For KoinWorks, an Indonesian digital lending company, the Covid-19 period has been a pivotal moment that has enabled it to surge forward in the right direction.

“At the beginning of the pandemic, we tried to step back and look into the situation. But we realized that it’s actually a mistake because our market kept growing amid the outbreak,” the company’s co-founder Willy Arifin told Tech in Asia.

KoinWorks’ main borrower are small and medium enterprises (SMEs) who have digital footprints, such as those who own online shops on Tokopedia and Shopee. These business owners have been somewhat shielded from the blow from Covid-induced social restrictions.

In the past 18 months, the number of SMEs that have digital footprints has doubled from around 10 million to 20 million businesses, according to Arifin, who said such a surge usually takes five years in a non-Covid scenario. At the same time, KoinWorks kept its non-performing loan (NPL) ratio under 2%, which is significantly lower than traditional financial institutions.

Amid the pandemic, the company reached US$15 million in loan disbursements per month, and logged positive cash flow, Arifin said. The firm also hit 1.5 million users at the end of last year.

The company raised a US$108 million in a series C funding round led by MDI Ventures, which is Telkom Group’s venture arm. Existing investors such as Quona Capital, Triodos Investment Management, Saison Capital, AC Ventures, and East Ventures also took part in the round.

The investment comprised US$43 million in equity and US$65 million in debt capital. Since its establishment, the company has raised US$70 million in equity and around US$110 million in debt.

KoinWorks plans to use the fresh funding to double its existing workforce of 400 employees, who hail from Indonesia, Singapore, Vietnam, and India. The company also aims to triple its revenue and double the number of its users before the end of 2022.

Evolution into a full-fledged financial service for SMEs

Since being founded in 2016, KoinWorks has expanded from being a platform dedicated to peer-to-peer lending to launching several new features to expand its user base.

Arifin said the firm realized that it should do more to help budding founders from the start of their entrepreneurship journey after having to reject many entrepreneurs looking for loans from its lending platform.

That’s why KoinWorks launched a neobank feature that allows users to open business bank accounts directly from its app. It also gave them learning material on how to manage an online business, promote it, and communicate with customers.

When the company is comfortable with a business owner’s transaction history, it gives them the KoinWorks Neo Card, a Mastercard virtual card that can be used to do any kind of online payments. Further, the SME can also borrow money through KoinWorks’ lending platform.

The Jakarta-based fintech firm has also introduced an earned-wage access (EWA) service called KoinGaji and a gold investment feature called KoinGold.

KoinWorks’ took an unusual route for fintech firms by starting with a lending business – the holy grail of the financial sector due to its high take rate – and then expanding into other services. Arifin said it was a natural evolution as most borrowers get their first productive loan from KoinWorks.

No plan to go abroad

Arifin said KoinWorks has shown positive cash flow, especially in its lending business. However, the company has reinvested the surplus to build other features and keep growing its market share.

The co-founder also isn’t shy about his interest in going public. Without going into specifics, he said an IPO – whether in the US via a SPAC merger, or a direct listing on the Indonesian stock exchange – was still on the cards. He said the listing wouldn’t be “too far away.”

However, Arifin underlined that he still wants to focus on the firm’s home market and has no plans to expand Koinworks’ lending business to other countries despite having developers from outside Indonesia.

“Half of the GDP (gross domestic product) of Southeast Asian come from Indonesia, we know where the money is,” Arifin stressed.

(Aditya/Tech in Asia)