In a Series C round of funding, KoinWorks, a Jakarta based SME financial platform, has raised $108M
In a Series C round of funding, KoinWorks, a Jakarta-based SME financial platform, has raised $108M
The estimated more than 60 million small and medium-sized enterprises (SMEs) in Indonesia form the backbone of the economy. Many, on the other hand, do not have access to working capital and, particularly prior to the pandemic, managed their finances manually through Excel spreadsheets. Since the implementation of COVID-19, many businesses have begun to digitize, and startups that target small and medium-sized enterprises (SMEs) have raised large rounds of funding in order to scale quickly. KoinWorks is the most recent addition. The Indonesia-based financial platform for small and medium-sized enterprises (SMEs) today announced the completion of a $108 million Series C round led by MDI Capital. For KoinWorks' working capital loans to customers, the round included $43 million in equity and $65 million in debt financing, totaling $110 million.
KoinWorks has now raised a total of $180 million through various means. Investors from the previous round, such as Quona Capital, Triodos Investment Management, Saison Capital, ACV, and East Ventures, have returned to participate in the latest round. It is planned to use the additional funds to hire approximately 400 additional employees and expand KoinWorks' most recent suite of products, SME Neobank, as well as to expand its existing operations.
What Else to Know About KoinWorks
KoinWorks is headquartered in Jakarta, Indonesia, and has technology offices in Yogyakarta, India, and Vietnam. The company has a holding company in Singapore and technology offices in India and Vietnam. KoinWorks was originally established to assist small and medium-sized enterprises (SMEs) in obtaining working capital, which is often denied by traditional financial institutions. Besides that, it has built a robust platform of financial tools to assist its customers, who include e-commerce vendors and social commerce sellers, in increasing their sales and profits.
It was in 2019 that TechCrunch first published a story about KoinWorks, which had just raised $12 million for its lending platform. With the increase in the number of businesses that went online during the COVID-19 pandemic, the startup reports that its user base has tripled to 1.5 million customers, with a waiting list of 100,000 small and medium-sized enterprises. With the help of a TechCrunch email, Willy Arifin, co-founder and executive chairman, revealed that monthly loan disbursements have tripled to nearly $50 million and revenue has quadrupled since 2019.
KoinWorks focuses on small and medium-sized enterprises (SMEs), which are underserved by traditional financial institutions and may be unable to obtain bank accounts or credit cards. Users can access accounting, point-of-sale, early wage access, and human resource management systems tailored to small businesses on the platform, as well as create an online bank account and debit card, borrow working capital, and borrow working capital.
Arifin stated that since KoinWorks' monthly disbursement rate reached $50 million per month, the company's take rate has increased sufficiently to the point where the company achieved positive cash flow earlier this year and its non-performing loan (NPL) percentage is less than 2 percent, according to the company. He claims that non-performing loans at KoinWorks have increased by at least twofold in banks that serve traditional SMEs. The pandemic resulted in a shift in sales channels, with up to 20% of businesses shifting their sales channels from offline to online. "Today, 89 percent of businesses sell their products and services online," he stated.
Let's take a look at over the last 3 years
Over the last three years, KoinWorks' competitors have grown to include other neobanks as well as startups that started out as accounting software providers but have since expanded to include working capital loans and other financial services as a result of their success. BukuWarung and BukuKas are two notable examples, both of which have raised significant amounts of money in recent rounds of funding.
We were one of hundreds of established financial institutions when we first started out," says the founder. Take us forward to today, and we are witnessing the digitalization of those very same banks," explained Arifin. But Indonesia has an annual funding shortfall of $80 billion USD, which puts those who are unbanked or underbanked at a competitive disadvantage. "There is still a significant amount of room for improvement."
According to him, given Indonesia's hundreds of thousands of thousands of entrepreneurs, "it is not a winner-take-all market." The top five banks in the country have a combined market capitalization of nearly $160 billion USD, making them the most valuable in the country. While there will undoubtedly be fintech companies that address the unbanked/underbanked market in the future, we believe that KoinWorks has a best-in-class approach that is tailored to the needs of SMEs and entrepreneurs that will have a significant impact on the future of the industry.
Mdi Ventures CEO Donald Wiharia said that funding KoinWorks is an investment in the financial literacy of underbanked and underserved communities in a press release. Our excitement at working with a team that recognizes the importance of each step in the entrepreneurial and SME growth journey is unmatched."
