that pay for advertising need to see the outcome of their investments. Their algorithms check the eyeballs and the subsequent conversions, if any.
“The advertisers don’t pay the influencers one by one. They pay the agencies which, in turn, pay the influencers and freelancers. But there is a payment gap. Freelancers do not get paid right away. It’s about eyeballs and people who click. When you run advertising campaigns, you will want to see the outcome and the conversion rate which could take months. Because of that, there is a gap,” Goh continues.
He indicates that these days, anyone can be a successful influencer even by doing mundane things that catch the attention of the global community. There is even a successful influencer in Korea who live streams himself studying, just quietly turning pages, and somehow people find that interesting.
“If social media was around in the 1980s, all of us could have been famous too!” Goh jokes incredulously, referring to his time as a student. Goh subsequently received a scholarship from the Public Service Commission, and spent some years in the civil service, before the entrepreneurship bug bit. He went on to develop HungryGoWhere which was sold to Singapore Telecommunications (Singtel).
“Companies which do the advertising and endorsements are the payers. These are consumer brands such as Apple, Samsung and P&G when they launch new products,” Goh says.
Similarly, for the real-estate ecosystem, developers pay the agencies and their agents to promote developers’ new launches. The real estate agencies pay the agents.
“We tie up with the agencies who already have a large pool of freelancers they are serving,” Goh says. Gushcloud has the largest number of influencers in Southeast Asia, for instance.
“As I look at it, we are supporting Gushcloud, ERA and PropNex agents to provide them with stability. We set out to help the individuals but we are also helping the agencies. We see all agencies as our most valued partners, and we are determined to help them grow their agent and freelancer base sustainably too by empowering every agent and freelancer under their umbrella to grow their income faster. We see all of us in this ecosystem as symbiotic partners growing sustainably together,” Goh says.
As Goh sees it, the commission advance service provided by the Azure-Lyte Fund helps agents and freelancers. If payments from the agencies to their agents are delayed, or if the agents and freelancers have monetary commitments, they can draw down from their LytePay accounts on demand to meet any sudden financial needs or react to any market opportunity.
A new world order
Lyte has the ability to offer many more services to help freelancers and gig economy workers including products to protect or grow their income over time, says Goh. Gig workers do not have an IT and human resource department.
“I’m thinking of how to build an ecosystem to support all freelancers, including those without agencies. We have progressed to a point where we can help freelancers more, beyond income,” Goh elaborates.
Lyte continues with market research. For instance, during the pandemic, many freelancers had their contracts cut. Some freelancers formed support groups during the pandemic. “We are talking to these support groups with plans to support them with new products and services,” Goh says.
Lyte plans to roll out “adjacent services” that will complement its commission-advancing product to include insurance and other financial products designed specifically for freelancers.
Lyte has a payments services licence from the Monetary Authority of Singapore. It counts Singtel and Mitsui Sumitomo Aioi Dowa (MSAD) Group Holdings as investors. “Given the strong revenue and business growth that is coming in 2023, we are targeting to ride the upcoming surge in growth momentum to do a large strategic fundraising round by 4Q2023 onwards, likely timing that with us coming out of stealth mode globally once we have achieved scale in a few countries,” Lyte says in an update to investors for FY2022.
“People’s expenses are constant and we position Lyte for income stability. We will use AI and machine learning,” Goh says. Lyte will have many data points as it onboards more agents and gig workers. In Singapore, around 12% to 15% of the workforce are freelancers. However, in Southeast Asia, around 155 million people are estimated to be gig workers or freelancers.
“There was a 60% growth in digital freelancers during the pandemic,” Goh observes. He believes that the future of work indicates more gig workers as a portion of the population in future years. This is why Goh plans an employee-centric ecosystem around freelancers. “We plan to offer everything employees need — they want the freedom of a freelancer but the protection of being an employee. Lyte wants to get there.”
For now, the Azure-Lyte Fund provides investors with a risk-averse, stable, dividend-paying proxy for this future trend.
