The backbone of Indonesia’s economy is its it is estimated that more than 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 pushing many to digitize, startups that focus on SMEs are raising large funding rounds to scale quickly. KoinWorks is the most recent. The Indonesia-based finance platform for SMEs announced today that it has raised $108 million in Series C funding led by MDI Ventures. The round included $43 million in equity and $65 million in debt capital for the working capital loans that KoinWorks provides to its clients.
The round brings KoinWorks’ total to $180 million. Existing investors who returned for its latest round include Quona Capital, Triodos Investment Management, Saison Capital, ACV and East Ventures. The new funds will be used to hire around 400 new employees and scale KoinWorks’ latest suite of products, SME Neobank.
KoinWorks is headquartered in Jakarta, with a holding company in Singapore and technology offices in Yogyakarta, India and Vietnam. KoinWorks was originally created to help SMEs, who are often rejected by traditional financial institutions, gain access to working capital. Since then, it has also developed a comprehensive platform of financial tools to help its customers, including e-commerce sellers and social commerce sellers, increase their sales.
Ploonge first introduced KoinWorks in 2019, when it raised $12 million for its lending platform. Demand has increased as more businesses have come online during the COVID-19 pandemic and the startup says its user base has tripled to 1.5 million customers and a waiting list of 100,000 SMBs being integrated into its new software. financial. Co-founder and CEO Willy Arifin told Ploonge in an email that since 2019, monthly loan disbursements have also tripled to nearly $50 million and revenue has quadrupled.
KoinWorks focuses on SMEs that are not served by traditional financial institutions and may not have a bank account or credit cards. On the platform, users can create a bank account and card online, borrow working capital, and access accounting, point-of-sale, pay early access, and human resource management systems tailored to small businesses.
Arifin said that since KoinWorks’ monthly disbursement rate hit $50 million a month, its share rate has grown enough for the company to become cash flow positive earlier this year, and its percentage of non-performing loans (NPL) is less than 2%. He says that banks serving traditional SMEs have at least twice as many defaults as KoinWorks. “Up to 20% of businesses switched from offline to online sales channels during the pandemic, and 89% of businesses now use online channels to sell their products and services,” he said.
Over the past three years, KoinWorks’ competitors have grown to include other neobanks and startups that started out as accounting software but are expanding to include working capital loans and other financial services. Two notable examples include rivals BukuWarung and BukuKas, which have both raised significant rounds of funding.
“When we started, we were among hundreds of traditional financial institutions. Fast forward to the present day, we are seeing these same banks go through digitization,” Arifin said. “Despite this, Indonesia’s annual funding gap is $80 billion, so those who remain unbanked or unbanked are still at a disadvantage. There is still a lot to improve.”
He added that with tens of millions of entrepreneurs in Indonesia, “it’s not a winner-take-all market.” The country’s five largest banks have a combined market value of about $160 billion. No doubt there will be fintech companies out there dealing with the unbanked/underbanked space, however KoinWorks has a best-in-class approach tailored to the needs of SMEs and entrepreneurs that we believe will have a significant impact on the future sector.
In a statement, MDI Ventures CEO Donald Wiharia said, “Investing in KoinWorks is investing in the financial literacy of underserved and underserved communities. We are ecstatic to be in tune with a team that understands the importance of every step in the SME entrepreneurship and growth journey.”