“I don’t think we’re going to see any competitor until two credit cycles away,” quips Geoff Prentice, co-founder of Southeast Asian microlender Oriente.
Prentice is talking about microloans – an industry that’s seemingly clogged with competitors across e-commerce, financial and ride-hailing sectors. He quickly brushes aside players like Go-Pay, GrabPay and other micro, peer-to-peer and traditional lenders. Nobody, he says, is building the same full-stack infrastructure that he is.
Loans are approved within eight minutes and not three days, he’s undercutting competitor rates, and the business is not bogged down by side verticals like ride-hailing or food delivery, Prentice adds.
Investors are convinced, for now, at least. In November, the Hong Kong-headquartered firm secured a sizeable $105-million Series A round from Sinar Mas Group, Berjaya and JG Summit Holdings.
“I realised that the companies that were the best to invest in were the simple ones, solving really simple problems. Uber was really simple – transport. We realised that the (loan) rates in this region were so high and no one was solving this so we decided to start this,” said Prentice.
Oriente is offering rates at 4-5%, a fraction of what Southeast Asian microlenders offer, which can go as high as 20%.
Microlending in Southeast Asia is a far cry from Silicon Valley, where Prentice spent five years co-founding and building video chat app Skype. After a successful exit to eBay followed by a brief period dabbling in venture investing, Prentice finds himself today in less snazzy cities across Indonesia, the Philippines and Vietnam.
But it’s these very markets where opportunities are shining the brightest.
Prentice asserts that Oriente is turning out to be bigger than anything he has worked on in Silicon Valley or China. Its ventures in the Philippines (Cashalo) and Indonesia (Finmas) are already growing faster than Skype during its initial months of launch.
In six months, Oriente went from dispersing 1,000 to 85,000 credit lines per month. It currently boasts over 85 merchant and retail partners including names like Robinsons Retail, Robinsons Appliances, Handyman, Memoexpress, Cherry Mobile, Samsung, Oppo, Home Along, Ramayana and Loote Grosir.
Beyond the e-commerce fanfare across SEA, a huge majority of retail transactions still takes place offline. According to McKinsey, e-commerce sales in Indonesia account for only 5% of all retail sales in the country. In the Philippines, it’s even lower – national stats point at between 1 per cent and 2 per cent.
“97 per cent of sales is still offline in SEA – that’s where people are. 67 per cent of people in SEA have no bank account. That’s how we figured out to go where the people are, which is offline,” Prentice said.
That’s why Oriente offers loans for purchases made offline – department stores, in particular.
“It costs less to acquire customers offline than it does on Facebook. The risk goes down because you physically see the person, and you make these merchants happy and you can grow your merchant network,” said Prentice.
Prentice added that the company will be rolling out SME loan products across Indonesia, the Philippines and Vietnam by the end of this month. Its focus remains on expanding its merchant network, which will include names like Philippines’ budget carrier, Cebu Pacific this year.
(Update: Microsoft, the owner of Skype, has verified with DealStreetAsia that Geoff Prentice is not co-founder of Skype as claimed by him. We have reached out to Prentice for comment.)
Edited interview excerpts with Geoff Prentice, co-founder of Oriente: