However, peer-to-peer (P2P) lending platforms have distributed Rp 15.7 trillion (US$1.1 billion) in loans in the first seven months of this year, a significant increase from Rp 3.51 trillion over the same period last year.

One of those lenders, Investree, has seen its business grow despite the pandemic and has distributed Rp 1.8 trillion in the first eight months of the year. The company also expanded its business to Thailand and the Philippines in March.

On Sept.10, The Jakarta Post’s Eisya A. Eloksari interviewed Investree CEO Adrian Gunadi to explore the start-up’s funding and expansion plans as well as its partnership strategy.

 

Question: Investree expanded to Thailand and the Philippines this year. Can you share with us your performance in each market?

Answer: Looking at our current data, the Thai market is more promising than the Philippines, because the response from the regulator is more open and supportive. However, we see that both countries have an active digital ecosystem.

We just started in March, so their contribution to our overall business growth is still small, but we are positive that it will increase in 2022. We will forge more partnerships with other digital ecosystems to grow our business there.

Our current three markets represent two-thirds of Southeast Asia’s economy, so we are now focusing on these markets and will continue to do so until next year, but we are open for expansion opportunities.

 

How has the pandemic affected Investree and its loan settlement rate?

Despite the pandemic, our business grew around 27 percent last year compared with 2019. This was due to our collaboration with several companies, which brought in more borrowers.

This year, our business grew at almost 20 percent year-on-year (yoy) as of June, and we project that we are on track to achieve 35 to 40 percent growth until the end of the year.

We have managed to keep our 90-day success loan settlement rate (TKB90) at 98.5 percent on average, maintaining our nonperforming loan (NPL) rate at 1.5 percent.

So, overall, the number of borrowers and lenders has kept going up this year, and one of the key success factors is our collaboration with other actors, such as the government’s e-procurement and e-catalog.

 

What is your strategy for achieving those targets?

We are going to deepen our existing partnerships that can bring us additional borrowers beyond Jakarta and [help us] reach our year-end target. Investree developed its partnership strategy in 2019, so now it is time to reap the benefits, as our partners have brought in 30 percent of our clients, and it will continue to increase.

Rather than expanding directly on our own, we prefer to acquire users through other platforms. Our business is more scalable through partnerships, too.

We want to continue supporting SMEs that cater to the needs of the government or businesses. Our target market has been very niche since the very beginning, because there is ample opportunity here. Supply chain financing is worth almost US$30 million, so this is actually not a small sector.

 

Can you give us some examples of Investree’s partnership strategy?

We have partnered business-to-business (B2B) e-commerce Mbiz, which also has a partnership with the Bali administration for procurement. We also work with e-commerce platform Blibli's school procurement arm SIPLah to give financing access to its school supplier merchants, as well as working with logistics start-up Andalin to finance SME exports.

Investree also collaborates with digital lender Bank Jago, which provides financing of up to Rp 100 billion for us.

For the past two years, we have been an embedded fintech lending service to other digital platforms, and this is a trend that will continue.

 

What are Investree’s future business plans?

We are in the process of raising funds this year that we are going to use to expand our market. Hopefully, we can announce the funding by the end of the year or in January next year, at the very latest.

As a growing company, we are obviously always on the lookout for inorganic opportunities such as mergers or acquisitions that can strengthen our business, but we do not have anything in our pipeline at the moment.

We are going to celebrate our sixth anniversary in October, and we are looking at solutions beyond lending. We see that SMEs also need credit scoring, invoice management and an integration of bookkeeping and financing, so these are some of the solutions we are exploring.

 

What are some challenges for further growth in P2P lending?

The first is to continue innovating internally. As a tech company, we must create new products, features and partnerships, but we have already been operating for six years, and so innovation is a challenge.

The second is keeping up with competitors. Competition is always going to be there, and with the rise of digital banks, if we are not apt to find the right positioning and build an ecosystem, that can be a threat.

The third is keeping up with changing regulations, as [the rules] evolve along with the overall industry development.