“Akulaku”, Indonesia’s consumer installment loan platform, hopes to occupy half of the Indonesian market this year

Akulaku has recently raised a close to US$100 million C round financing

By

“Akulaku”, Indonesia’s consumer installment loan platform, hopes to occupy half of the Indonesian market this year

Established in 2016, Akulaku is an online consumption platform in Indonesia. The company launched its credit card business and later built its own e-commerce platform, which has both its self-run mobile phone brands and third-party suppliers, with more than 3 million SKUs. In addition, Akulaku expanded from 3C products to virtual payment scenarios. It says it has become the largest online consumer financial service provider in Indonesia.

Li Wenbo, founder and CEO, introduced that Akulaku has successfully raised a C round financing recently, after having completed a B round in July last year. The investors of this round include several international investment institutions such as Sequoia Capital Southeast Asia and Finup, investing close to $100 million in total.

In the past six months, Akulaku maintained rapid growth. It was said that the Akulaku App has exceeded 15 million downloads and over 10 million registered users within two years; within 1 month, Akulaku obtained more than 1 million newly added users, and handled more than 1.8 million transactions. The monthly turnover exceeded US$80 million, and the transaction amount grew more than 3 times.

Li Wenbo told 36Kr that, after the previous round of financing, Akulaku mainly focused on deepening cooperation with local e-commerce companies and opening up more consumption scenarios, and it also invested a large amount of manpower in big data and AI related algorithm to strengthen the risk control.

Afterwards, Akulaku plans to explore more online consumption scenarios, such as catering, micro payment at convenience stores, and loans for high-quality small and medium sized businesses. The strategic expansion of the Southeast Asian market will continue. In Indonesia, Akulaku’s goal this year is to nab 50% of Indonesia’s consumer installment loan market.

Southeast Asia: Major players remain unchanged, big companies become more radical

Li Wenbo said that in the past year, the popularity of the Southeast Asian market has receded slightly. Due to the differences in geography and levels of economic development, many players who seeked the fortune overseas quickly collapsed. Only the major players maintained good levels of performance.

“Some mobile phone manufacturers and cash loans companies can maintain a decent level of business for a period of time after launching its business overseas,” said Li Wenbo. “But later on, due to the low unit price of passengers, the poor infrastructure and relatively slow liquidity in Indonesia as compared to China, many companies could not carry on with their current business model.”

Despite this, Indonesia’s growth is still promising. According to the Southeast Asia e-commerce report of Google and Temasek in 2017, Internet users in Southeast Asia are expected to grow from 260 to 480 million by 2020, and the volume of Internet economy in 2025 will reach to $200 billion. In addition to the need for corporate financing to support development of the Southeast Asia market, the local technical talents, a sound digital payment ecosystem, the improvement of the logistics system, and the Internet infrastructure are also paramount.

Therefore, for this piece of fresh land, large corporations can not let it go. From the perspective of the recent capital flow, big companies love to invest in companies whose business model has been relatively mature. Since 2016, Internet companies in Southeast Asia have raised US$12 billion, of that, US$9 billion has been invested in unicorns such as Go-Jek, Grab, Traveloka, and Tokopedia. Funds have gradually gathered to high-quality projects.

In the field of e-commerce and finance, as giants enter the game, competition is becoming more intense than ever. In March of this year, Alibaba invested US$2 billion in Lazada, the largest e-commerce platform in Southeast Asia. JD.com recently announced that it has invested in Vietnam’s e-commerce platform Tiki and became one of its largest shareholders. Previously, Go-Jek further consolidated its position in the digital payment field by acquiring three local fintech companies: Kartuku, an offline payment company, Midtrans, an online payment gateway, and Mapan, a savings and lending network based in local community.

Goal: Maintain advantage in financial services and be a comprehensive financial service provider

From the perspective of Akulaku’s e-commerce business and the international background of investors in previous rounds, Akulaku’s goal is of course not limited to consumer installment loans. In fact, Akulaku’s goal is to maintain its advantage in financial services and become a comprehensive financial service provider.

From 2016 to 2017, the major investments in Southeast Asia were concentrated in Singapore and Indonesia, in which Indonesia received 34% of the total investment. The development of the e-commerce market in Indonesia is still at a relatively early stage. Despite the low penetration rate of the Internet and credit cards, Indonesia’s huge population, rapidly growing middle-income groups, and the fast-growing Internet ecosystem continue to make investors optimistic about the Indonesian market.

“There are many young people in Indonesia. They need more apps and more online shopping services,” said Li Wenbo. Compared to the feeble local credit card system, Akulaku can complete the credit-granting within a few hours. The application process is completely online. Aside from its own service, Akulaku has cooperated with local e-commerce giants such as Shopee, Elevenia, Bukalapak and Blibli .

How to enter the entire Southeast Asian market? Copying the Chinese model may not be that effective. Although the Southeast Asian market is large enough, due to its diversity in politics, economics and religions, it is difficult for companies to occupy the entire market in a short term. Previously, many companies could not further expand their business because they did not deal with localization properly.

Akulaku strategy is to take e-commerce as a traffic portal, maintain its advantage on the financial side, and explore more channels and scenarios. Akulaku stated that its e-commerce platform has grown to be the leading platform in Indonesia and is sufficient to support the traffic entrance. Akulaku has advantages that many other consumer credit platforms do not have: licenses. The company has obtained the Multi Finance license issued by the Indonesian Financial Management Service (OJK), which allows it to carry out loans to businesses in compliance with regulations, giving them access to bank-quality funds. According to Li Wenbo, Akulaku is the only consumer installment platform which obtained this license. In addition, all Akulaku middle management employees are local and can expand operations more smoothly.

Akulaku currently has a team of more than 400 people. Li Wenbo, co-founder and CEO, previously worked for Ping An Group and King & Wood where he engaged in M&A and financial services; Hu Bo, co-founder and CTO was employed in Oracle, CITIC Securities, and Tencent. He was responsible for the development of the Quantitative Trading System of CITIC Securities; the head of Business in Indonesia, Santoso Akhmad, was once a practicing auditor who graduated from Thomas Aquino University majoring in accounting.

Previous rounds:

2017.07 — Received USD 30 million investment led by Qiming Venture Capital, and followed by Legend Capital, Shunwei Capital, and previous shareholders, including IDG, Arbor Ventures, DCM, Arbor Venture Fund, and Wecapital.

2017.02 — Received close to 15 Million US Dollars from Fidelity VC Fund Arbor, Eight Roads, DCM, and Micro Cloud Ventures

2016.02 — Received $5 million Series A round of financing led by DCM, followed by China Growth Capital and IDG

Written by: DENG Yongyi