Peer-to-peer lending and funding platforms Modalku, a member of PT Mitrausaha Indonesia Group, has raised $1.2 million from Alpha JWC Ventures and a number of undisclosed foreign venture capital investors. The company has also secured a partnership with PT Bank Sinarmas, which has now become the escrow agent of the P2P lending platform.
Modalku is a direct platform or borrowing market place in Indonesia. It is an alternative business of investment products based on digital, which addresses the needs of small and medium enterprises (SMEs) through fast working capital loans with competitive interest rates.
The business model allows Modalku to fill the funding gap for businesses that may be eligible for a loan, but rejected by banks that typically demand collateral or a proven track record.
Reynold Wijaya Co-Founder of Modalku said, the funds will be used to expand the firm’s services. He added that the firm wants to establish partnerships with more banks, and are now in talks with several others.
“We keep opening ourselves to every opportunity out there. What’s important is that we want to strengthen this collaboration with traditional banks to reach the otherwise unbankable small and medium enterprises (SMEs),” said Reynold on Monday, on the sidelines of Indonesia FinTech Conference in Jakarta.
Modalku has helped fund 13 SMEs operating in various sectors with a total disbursement of Rp 3.4 billion. Loans offered vary from Rp 50 million to Rp 500 million with a tenor of three, six, and 12 months.
Reynold revealed that Modalku has taken a very conservative approach on selecting hundreds of applications, that have poured in since its launch in January 2016. To date, the firm has maintained zero per cent of recorded default and 100 per cent repayment.
“Realistically it will not be possible for us to maintain zero per cent default forever. We must be aware that there are still risks involved but know that they are also manageable,” he said.
Southeast Asia’s largest market Indonesia has been witnessing an emergence of a number of fintech companies such as mobile recharge platform Sepulsa, e-commerce financing company Kredivo, online micro-lending company UangTeman and many others.
These companies are essentially channeling funds to small and medium companies or individuals, from investors or financial institutions funds.
Players have agreed that fintech companies should be seen as complementing mainstream banking and not as a threat, as fintech can help both unbankable small and medium enterprises and unbankable individuals.