Indonesian online payment platform DavestPay.com is hoping to raise $5 million from a funding round, after bootstrapping since its launch in late 2015. Currently, the Makassar-based company is preparing itself to approach a number of investors at the end of this year.
Founder and CEO of DavestPay, Hendra David, said, the company has been receiving funding from friends and family amounting to around $2 million. Operations of the company have been supported by profits.
“We take small amounts of our profits to run the company. But by the end of this year, we’ll be talking to some investors about funding,” David told DEALSTREETASIA, in an exclusive email interview.
DavestPay started out as a business-to-business (B2B) prepaid mobile credit payment solution launched in 2009 by PT Hensel Davest Indonesia. The company continued to grow with prepaid mobile credit until in 2012 it decided to develop an online payment system for paying electricity bills (PLN).
Receiving a positive response, Hensel marched forward by developing a system for multi-biller product, aiming to enter the B2C market. DavestPay.com was finally introduced in December 2015, followed by the mobile app in January 2016.
The system provides users payment services for various needs, allowing them to fund and transfer money for water bill (PDAM), electricity bill (PLN), health insurance (BPJS), mobile phone credit, airline tickets, banking, and many more.
“No other player in the market has a complete, product range equipped by a multi-platform technology like DavestPay, which runs through the web, mobile apps, as well as SMS for rural communities,” said David.
DavestPay now has more than 100,000 agents and merchants in the B2B sector, conducting over 22 million transactions and generating $80 million in revenue. DavestPay is looking to double that number to about $160 million in revenue, with a total transaction of 44 million.
David said he is confident that the company can post a 10-fold growth in the next five years. He can even picture the firm going public by that time.
“But of course, one of the decisive factors in the IPO plan is not only the size, but also the climate of the industry as well as government regulation. Now is the time for government to draw up regulations for electronic commerce,” explained David.
Moving forward, DavestPay will introduce a new feature where merchants will be enabled to transfer and lend money. DavestPay will also expand its marketing strategy by launching a series of both online and offline advertising campaign.
David said he believes in the great potential of Indonesian fintech industry, especially since Indonesians adopt new trends and technology easily, almost by nature. This makes the market unique, and highly adaptable.
“Fintech sector will be the next disruptive innovation, by changing the way people buy products from bills payment to insurance, even money lending. Unlike banks, the fintech companies can actually target the rural communities,” he said.
These rural communities are in fact the unbankable small and medium enterprises (SMEs) as well as unbankable individuals, which are called the “missing middle” by experts.
Indonesia’s “missing middle” consists of enterprises with monthly revenues between Rp 10 million to Rp 100 million that lack access to finance, thus stunting their growth.
A recent report by Oliver Wyman and Modalku reveals that Indonesia will see a $54 billion small and medium enterprises financing gap by 2020, with more than 57 million potentially bankable micro businesses.
Realizing this potential, players and stakeholders in the industry are now rushing to construct business models that can reach the unreachable market.
In terms of regulation, the Indonesian government has said that it is preparing to launch new rules governing fintech companies by the end of the year. The new regulations are expected to help set a healthy ecosystem in which fintech startups could grow and collaborate with traditional banks.
Currently, fintech startups do not clearly fall under the purview of any single authority. While technology startups are regulated by the communication ministry, those engaged in financial services are governed by the Financial Services Authority (OJK). Hence, the sector needs a new regulation that is being worked out by both departments.