#MaganiMen: Meet Adrian Gunadi, Co-Founder & CEO PT Investree Radhika Jaya and Chairman Asosiasi Fintech Pendanaan Bersama Indonesia (AFPI). Learn how Adrian has scaled Investree into a leading Indonesian financial technology company.
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Why did you start Investree? What was the motivation?
First of all, I would like to tell you a bit about myself. In my own opinion, I found that I'm a self-starter kind of person, I have always been very resilient and confident in pursuing my ambitions. My interest in the financial business came as early as high school, I have always been interested in building my own business eventually. After years of being exposed to the Banking industry, I found myself having strong passion in building robust business models for banking companies within the conventional sphere in areas such as sharia finance and SME platforms, as well as in microfinance and e-banking in the retail sector. Throughout the years of working for leading financial institutions has allowed me to witness the fact that in Indonesia obtaining access to finance is a struggle. Arising from these observations, the idea of building a business which can help empower SMEs and reducing the financial gap emerges.
The initial idea of developing a fintech company started back in 2015, my friends and I realized that many SMEs were struggling to acquire financing and build their businesses. As the financial technology industry has arisen since 2008, we saw an opportunity to utilize financial technology to provide better financing access to underserved. Through our combined experience we were able to map the abundance of opportunity. In Indonesia, there are many segments, especially SMEs that have not been served by the banking system, because they may not meet the terms or conditions. While SMEs are underserved by the conventional banking industry, they actually have great potential and are the backbone of Indonesia’s economy, thus we decided to establish Investree.
What is the biggest challenge you faced when starting Investree? What is the biggest challenge you are facing now?
The industry itself, marketplace lending is very nascent in Indonesia, even though it has existed globally for more than 10 years. Some of the challenges faced in the beginning and which we continue to address:
- Regulations – Financial service is a highly regulated industry. There was no regulation when we started. Hence, we worked closely together with regulators primarily with OJK (Financial Services Authority of Indonesia) and Bank Indonesia (Central Bank of Indonesia) in setting the regulatory framework for marketplace lending or P2P lending in Indonesia. Which resulted in the issuance of POJK Nomor 77/POJK.01/2016 in December 2016, which provided a regulatory standard for the business. To date the regulations continue to evolve, and Investree continues to be in the forefront of this development.
- Risk management – Managing credit risk given the lack of credit infrastructure in Indonesia remains a challenge. Thus, developing a robust credit scoring model and collection strategy is key. To date apart from our own proprietary credit model, we are connected to Pefindo Credit Bureau which enhances our scoring capability. A robust collection process and selected product segment has enabled us to maintain healthy loan portfolio.
- Tech development – Given that the market for Indonesia was unique, we had to build our infrastructure from the ground up. Thus, develop our own internal resources and develop the tech infrastructures to meet our business requirement and continuous enhancement. To date we have managed to continue to grow inhouse our own talent base and enhanced our current platform to meet current business requirements.
- Awareness – Marketplace or P2P lending is very new in Indonesia. We did numerous seminars, joined conferences and expos, media visits, both on our own but also together with regulators to increase public awareness of our business. Hence not only building our start-up but it was more about building a new industry. Nowadays, we actively build awareness through online platforms, such as webinars, social media, YouTube educational videos, media interviews, etc.
- Scaling – How to grow the business in a scalable and effective manner was the key. By focusing on selected SME loan products such as Invoice Financing and Online Seller Financing leveraging on B2B partnerships with traditional companies, and partnership with the new digital economy has enabled us to scale the business on both borrowers and lenders. For more than 5 years, the business has grown more than 20 times and we are cooperating with various players on the ecosystem, such as e-commerce, e-procurement, financial institutions, and more. This ecosystem partnership will enable us to scale more rapidly in the future. On the lender side, we have started to attract institutions such as banks hence increasing our lending capacity.
What is your vision for Investree?
In Investree, we want to digitize financial inclusion. Our products are based on SMEs concern of getting financing, and through our loan products, Invoice Financing, Buyer Financing, Working Capital Term Loan, and Online Seller Financing, we are providing a solution for them. Each of our products are tailored to provide benefits towards the needs of our borrowers, for example, one of which is Invoice Financing that serves SMEs that have a concern on managing their cash flow because of the long term of payment or MSMEs who are struggling to maintain their business especially during this pandemic. In this case, they need to get financing as soon as possible but they have no fixed asset to serve as collateral. Hence, Invoice Financing becomes a solution for them to acquire financing and grow their businesses even faster.
It has been our commitment to continue to grow to always support SMEs in Indonesia in terms of capital. Especially during the current state of affairs, Investree is committed to extending loans to SMEs who are now having difficulty securing capital to revive their business. So, we will focus on providing financing through short-term business capital loan products such as Invoice Financing and Pre Invoice Financing which are very suitable to the situation and circumstances of SMEs that need to adapt in the phase transition and are starting to revive its business activities. We hope to be able to support more of Indonesian SMEs to be empowered and continue to grow.
Moreover, as Investree has successfully raised US$23.5 million in the first tranche of our Series C funding round on April 2020, we will do further development of Investree services to support small and medium sized enterprises (SMEs) in Indonesia and to ramp-up the growth of Investree’s activities in the Philippines and Thailand as part of our regional expansion strategy. In the future, we hope to be able to support not only SMEs in Indonesia but also in Southeast Asia.
What would you do differently if you could start Investree all over again?
If I can restart Investree, I will still do it the same way and with the same people.
How do you balance passion/interest and business?
As a sport enthusiast, I find my interest in triathlon and marathon actually could boost my energy to work and innovate better as it trains endurance, speed, focus, as well as reduces stress.
How do you differentiate Investree from the other P2P players?
What differentiate Investree to other fintech players are the technology utilization and the target segment. We are supporting SMEs by focusing on supply chain financing scheme. That affects their business cash flow positively – enables them to even grow faster. We digitalize business financing while tailoring our loan products according with SMEs’ needs and unique business models. In addition, we also utilize big data, implement it in our modern credit scoring technology. It results on faster and more accessible financing for borrowers as well as more comfortable lending experience for lenders.
How do you see P2P evolving in Indonesia in the future?
I see that the industry will continue evolving as the digitalization of MSMEs is accelerating and people are ready to go digital. Moreover, according to data from SME Finance Forum, there is still a funding/credit gap for Micro, Small and Medium Enterprises (MSMEs) worth IDR 2,439 trillion. This is an enormous amount of money and reflects the real need in the community to get a business loan.
Moreover, the millennial generation is an influential generation in the world, including in Indonesia. This generation is a generation of digital literacy and very open to new lifestyles. This digital behavior is very relevant to fintech lending companies that prioritize the use of technology and the internet as their core services.
Tell us a fun fact about your industry that outsiders wouldn't know.
On July 2020, Lembaga Demografi (Demographic Institute) of the Faculty of Economics and Business, Universitas Indonesia (LD FEB UI) has published the results of their researched entitled "Socio Economic Impacts of Fintech Lending (Case Study Investree 2017-2019)". The research that was conducted in December 2019 is the first case study research that measures socioeconomic impacts of fintech lending in Indonesia. This research took samples from borrowers within Investree ecosystem. The key takeaways of this research report include:
- 56% entrepreneurs experienced increases in their revenues after borrowing from Investree
- 44% entrepreneurs experienced increases in employment after utilizing Investree's access to capital
- 54% entrepreneurs experienced increases in their revenues after get financing with sharia scheme from Investree
- 59% entrepreneurs gained more credibility for financing from bank after borrowing more than one time from Investree
The full report can be accessed on Investree’s and LD FEB UI’s website.
Is there anything in particular that you would like to highlight about Investree?
Some points I’d like to highlight about Investree:
- At present, Investree is the only fintech lending company that has obtained Business License for Information Technology-Based Lending and Borrowing Services from the Financial Services Authority in Indonesia for two types of businesses, namely conventional and sharia.
- This year, we were quite fortunate by having secured our Series C funding right before the height of the pandemic. The company has raised US$23,5 million which will be used for the further development of Investree services to support SMEs in Indonesia and to ramp-up the growth of Investree’s in regional market.
- At the beginning of 2021, Investree Philippines officially received approval from the Philippines' Securities and Exchange Commission (SEC) to operate the first licensed crowdfunding platform for SME financing in the country.
- Together with Bank Mandiri, Investree synergizes to optimize the distribution of National Economic Recovery (PEN) funds to support joint efforts for Indonesian economy recovery.
- In addition to providing lending marketplace, Investree also acts as a distribution partner for Government Retail Bonds (SBN) that are issued by Indonesian Government. We also partner with another fintech player to provide a special feature, mutual funds or Reksa Dana for Lender, made for our lenders.
Businesses are likely facing changes in the future, and they are still unknown. Here, Investree is ready to support them to face uncertainty through our productive loan products during this disruptive period.
What about Magani resonated/appealed to you?
Magani is a very interesting brand because Magani carries out Indonesian culture, Batik and develops the product in accordance with what the market needs, which is sweat resistant Batik that is very helpful for many people. As Indonesian company, I see both Investree and Magani create innovative solution for people. One creates innovative financing solution for SMEs and attractive lending opportunities for lenders, while the other one creates a creative solution for people who finds wearing Batik uncomfortable. In my opinion, both of us also innovate according to our target’s need. That’s how Magani resonates to me.
