The round was led by an unnamed “major Southeast Asia banking group,” while two other Indonesian institutional investment firms also participated. In addition to the equity financing, UangTeman said it raised roughly US$735,000 million in debt.
Microlending sites are no longer seen as potential competitors to banks, but as partners.
The startup launched in 2015 and has a simple premise: it hands out small loans of up to US$136 for a period of 10 to 30 days. The name, by the way, roughly translates to “Friend’s Money.”
It targets low income people who would stand little chance to be approved for a conventional credit or a loan. The cash boost from UangTeman is supposed to help them make it through particularly tough times.
UangTeman has been criticized for taking high interest rates and late fees. Co-founder and CEO Aidil Zulkifli responded by saying that he found the primary customer concern to be transparency, not the interest rate.
“We are very clear about how much you borrow and how much is due — not a single rupiah less or more,” Aidil told Tech in Asia in an earlier interview.
Fintech on its way to the mainstream
UangTeman says it’s handed out more than US$1.9 million in loans so far. It also claims to have a better track record than banks and financial services when it comes to recovering debts. While the normal ratio of non-performing loans is at 3 percent, UangTeman says its ratio is below that.
In its seed stage, UangTeman had support from crew of investors including an unnamed family office in Malaysia, Jakarta-based venture capital firm Alpha JWC, and a co-founder of Wonga, a British payday loan company similar to UangTeman.
Banks and institutions are now lining up to get a share in UangTeman’s future, which indicates a shift in perception in Indonesia. Microlending sites like UangTeman are no longer seen as potential competitors to banks and established financial institutions, but rather as partners in the country’s efforts to improve financial inclusion.
Converted from Singapore dollars and Indonesian rupiah. Rate: US$1 = S$1.36, IDR 13,032.