Original Post by FinTech News Singapore
DailySocial Indonesia recently releasedabout their findings on the Indonesian fintech scene, recently notable with the rise of peer-to-peer (P2P) lending.
Between December 2017 to November 2018, DailySocial observed at least 14 disclosed funding for fintech startups, noting that there are more later stage investments than the previous year. These facts imply that the Indonesian scene is growing more mature.
Therefore, we have looked into the top 5 of those investments, which could give us a hint on which sectors are more mature in Indonesia. In fintech’s ever growing march, these startups could give us a glimpse into the ares which new fintechs might face stiff competition if they’d like to enter today, or simply fintechs that are best tuned to the unique needs of the Indonesian people.
As for an overall observation, 8 out of 14 of the fundings listed in the report are related to lending startups, lending credence to the idea that P2P lending has become a significant factor in Indonesia.
Beyond 2018, Indonesian fintechs have also made an impact on the general Southeast Asian scene, with one of our representatives making it to the list of top funded fintechs.
The companies listed below are arranged based on disclosed funding numbers on the aforementioned DailySocial report. Therefore, there may be variations in the actual valuations of the company, and certain companies that may otherwise belong on this list have gone unlisted—like Investree.
5. Koinworks – US$15 million
Koinworks is an Indonesian P2P that does online P2P lending matching via machine learning. Borrowers can request funds starting from Rp 100,000, with what the company claims are lower interest rates.
In August, the company closed its Series A funding round at US$15.77 million, led by Mandiri Capital Indonesia, the venture capital arm of Bank Mandiri. The round gained participation from Gunung Sewu and Convergence Venture as well. Koinworks said they would utilise the funds by investing into developing its technology side, which could be a hint to the company venturing into other machine learning-related arms of finance.
Koinworks is said to hold a significant slice of the crowded retail P2P investment space, where investors are given access to curated financial products with analytics of said investments outlined to them.
4. Funding Societies (Modalku) – US$25 million
While Funding Societies has a presence across various Southeast Asian markets, Modalku is probably the company’s most successful venture at this time. Modalku, as the name implies, aims to help SME owners start or grow their business by providing a platform that could connect them to investors—via a crowdfunding, or P2P model.
As of 2012, Modalku claims to have facilitatedloans, which is a long way from the Rp 999 million the company reported just earlier that same year. The company also noted that 70% of Modalku’s total loans are provided my millennials.
Funding Societies’ most recent round netted them US$25 million in a series B round, in what Tech in Asia characterises as an ““. It was led by Softbank Ventures, with participation from existing investors Sequoia Capital, Golden Gate Ventures, and Alpha JWC Ventures, while Qualgro and Line Ventures.
3. C88 (CekAja) – US$28 million
CekAja.com, loosely translating to “Just Check”, is a comparison platform that banks on its neutrality to gain trust among the Indonesian society in making financial decisions. They compare financial services from credit cards, loans, insurance, investments and SME-specific products.
Its parent company,in a Series C round led by global credit-scoring giant Experian. And in addition to the growth capital, Experian partnered with C88 to implement its demand generation, analytics and digital on-boarding technology onto C88’s CekAja platform, as well as its sister site in the Philippines.
2. FinAccel (Kredivo) – US$30 million
Branding themselves as a digital credit card for the masses, Kredivo is an app that evaluates the creditworthiness of someone wanting to shop online in real-time. The registration process, Kredivo claims, takes about 1 minute and approval will be given in a few hours. Kredivo can be used to get installments for online shopping.
In July, Kredivo’s parent companyin Series B equity investment. This was led by Square Peg Capital, with participation from new investors such as Telkom’s MDI Ventures and Atami Capital, and existing investors Jungle Ventures, Openspace Ventures, GMO Venture Partners, Alpha JWC Ventures and 500 Startups.
A few months following this investment round, Kredivo announced that they are joining the heatedin Indonesia, carrying 2.95% in interest per month. Kredivo offers personal loans in two varieties— Mini, which entitles borrowers to Rp3.000.000 (US$209) with a 30 day and Jumbo, allowing for loans up to Rp30.000.000 (US$2,092) with up to a six month tenure.
1. Akulaku – US$70 million
Akulaku started out as a service that allows online shoppers without credit cards to purchase high-ticket items in installments. This starting point eventually led to diversification—into credit cards, and even later an e-commerce platform selling both in-house products and items from third-party suppliers. Furthermore, Akulaku have also expanded into digital payments, like utility bills, game credits and mobile phone bills.
, Akulaku raise US$70 million in Series C funding to strengthen its market presence in Southeast Asia, and launch yet other financial services. The round was led by Fanpujinke Group with participation from Sequoia India, BlueSky Venture Capital, and Qiming Venture Capital.
Credit Financing was Deemed Highly Valuable in 2018
What has been interesting to note is that while Indonesia’s scene is known for P2P lending, the highest value in funding last year came from credit financing startups. With that being said, the reasoning behind its higher valuations may not boil down to Indonesia at all. These platforms may experience high use amongst Indonesians, but we feel like high-ticket investors might be more keen on these platforms simply due to potential in Southeast Asian regions, should they choose to expand.
Indonesia experiences a high unbanked population, withunbanked, or 66% of its population. These numbers line up with what KPMG estimates of Southeast Asia, only 27% of the region’s populations with a bank account.
And even among those, credit card use has been decreasing in popularity. according to Asia the, Philippines and Vietnam showcased significant enthusiasm for credit cards in 2017, but lagged in markets like Indonesia, Malaysia and Thailand, in parts, thanks to platforms like GrabPay, Go-Pay, or simply bank-issued mobile payment apps.
Indonesian platforms are well-poised to capture the credit card-reticent market of Southeast Asia, and even do better than western or Chinese contemporaries simply because they would understand neighbouring developing nations better, or have a product that better caters to similar needs.
With that being said, investors who are interested in Indonesia’s P2P scene may have simply been holding back higher sums pending Indonesia’s Financial Services Authority’s (OJK) regulations, which was only.
Other reasons behind their lower funding rounds could also boil down to the scene’s general maturity, or a solution that is not seemed to have much value outside of Indonesia as of now.
Of course, the above companies listed represent only a small slice of the Indonesian ecosystem. For a more holistic view of the state of play of fintech in Indonesia, ourhighlights some of Indonesia’s players and scenes with high potential.