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Indonesia-based peer-to-peer (P2P) lending company Julo has recently raised an undisclosed amount of seed funding from East Ventures, Skystar Capital, and Convergence Ventures.

As per reports, the startup will be utilising the fund to reach up to 10,000 users within the next year. A portion of the investment will also be spent on distribution.

Founded by Adrian Li in 2014, Convergence Ventures is an Indonesian VC firm that invests in tech startups dealing with Internet-based products and services. Donald Wihardja, Partner at Convergence Ventures added, “Julo’s approach is especially important as it uses alternative data to responsibly assess risk for people with no other ability to get loans.”

Set up in 2014 as a subsidiary of Skystar Ventures, Skystar Capital is a technology fund operating in Asia Pacific. It currently invests in early- and growth-stage tech startups in a variety of domains such as education, media, Internet, ecommerce, finance, and mobile.

Established in 2010, East Ventures is a Singapore-headquartered venture capital firm with offices in Tokyo, Jakarta, and San Francisco. So far, it has made over 122 investments in 97 companies across sectors like ecommerce, software, marketplaces, games, apps, etc. In January 2017, it reportedly launched its fifth fund with a corpus of $27.5 Mn aimed at facilitating the startup ecosystem in Southeast Asia.

Commenting on the Julo investment, East Ventures co-founder and Managing Partner Willson Cuaca said, “The way Julo assesses consumer credit worthiness is pretty unique. The founding team has prior experience of this vertical in other markets. We believe that will accelerate product customisation for the Indonesian market.”

Julo Target Users: The 150 Mn Unbanked People In Indonesia 

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Founded by former Silicon Valley executives Adrianus Hitijahubessy, Hans Sebastian, and Victor Darmadi, Julo is an online alternative lending platform that works by matching individuals looking for loans with institutional lenders. The P2P lending startup currently offers unsecured personal loans for three months to a year at low monthly interest rates of around 1.5%-4.0%.

The target user base in Indonesia, according to Hitijahubessy, comprises asset-light, employed millennials in need of capital. At present, it is working to enhance the underlying credit scoring engine, in order to accurately evaluate the borrower’s creditworthiness. For its services, Julo currently receives an origination fee of 4%-5% per transaction from borrowers as well as lenders.

Hitijahubessy attributes the company’s success to the extensive experience all three members of the founding team have as technologists. Sebastian’s long career has encompassed different software development and data analytics, while Darmadi has previously worked as a full-stack software engineer and data architect in Germany and Silicon Valley. Hitijahubessy served as a financial technologist specialising in risk management, applied artificial intelligence (AI), and data analytics.

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The idea of starting a P2P lending platform in Indonesia occurred to Hitijahubessy while building an AI-driven credit scoring solution that could be used in emerging countries with poor lending infrastructure. Commenting on his decision to start the company in his home country, he told Digital News Asia, “Indonesia is the perfect seedbed for the right-minded fintech lending company to flourish. The country has a large segment of the population at the base of the financial pyramid and low consumer credit liquidity, catalysed by rapid technological and infrastructural transformation in the past few years.”

To reach the 10,000 borrower mark in Indonesia, P2P lending company Julo is planning to spend some part of the investment on digital advertising and referral-based promotions. The investment will also allow the Julo team to develop new products, build machine learning algorithms, and also hire new talents.

Indonesia’s Evolving Fintech Market

Indonesia’s fintech space has been witnessing rapid growth in recent times, as a result of increased access to latest technologies and the Internet. Presently, there are more than 150 fintech startups in the country; a number that has increased by 78% since 2015. Of this, crowdfunding and alternative lending startups constitute over 25% of the total fintech pie. Major players in the field include Modalku, Taralite, and crowdfunding platform Kitabisa. In June 2017, Indonesian conglomerate Salim Group reportedly acquired 51% stake in a local  Bank Ina Perdana for $42 Mn, in a bid to enter Indonesia’s e-wallet and P2P lending landscape.

Startups that Julo competes with in Indonesia in the P2P lending space include Taralite, a startup that offers personal loans for education, marriage, childbirth, etc. at a low interest rate of around 1%, secured $6.3 Mn from Japanese financial services provider SBI Group in May this year. In June 2016, peer-to-peer lending platform Investree also raised an undisclosed amount in a Series A funding round led by Kejora Ventures.

(The development was reported by Digital News Asia)

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