Chinese investors are eyeing Indonesian online peer-to-peer lending marketplace Investree and have initiated discussions to invest in the company, according to three people aware of the development. If this deal goes through, it will be one of the first international investments in Indonesia’s fintech space, hinting at the beginning of a new trend.
Investree did not comment on its fundraising plans in response to queries from DEALSTREETASIA.
The startup is learnt to be in discussions with the Chinese investors to secure its Series B round. It had raised a Series A round in 2016 from local venture capital firm Kejora. While the amount was not disclosed at the time, Kejora typically invests $2-5 million in portfolio firms.
Investree connects lenders with borrowers – those that want to invest their money to get returns and those who need funds for personal use or businesses. Its current growth drivers have been B2B partnerships through the supply chain, invoice financing for small and medium enterprises (SMEs), and employee loan financing for corporates, which have led to an increased number of borrowers. Its active digital marketing has also increased the number of individual and retail lenders, the management said in an emailed reply to DEALSTREETASIA. According to its latest figures, Investree has disbursed loans totalling Rp 229 billion ($18 million). Its average funding period is five days with 17.3 per cent average return to lenders.
In an email response, Investree co-founder and chairman Adrian Gunadi said that the company would continue to focus on growing in the B2B space through supply chain financing and partnerships with e-commerce platforms or traditional corporate companies. The company is also looking to launch new offerings to support distributor financing and e-commerce supplier financing in Q3 2017.
Gunadi himself is not a new name in the Indonesian banking industry. He was director of retail banking at Bank Muamalat, managing SMEs, consumers, liabilities and e-banking across 400 branches. A trained banker, he holds a bachelor’s degree from Faculty of Economics in University of Indonesia and an MBA from Rotterdam School of Management.
Gunadi said the company plans to expand its presence domestically in Semarang and Surabaya, and outside Indonesia, in Vietnam. It is also interested in launching a Shariah product, given the opportunity in Indonesia, and is in talks with the Shariah Council. It plans to launch its mobile apps in Q3 2017 aimed primarily at lenders at the initial stage.
Investree works on the premise that borrowers can enjoy a streamlined loan application process and get funded within a week, and with competitive rates. For lenders, the P2P model is attractive as they can connect directly with businesses that match their ideals, while earning full interest paid by borrowers. The service model is predicted to enjoy a boom in Indonesia, where access to financing for SMEs is still limited.
Indonesian Financial Services Authority (OJK) has estimated that the actual needs of business financing in the country would be around Rp1,600 trillion. In reality, only Rp600 trillion is disbursed every year through banking, capital market, and multi finance. The disparity is further shown in the fact that only 11 million out of 60 million SMEs are able to get loans from the banks. About 60 per cent of those SMEs are based in the Java island.
Southeast Asia’s largest market Indonesia has been witnessing an emergence of a number of fintech companies such as peer-to-peer lending company Modalku, mobile recharge platform Sepulsa, e-commerce financing company Kredivo, online micro-lending company UangTeman and many others. Modalku, a platform that pools funds from the public and directs them into SMEs, and its sister company, Singapore-based Funding Societies, also announced a S$10 million investment from venture capital firm Sequoia India.
Recently, Akulaku raised around $5-10 million from Chinese VCs as reported by this portal. Transactions through fintech in Indonesia are estimated to have touched Rp 40 trillion in the last two years, a rapid escalation alongside growth in internet usage in the country as a third of its 250-million population goes online.