Amartha, an Indonesian peer-to-peer (P2P) lending platform for unbankable society today announced that it has raised a seven-digit US dollar fundraising round led by Mandiri Capital Indonesia (MCI), the investment arm of state-owned Bank Mandiri.
This comes as a Series A round, and other investors involved include new investor Lynx Asia Partners with existing backers Beenext and Midplaza Holding.
Speaking on the investment, Mandiri Capital’s CEO Eddie Danusaputro said: “Armatha’s business model plays an important role in our economy as it addresses the challenge of delivering financial services to the unbanked population.”
This is particular to the situation in Indonesia as according to a study by the World Bank, about 64 percent of Indonesian adults do not have a bank account, which is much higher compared to the global average of 38 percent.
“With limited banking infrastructure and service coverage especially in rural areas, micro-entrepreneurs who work in formal economies struggle with the reality of accessing affordable working capital,” said Andi Taufan Garuda Putra, the CEO of Amartha.
He further adds, “By leveraging Bank Mandiri’s vast network and resources in Indonesia, Amartha will be able to create a new market that modernizes microlending and gives people at the bottom of the income pyramid better alternatives to fund their businesses even further.”
That is to say, Amartha through developing credit-scoring technology that evaluates small businesses will be able to fill the gap in which conventional banks have deemed too risky as it help connect these individuals to lenders via its website.
“With over seven years of experience in microlending, robust field networks in rural areas, and a solid leadership team, Amartha compliments Bank Mandiri’s vision to drive financial inclusion across the nation,” Danusaputro said.
At present, the P2P lender has disbursed more than IDR68 billion (US$5 million) to 30,000 women who own small business.,while targeting to reach US$30 million to 100,000 borrowers by the end of the year, with an amount of 10,000 active lenders on board.
“Aspiring borrowers usually need capital to open up a warung (stalls) or for fish farming. Through the Amartha platform, we were able to help them secure loans ranging from IDR3 million (US$224) to IDR10 million (US$749),” said Putra.
“The number might be considered small but we believe that with the right approaches, we will be able to open up opportunities to improve welfare for Indonesians living in the lower end of the social pyramid,” he adds.
Amartha will use the funding to scale its business, optimise technology as well as to improve its product line. The capital will also be used to expand their coverage by creating mini-branches across Java and Bali, which is slated to complete by the end of 2017. This in turn will provide hundreds of thousands of micro-entrepreneurs across Indonesia’s remote geographies access to affordable and sustainable financing.
Apart from Amartha, more fintech startups in Southeast Asia are working to help improve financial inclusion in the region’s developing economies. Other P2P lending platforms in the country include Modalku, GandengTangan, Investree, KoinWorks, and Crowdo.
By Vivian Foo, VCNewsNetwork