VCs invest $12m in Indonesia's UangTeman

K2 Venture Capital led the round, with participation from Draper Associates and existing investor Alpha JWC Ventures. The debt financing was provided by Hong Kong’s STI Financial Group.

UangTeman will use the capital for research and development. The company plans to open R&D centers in Singapore and India to take advantage of the deeper pool of technology expertise available in those countries than in Indonesia. As part of the investment K2 Managing Director Stanley Wang will join UangTeman’s board.

Founded in 2015, UangTeman offers small, short-term loans of up to $350 for less than 30 days. Borrowers are asked to fill out a questionnaire covering family status and employment. So far all of its loans have been approved manually, though the company aims to automate the approval process once it has collected enough data to allow meaningful analysis.

UangTeman claims a default rate of 2% and a late-payment rate of 5%, which it considers acceptable in light of the higher risk levels of its borrowers. To recover delinquent debts the company employs its own team of in-house debt collectors as well as third-party collection agencies. It also assumes first risk on loans to ensure its investors can recover their money even if borrowers default.

This is the first investment in Indonesia by Draper Associates, an early stage VC investor formed by US-based Tim Draper. The firm launched a $190 million seed fund last year aimed at investments in early-stage companies in the US and emerging markets, with a particular focus on India and Indonesia.

Investors have shown increasing interest in Indonesian consumer lending in recent years, with the growth of the country’s middle class expected to lead to increased demand for credit. Recent initiatives include a commitment by Southeast Asian ride-hailing app operator Grab to invest $700 million in Indonesia over the next four years to promote financial inclusion, as well as developing its core business.

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• Topics
• Southeast Asia
• Early-stage
• Financials
• Technology
• Indonesia
• Timothy C. Draper
• Financial Services