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Peer-to-peer lending startup Amartha has said that it received a US$28 million investment from the Women’s World Banking Capital Partners II fund and MDI Ventures. Existing backers Mandiri Capital and UOB Venture Management also participated in the round.
“We are grateful that Amartha can continue to grow amid the pandemic,” said the startup’s founder and CEO Andi Taufan. “There are about 30 million to 40 million micro-entrepreneurs in Indonesia, and we hope to tap into least 20% of them, serving up to 10 million borrowers from this segment in the next five to 10 years.”
WWB Capital Partners II is the second gender lens investment fund established by the US-based nonprofit organization Women’s World Banking. The fund aims to close the gender gap by investing in high-performing financial service providers that serve low-income women. This marks WWB’s first investment in a fintech company in Southeast Asia, according to Taufan.
Moving forward, Amartha will collaborate with WWB in several projects aimed at underserved communities in rural areas.
With the fresh funding, Amartha will strengthen its core community-based lending business and accelerate product innovation. “Beyond lending, we have other services such as Amartha for Business Partners to encourage offline-to-online transactions, supporting end-to-end loan management from origination and disbursement to repayment,” said Taufan.
“We also have Amartha Plus that empowers communities with group buying, where we connect them with ecommerce platforms so they can shop more conveniently and get more affordable prices,” he added. “Moreover, we’ll launch Amartha Score, where we build our partners’ credit history digitally, making it easier for them to get other financial services.”
This new investment takes place only three months after Amartha received US$50 million in debt financing from the US-based Lendable. The company has deployed the first batch of this financing and aims to distribute the remainder by the end of the year, Taufan said.
Amartha currently operates in more than 18,600 villages in Java, Sumatra, and Sulawesi. The company plans to expand its coverage into the eastern provinces of Indonesia, and its community partners have grown together with the company, said Taufan. The average income of Amartha’s borrowers increased between 200% and 700% after joining the platform, based on research published by the Center for Digital Society (CfDS) of Gadjah Mada University in 2019.
“We started very humbly in 2010. Initially, we provided only a loan of 500,000 rupiah (US$35) per year, which was enough to fill the inventory of one small shop and help revive the economic activities of the surrounding community,” Taufan said. “Many of our first borrowers are still partnering with Amartha today. Our value proposition is a community-based network that helps them grow and look after each other, as one small loan can make huge differences in a rural community.”
Amartha empowers women micro-entrepreneurs in rural areas with working capital loans, ranging from 3 million to 10 million rupiah (US$200 to US$700), along with financial literacy education and entrepreneurship training. To date, the platform has disbursed US$240 million in loans to more than 661,000 women micro-entrepreneurs.
The firm makes money by collecting fees for the loans, but plans to diversify its revenue sources from other financial products. Amartha has been cash-flow positive since last year and is expected to hit profitability this year, Taufan said. Looking ahead, he hopes the company will have at least 1 million borrowers by the end of 2021 and 3 million in the next two to three years.
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