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Indonesian fintech startup BukuWarung gets new funding to add financial services for small merchants
A month after completing Y Combinator’s accelerator program, BukuWarung, an financial tech startup that serves small businesses in Indonesia, announced it has raised new funding from a roster of high-profile investors, including partners of DST Global, Soma Capital and 20VC.
The amount of the funding was undisclosed, but a source told TechCrunch that it was between $10 million to $15 million. The new capital will be used to hire for BukuWarung’s technology team. TechCrunch first profiled BukuWarung in July.
Angel investors in the round include several high-profile founders and executives: finance technology platform Plaid’s co-founder William Hockey; Tinder co-founder Justin Mateen; Superhuman founder Rahul Vohra; Adobe chief product officer Scott Belsky; Clearbit chairman and startup advisor Josh Buckley; former Uber chief product officer Manik Gupta; Spotify’s former head of new markets in Asia Sriram Krishnan; 20VC founder Harry Stebbings; Nancy Xiao, an investor with Bond Capital; and Fast co-founder Allison Barr Allen. Angel investors from WhatsApp, Square and Airbnb also participated.
Launched last year by co-founders Chinmay Chauhan and Abhinay Peddisetty, BukuWarung is targeted at the 60 million “micromerchants” in Indonesia, including neighborhood store (or warung) owners. The app was originally created as a replacement for pen and apper ledgers, but plans to introduce financial services including credit, savings and insurance. In August, the company integrated digital payments into its platform, enabling merchants to take customer payments from bank accounts and digital wallets like OVO and DANA. BukuWarung’s goal is to fill the same role for Indonesian merchants that KhataBook and OKCredit do in India.
One of the reasons BukuWarung launched digital payments was in response to customer demand for contactless transactions and instant payouts during the COVID-19 pandemic. Since introducing the feature, the company said it has already processed several million U.S. dollars in total payment volume (TPV) on an annualized basis. The company says it now serves about 1.2 million merchants across 750 locations in Indonesia, focusing on tier 2 and tier 3 cities.
Digital payments is also the first step into building out BukuWarung’s financial services, which will help differentiate it from other bookkeeping. The payments features is currently free and BukuWarung is experimenting with different monetization models, including making a small margin on fees.
“The reason why we launched payments is also very strategic, because there is a lot of pull in the market. We have already seen several millions annualized TPV in less than a month, because the payments we offer are cost-efficient as well and cheaper than to get from a bank,” Chauhan told TechCrunch.
“If you look at the Indian players, like Khatabook, they have also launched digital payments. The reason for that is because it’s a very essential step for building a business and monetization,” he added. “If you don’t have payments, you can’t do anything like that.”
Chauhan added that building a financial services platform is the difference between providing a utility app that replaces bookkeeping ledgers, and becoming an essential service for merchants that will eventually include lending for working capital, savings and insurance products. The bookkeeping features on BukuWarung will feed into the financial services aspect by providing data to score creditworthiness, and help small merchants, who often have difficulty securing working capital from traditional banks, get access to lines of credit.
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Philippines payment processing startup PayMongo lands $12 million Series A led by Stripe
Stripe has led a $12 million Series A round in Manila-based online payment platform PayMongo, the startup announced today.
PayMongo, which offers an online payments API for businesses in the Philippines, was the first Filipino-owned financial tech startup to take part in Y Combinator’s accelerator program. Y Combinator and Global Founders Capital, another previous investor, both returned for the Series A, which also included participation from new backer BedRock Capital.
PayMongo partners with financial institutions, and its products include a payments API that can be integrated into websites and apps, allowing them to accept payments from bank cards and digital wallets like GrabPay and GCash. For social commerce sellers and other people who sell mostly through messaging apps, the startup offers PayMongo Links, which buyers can click on to send money. PayMongo’s platform also includes features like a fraud and risk detection system.
In a statement, Stripe’s APAC business lead Noah Pepper said it invested in PayMongo because “we’ve been impressed with the PayMongo team and the speed at which they’ve made digital payments more accessible to so many businesses across the Philippines.”
The startup launched in June 2019 with $2.7 million in seed funding, which the founders said was one of the largest seed rounds ever raised by a Philippines-based fintech startup. PayMongo has now raised a total of almost $15 million in funding.
Co-founder and chief executive Francis Plaza said PayMongo has processed a total of almost $20 million in payments since launching, and grown at an average of 60% since the start of the year, with a surge after lockdowns began in March.
He added that the company originally planned to start raising its Series A in in the first half of next year, but the growth in demand for its services during COVID-19 prompted it to start the round earlier so it could hire for its product, design and engineering teams and speed up the release of new features. These will include more online payment options; features for invoicing and marketplaces; support for business models like subscriptions; and faster payout cycles.
PayMongo also plans to add more partnerships with financial service providers, improve its fraud and risk detection systems and secure more licenses from the central bank so it can start working on other types of financial products.
The startup is among fintech companies in Southeast Asia that have seen accelerated growth as the COVID-19 pandemic prompted many businesses to digitize more of their operations. Plaza said that overall digital transactions in the Philippines grew 42% between January and April because of the country’s lockdowns.
PayMongo is currently the only payments company in the Philippines with an onboarding process that was developed to be completely online, he added, which makes it attractive to merchants who are accepting online payments for the first time. “We have a more efficient review of compliance requirements for the expeditious approval of applications so that our merchants can use our platform right away and we make sure we have a fast payout to our merchants,” said Plaza.
If the momentum continues even as lockdowns are lifted in different cities, that means the Philippine’s central bank is on track to reach its goal of increasing the volume of e-payment transactions to 20% of total transactions in the country this year. The government began setting policies in 2015 to encourage more online payments, in a bid to bolster economic growth and financial inclusion, since smartphone penetration in the Philippines is high, but many people don’t have a traditional bank account, which often charge high fees.
Though lockdown restrictions in the Philippines have eased, Plaza said PayMongo is still seeing strong traction. “We believe the digital shift by Filipino businesses will continue, largely because both merchants and customers continue to practice safety measures such as staying at home and choosing online shopping despite the more lenient quarantine levels. Online will be the new normal for commerce.”
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Airwallex gets $160 million Series D to launch more cross-border financial products
Airwallex, a Melbourne-based cross-border financial startup that achieved “unicorn” status last year, announced today that it has raised a $160 million Series D. The round included ANZi Ventures, the investment arm of ANZ Bank, and Salesforce Ventures, along with returning investors DST Global, Tencent, Sequoia Capital China, Hillhouse Capital and Horizons Ventures.
Founded in 2015, the company’s financial services include foreign currency accounts that let businesses receive money from around the world. Airwallex’s system uses inter-bank exchanges to trade foreign currencies at a mid-market rate and targets companies that do business in several different countries. The new funding will be used on potential acquisitions; expansion in American, European and Middle Eastern markets; and the launch of new products, including payment acceptance tools.
Airwallex reached a valuation of more than $1 billion last year when it closed its Series C funding, and has now raised a total of $360 million. Since that round, it has launched new operations in Tokyo, Bangalore and Dubai, and introduced products including Airwallex Borderless Cards in partnership with Visa and integration with accounting platform Xero. The company also now offers an API that enables companies to issue their own virtual cards.
In a press statement, Salesforce Ventures’ head of Australia Rob Keith said, “Being able to transact and do business with customers all over the world is a key criteria for companies who are going through a digital transformation. We’re excited to partner with Airwallex at this critical time in its growth, expanding both its footprint globally and its product capabilities.”
Other startups that have also raised funding to help small to medium-sized businesses deal with the challenges of doing trade in different currencies include Brex, another unicorn, and Hong Kong-based Neat.
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Japanese instant-credit provider Paidy raises $143 million from investors including PayPal Ventures
Paidy, a Japanese financial tech startup that provides instant credit to consumers in Japan, announced today that it has raised a total of $143 million in new financing. This includes a $83 million Series C extension from investors including PayPal Ventures and debt financing of $60 million. The funding will be used to advance Paidy’s goals of signing large-scale merchants, offering new financial services and growing its user base to 11 million accounts by the end of 2020.
In addition to PayPal Ventures, investors in the Series C extension also include Soros Capital Management, JS Capital Management and Tybourne Capital Management, along with another undisclosed investor. The debt financing is from Goldman Sachs Japan, Mizuho Bank, Sumitomo Mitsui Banking Corporation and Sumitomo Mitsui Trust Bank. Earlier this month, Paidy and Goldman Sachs Japan established a warehouse facility valued at $52 million. Paidy also established credit facility worth $8 million with the three banks.
This is the largest investment to date in the Japanese financial tech industry, according to data cited by Paidy and brings the total investment the company has raised so far to $163 million. A representative for the startup says it decided to extend its Series C instead of moving onto a D round to preserve the equity ratio for existing investors and issue the same preferred shares as its previous funding rounds.
Launched in 2014, Paidy was created because many Japanese consumers don’t use credit cards for e-commerce purchases, even though the credit card penetration rate there is relatively high. Instead, many prefer to pay cash on delivery or at convenience stores and other pickup locations. While this makes online shopping easier for consumers, it presents several challenges for sellers, because they need to cover the cost of merchandise that hasn’t been paid for yet or deal with uncompleted deliveries.
Paidy’s solution is to make it possible for people to pay for merchandise online without needing to create an account first or use their credit cards. If a seller offers Paidy as a payment method, customers can check out by entering their mobile phone numbers and email addresses, which are then authenticated with code sent through SMS or voice. Paidy covers the cost of the items and bills customers monthly. Paidy uses proprietary machine learning models to score the creditworthiness of users, and says its service can help reduce incomplete transactions (or items that buyers ultimately don’t pick up and pay for), increase conversion rates, average order values and repeat purchases.
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Indian online lending platform Capital Float picks up $25M Series B
Capital Float, an online lending platform for small businesses in India, announced today that it has closed a $25 million Series B. Robinhood Raises $13M To Democratize Stock Market With Zero-Commission Trading App
Half a million people have already signed up for Robinhood’s unlaunched zero-fee stock trading service. Now the startup has raised $13 million to hire talent to make its app totally secure so it can start adding people from its private beta waitlist.
Unlike competitors E*Trade and Scottrade that charge people $7 to $10 per trade, Robinhood doesn’t need to spend money on… Read More
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Stock trading and financial management platform 8 Securities has closed a $9 million Series B to support its expansion in Japan and China. Returning investors include Velocity Capital and Leitmotiv Private Equity.