Indonesian online peer-to-peer lending marketplace Investree said it has secured a series A funding commitment from a local venture capital firm, Kejora. Details of the amount, however, have not been disclosed.
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. The company offers lending solution for both business financing and employee loan.
Before securing the funding commitment, Investree has been bootstrapping for almost a year, raising $500,000 for its initial stage development. Investree and Kejora will officially sign the agreement in June.
“Partnership with Kejora will bring in growth capital, and also potential collaboration among ecosystem. The new funding will be used for hiring talent, from marketing personnel to legal experts, as well as establishing sales offices,” Co-founder and Chairman of Investree Adrian Gunadi said.
Gunadi himself is not a new name in the Indonesian banking industry. He was a director of retail banking at Bank Muamalat, managing SMEs, consumer, liabilities and e-banking across 400 branches. A trained banker, he holds a bachelor degree from Faculty of Economics in University of Indonesia and an MBA from Rotterdam School of Management.
As of May, Investree has disbursed 23 loans totalling Rp6.8 billion. Average funding period is five days with 16.7 per cent average return to lenders. Total loans default is still maintained at zero.
Gunadi said, Investree plans to expand its presence in Surabaya, Makassar and Semarang this year. It will also develop sharia products as alternative offering, and launch the iOS and Android mobile application.
“We will start working on it by the second half and hope to complete it by January,” he told DEALSTREETASIA on the sidelines of Investree launching.
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 small and medium enterprises (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 could be 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 could get loans from the banks. Sixty per cent of that figure are based in the Java island.
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.