Democratising Credit Availability In Indonesia: UangTeman Raises $12 Mn Series A Funding From K2 VC, Draper, STI

Indonesia-based consumer lending platform UangTeman has recently raised $12 Mn in equity and debt funding. The Series A funding round, as per reports, was led by K2 Venture Capital and Draper Associates.

According to UangTeman’s co-founder and CEO, Aidil Zulkifli the newly-secured funding will go into strengthening the company’s core technology. To further bolster its product line, the startup is looking to set up R&D centres in Singapore and India.

Commenting on the development, Zulkifli said, “We have collected quite a bit of data and are hiring more data scientists. It’s a question of talent pool. We don’t have masters or PhDs in machine learning or algorithm design here in Indonesia.”

The debt financing was provided by Hong Kong-based asset management firm, STI Financial Group. The company specialises in hedge funds management, PE investments and structured product management. Although the exact amount of debt funding raised remains undisclosed, it is believed that the Series A investment will help UangTeman widen its reach among borrowers based in Indonesia.

Headquartered in Silicon Valley, Draper Associates is an early-stage, VC firm that facilitates the growth of startups as a means of job and wealth creation. In September 2016, the firm announced a $190 Mn seed fund for startups in India and Indonesia. The current round marks the first time that the fund has poured money into an Indonesian startup.

K2 Venture Capital is a financial services provider with operations in Hong Kong. Founded in 2012, the firm offers clients assistance at all stages of the investment process, including strategic planning, portfolio and property analysis, acquisitions, development services, asset management, disposition strategy and discretionary investment services.

In the past, K2 Capital infused $825K Seed funding in SaaS-based transportation solutions startup, TempoGO.

UangTeman: Automating The Lending Process

Launched in 2015, UangTeman operates in 14 cities across Indonesia. It offers micro-loans worth $75 to $350 for short durations of less than 30 days. To avail these services, borrowers are required to provide specific data pertaining to family status, employment, and phone number.

In July 2017, the startup reportedly disbursed a total of $750K in short-term loans, of which around 2% ended in defaults. As pointed out by Zulkifli, the rate of late repayments currently stands at 5%. Presently, the processes of credit assessment, loan disbursal, and repayment are handled by an automated, algorithm-based system.

To ensure low delinquency rates, UangTeman enlists the help of both in-house debt collectors as well as third-party loan recovery agents hired by banks. In order to protect the lender’s money, the company also offers first-risk cover to investors on its platform.

To generate adequate revenue, UangTeman is known to charge interest rates that are higher than market standards. It also collects late payment fees from borrowers.

The startup previously raised an undisclosed amount of Pre-Series A funding from an unmanned Southeast Asian banking group. Prior to that, it secured Seed funding from a clutch of investors, including Jakarta-based VC firm Alpha JWC Ventures.

How Indonesia Is Scaling New Heights In Digital Lending

Indonesia’s digital lending space has undergone massive development in recent years, as a result of increased penetration of smartphones and Internet. Valued at $70 Bn, the P2P lending industry in the country is home to a growing class of startups.

Among these are Investree, Modalku, Kitabisa, Crowdo and Taralite. In July 2017, Julo secured an undisclosed amount of Seed funding from East Ventures, Skystar Capital, and Convergence Ventures. In May 2017, personal loans provider Taralite raised $6.3 Mn funding from Japan-based SBI Group. Earlier in June 2016, Investree raised an undisclosed amount in a Series A funding round led by Kejora Ventures.

Although largely unexplored, the alternative lending space in Indonesia holds a bundle of opportunities for up-and-coming startups. The latest Series A funding from K2 Venture Capital, Draper Associates and STI will help UangTeman tap into this fast-emerging industry.

(The development was reported by Tech in Asia)