The backbone of the Indonesian economy are its estimated at over 60 million SMEs. But many do not have access to working capital and, especially before the pandemic, managed their finances using manual processes such as spreadsheets. With COVID-19 prompting many to go digital, startups that focus on SMEs have raised significant fundraisers to grow rapidly. KoinWorks is the last. Indonesia’s financial platform for SMEs today announced that it has raised $ 108 million in Series C financing led by MDI Ventures. The round included $ 43 million in equity and $ 65 million in debt capital for working capital loans that KoinWorks provides to its clients.
The round brings KoinWorks’ total raised to $ 180 million. Existing investors who returned for their final round are Quona Capital, Triodos Investment Management, Saison Capital, ACV and East Ventures. The new funds will be used to hire around 400 new employees and develop KoinWorks’ latest product line, SME Neobank.
KoinWorks is headquartered in Jakarta, with participation in Singapore and technology offices in Yogyakarta, India and Vietnam. KoinWorks was originally created to help SMEs, which are often turned down by traditional financial institutions, to access working capital. Since then, she has also developed a comprehensive platform of financial tools to help her clients, including e-commerce sellers and social commerce sellers, increase their sales.
TechCrunch first introduced KoinWorks in 2019 when it raised $ 12 million for its lending platform. Demand has grown as more businesses go online during the COVID-19 pandemic and the startup says its user base has tripled to 1.5 million customers and a waiting list 100,000 SMEs that are integrated into its new financial software. Co-founder and executive chairman Willy Arifin told TechCrunch in an email that since 2019, monthly loan disbursements have also tripled to nearly $ 50 million and income has quadrupled.
KoinWorks focuses on SMEs that are underserved by traditional financial institutions and may not have a bank account or credit card. On the platform, users can create a bank account and card online, borrow working capital, and gain access to outlets, early access to salaries, and human resource management systems suitable for small businesses. companies.
Arifin said that since KoinWorks’ monthly disbursement rate hit $ 50 million per month, its subscription rate has risen enough that the company turned positive at the start of the year and its percentage of non-performing loans. (NPL) is less than 2%. He says banks serving traditional SMEs have at least double KoinWorks’ NPL. “Up to 20% of businesses have moved their sales channels from offline to online during the pandemic, and 89% of businesses are now using online channels to sell their products and services,” he said.
Over the past three years, Indonesian SME-focused fintechs have grown to include other neobanks and startups that started out as accounting software, but are expanding to include working capital loans and other services. financial. Two notable examples are BukuWarung and BukuKas, both of which have raised significant funds (and are collaborators of KoinWorks) and the neobank Aspire.
“When we started, we were among hundreds of traditional financial institutions. Fast forward to the present day, we are seeing these same banks now undergoing digitalization, ”Arifin said. “Despite this, Indonesia’s annual funding gap is US $ 80 billion, so those who remain unbanked or underbanked are still at a disadvantage. There is still a lot of room for improvement ”
He added that with tens of millions of entrepreneurs in Indonesia, “it’s not a winner-takes-all market.” The country’s five largest banks have a combined market value of nearly US $ 160 billion. There will undoubtedly be FinTech companies that tackle the unbanked / underbanked space, however, KoinWorks has a top-notch approach tailored to the needs of SMEs and entrepreneurs who we believe will have a significant impact on the future sector.
In a statement, MDI Ventures CEO Donald Wiharia said, “Investing in KoinWorks is about investing in the financial literacy of underbanked and underserved communities. We are thrilled to be together with a team that understands the importance of every step of the journey of entrepreneurship and SME growth. ”