The startup allows users to “borrow” money to buy a product which they can pay back in 30 days. It also provides credit of up to Rp 20 million, which can be paid in 3-12 months with 2.95 per cent interest, the same as credit cards.
“We had closed the funding some time ago but decided not to announce it then,” Akshay Garg, CEO of Kredivo, told reporters at a media luncheon in Jakarta today. He declined to reveal the quantum of funds raised.
“What I can tell you is that the total amount of funding we have raised so far from seed is one of the largest in Southeast Asia among VC deals,” Garg said, adding that the vast majority of the funding will go into product development, hiring, and user acquisition.
Kredivo had raised a seed round in 2016 from Jungle Ventures, GMO Venture Partners, and others.
NSI Ventures is part of private equity firm Northstar Group that manages five funds and has over $2 billion in assets under management. It has so far invested in 15 companies, including Indonesia’s ride-hailing startup Go-Jek, telemedicine platform HaloDoc, Singapore’s online restaurant booking app Chope, healthtech firm CXA Group and Myanmar’s Oway Ride.
The Alpha JWC Ventures-backed company also announced on Wednesday that it has renewed its partnership with BFI Finance, an Indonesian multi-finance firm.
Breakeven in 5 years
Founded less than 1.5 years ago, Kredivo estimates to turn profitable in the next four to five years. The company plans to expand its reach outside of e-commerce and tap into education, healthcare, insurance, and travel in the next three to four years.
“By then we intend to be anywhere from 5-10 per cent of all retail transaction value. For the biggest merchants, we are already accounting for 4-5 per cent of their transactions, and over the next four years, we’re aiming for hundreds of millions of dollars in transactions per month,” Garg stated.
Credit card penetration in Indonesia remains poor despite the current e-commerce boom. On top of that, Indonesian e-commerce merchants suffer from some of the highest cart abandonment rates in Asia.
“Traditional payment methods are ill-suited for e-commerce (because) they typically involve multiple steps for checkout. At the same time, poor credit card penetration in the country adds a dampener to e-commerce growth. Kredivo’s product solves for both problems, giving consumers the best checkout experience of any available checkout method and the convenience of a reusable credit line at transparent, below-market rates,” Garg said.
Kredivo claims that its system has proved to be the stickiest in Bukalapak, one of Indonesia’s largest marketplace platforms. Nearly 80 per cent of Bukalapak’s customers have transacted with Kredivo at least two times, and 60 per cent have transacted at least four times in the past 8 months.