Jakarta-based B2C lending platform Pinjam.co.id has secured an undisclosed amount of both seed and series A funding from an unnamed local investor. The company will use the funds to hire talent, develop technology, products, mobile apps, as well as to expand throughout Java and Bali.
Pinjam CEO and founder Teguh Ariwibowo said, the agreement would be signed this month. Pinjam provides digital pawning services. It went live in April 2015 to serve a number of pilot transactions, and was officially launched in December.
“2016 is our expansion year. We chose a local investor, of course, because we want this to be a 100 per cent local venture,” Ariwibowo told DEALSTREETASIA on the sidelines of the Indonesia Fintech Forum in Jakarta.
The project was initiated by Ariwibowo after he failed to get a bank loan for his company. Having experienced first-hand the nightmare of getting a credit for small and medium businesses, he decided to establish Pinjam to help other SMEs or individuals get access to capital.
On the Pinjam website, a customer can upload photos of his collateral online. An automated bot will then give a price estimation, and the customer can carry the collateral directly to the nearest branch or have a courier pick it up. Once the price is agreed upon, funds will be transferred to the customer’s account within hours. Interest rate on Pinjam is 0.7 per cent per week with a maximum tenure of 12 weeks.
After only eight months since operations, Pinjam has recorded about Rp2 billion worth of transactions. Ariwbowo further said, the company had secured a partnership with a corporate lender who agreed to disburse up to Rp 100 billion this year. Income from the disbursed loans will be divided among Pinjam and the corporation, or known as the fee based income partnership deal.
“We only have one corporate lender so far because current regulation restricts us from pulling funds from multiple parties. We are not a bank,” Ariwibowo explained.
The Indonesian Financial Services Authority (OJK) has repeatedly said it would come up with comprehensive rules to regulate fintech, a still relatively alien industry in Indonesia. 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 OJK.
Among the several sets of rules that OJK has been mulling over is a plan to give licence to companies that have a minimum capital of Rp50 billion.
“Raising barrier to entry to a higher level is definitely needed. But I also want to highlight the need for regulations to protect customers’ data,” he said.
Fifty per cent of Pinjam’s customers are small and medium businesses, while the remaining are individuals. Pinjam’s credit default rate is about one to two per cent, however, the non performing loan (NPL) is maintained at zero per cent.