Deal focus: Digital brokerage Ajaib finds the right fit

Anderson Sumarli was still an MBA student when he met Yinglan Tan, founding managing partner at Insignia Ventures Partners, in 2018 to discuss a digital platform for insurance. Tan liked the idea of a digital platform but suggested Sumarli focus on stockbroking instead.

This conversation and the subsequent business plan pivot, led to Insignia joining a $2.1 million angel round for Ajaib, Sumarli’s Indonesia-based financial technology start-up, in 2019. SoftBank Ventures Asia and Silicon Valley’s Y Combinator also took part.

“At that time, Ajaib had a mutual fund product. They were looking to expand into the stock brokerage market, but they needed to obtain a license first. We were confident that they could make it with some capital support, so we participated in that small funding round,” says Tan.

That was January 2019. A year later, Ajaib secured a license through the acquisition of Primasia Securities, a decades-old brokerage firm. The stockbroking platform launched soon after, and within six months, Ajaib was the fifth-largest local broker by number of trades.

“We experimented in 2019, found a product-market fit in 2020, and hyper-scaled in 2021. We at Ajaib believe in finding product-market fit before growth. Too many fintech start-ups today rush to growth before proving product-market fit. They burn on marketing [from] day one to force traction to raise,” according to Sumarli.

As Ajaib’s gained momentum, investor interest grew. Li Ka-Shing-controlled Horizons Ventures and Alpha JWC Ventures led a $25 million Series A round in January, followed by a $65 million extension from Ribbit Capital. Last week, the company closed a $153 million Series B round at a valuation of $1 billion, becoming Indonesia's seventh unicorn.

DST Global led the Series B, while several existing investors re-upped, including Insignia, Ribbit, Horizons, and SoftBank. Insignia has re-upped in every round to date.

Asked how Ajaib differentiates itself from the competition, Tan points to its smooth onboarding process, extensive customer engagement efforts, and robust online community.

Know-your-customer (KYC) procedures are fully online, enabling new users to open an account in as little as two hours, while transactions can be executed and portfolios tracked via mobile. There is also a strong emphasis on attracting first-time users, especially millennials, whether that is through education-driven communities, lower commission fees than local brokerages, or fractional shares that lower the financial entry barrier.

“There are three key factors in launching a good fintech product: a user-centric product; the development of a strong distribution network and community to lower customer acquisition costs; and close ties with regulators and the ability to securing licenses. Ajaib has demonstrated strong capability in all these areas,” says Tan.

Having a quality product is the overriding element. While some start-ups pursue rapid expansion by subsidizing users or entering partnerships to boost market share, Tan observes, ultimately sustainability comes from having a platform that people want to use.

Ajaib now counts more than one-third of Indonesia's 2.6 million retail stock investors as customers. But this barely scratches the surface in terms of market potential, given the country’s 270 million population. “Indonesia is the largest market in the region, if you win Indonesia, you win Southeast Asia,” says Tan.

Much as Ajaib wants to become the Robinhood Markets of Indonesia, it is also looking beyond its domestic market. Tan identifies Thailand as the near-term target.

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• Topics
• Southeast Asia
• Financials
• Technology
• Early-stage
• Indonesia
• Fintech
• Insignia Venture Partners
• Ribbit Capital
• DST Advisors
• Horizons Ventures
• SoftBank Ventures Asia