Jakarta-based fintech startup AwanTunai–featured on the 2022 Forbes Asia 100 to Watch list–raised $27.5 million in a Series B funding round to power its digitalization drive in Indonesia.
The round was led by Norwegian investment fund Norfund; MUFG Innovation Partners, the innovation arm of Japan’s largest bank by assets; and OP Finnfund Global Impact Fund I, the global impact fund of Finland’s OP Financial Group and Finnish state-owned Finnfund.
Participating in the round were Krungsri Finnovate, the fintech arm of Thailand’s Bank of Ayudhya, and existing investors IFC, OCBC Indonesia (OCBC NISP) and Singapore-based VC firm Insignia Ventures Partners. The round, which was oversubscribed by $2.5 million, brought AwanTunai’s total equity raised to $51 million, alongside $47 million in debt financing. The startup declined to disclose its current valuation, but claims it’s Ebitda positive.
“We’re impressed by AwanTunai’s commitment to enabling Indonesian SMEs in the fast-moving consumer goods (FMCG) sector by digitizing their operations and providing them access to financial services,” said Nobutake Suzuki, President and CEO of MUFG Innovation Partners, in a statement about the funding round. “Apart from gaining visibility into their clients’ operations, AwanTunai leverages data science to analyze unstructured transaction data to manage lending risk.”
The Series B funding will go towards AwanTunai’s lending capital and risk management technology. By the end of 2024, the startup aims to cover $2 billion of annualized inventory purchase financing among its users.
Founded in 2016, AwanTunai provides online financing and payment services to Indonesia’s micro, small and medium enterprises (MSMEs), from mom-and-pop shops to grocery store chains. These primarily cash-based enterprises can apply online for AwanTunai’s financing solution, AwanTempo, to receive working capital of up to 200 million rupiah (about $12,000). They can also use the startup’s app, AwanToko, for supplier information, inventory and order management services. To date, AwanTunai claims it’s worked with over 120,000 merchants across Indonesia.
“We truly want to be the origination arm, or platform, for the banking industry,” says Dino Setiawan, cofounder and CEO of AwanTunai, in a phone interview. “We’ve truly focused on trying to build technology that would give us a risk management advantage over banks…we want to do things that banks are just uncomfortable doing, or things they just don’t have the patience or perhaps even the technical know-how to operate.”
Chief among AwanTunai’s tech solutions is its enterprise resource planning (ERP) software, says Setiawan, which allows the startup to capture proprietary transaction data from SMEs. By applying its patented machine learning technologies, AwanTunai claims to analyze transaction data with the aim of mitigating potential risks and fraudulent activity.
“Given our operational insights into these SMEs, given that we’re getting ERP data, we have a better sense of who is better able to handle higher amounts of financing, or if it’s at higher leverage,” adds Setiawan.
Accessing working capital remains a challenge for Indonesia’s many business owners, as about 80% of the country’s population–or 220 million people–are unbanked and underbanked, according to a paper published last October by the Singapore-based ISEAS-Yusof Ishak Institute.
Still, lending and wealth are expected to “rise rapidly” from a low base in Indonesia, according to a December report jointly prepared by Google, Temasek and Bain. Digital lending, measured by end-of-year loan book balances of companies’ consumer and SME loans, is projected to rise from $6 billion in 2023 to $15 billion in 2025, reaching around $40 billion by 2030, the report added.
Across Southeast Asia, startups tapping into Indonesia’s burgeoning fintech space have featured prominently in Forbes Asia 100 to Watch lists. These include Singapore-based Finture, featured on the 2023 list, which operates virtual banking services for customers in Indonesia through their app, Yup, licensed by the Financial Services Authority in Indonesia. Islamic finance startup Alami, featured on the 2022 list, raised an undisclosed growth funding round led by Intudo Ventures to help expand the startup’s Sharia-compliant peer-to-peer lending platform.
READ MORE
Read the full article here
