AwanTunai Books Funding of IDR 427,6 Billion Led by Norfund, MIUP, and FinnFund

Startups AwanTunai received equity funding worth $27,5 million or equivalent to IDR 427,6 billion. Norfund, MIUP (MUFG's investment arm), and FinnFund led the latest round. Previously they planned to close this series B round at $25 million, but the value was increased due to excess demand, said AwanTunai Co-Founder & CEO Dino Setiawan.

This is also the third investment norfund, a managed fund from Norway for investment in developing countries. Previously they entered into funding debt Modalku in 2023 and Amartha in 2021. Especially for AwanTunai, they entered into equity funding, instead of debt.

A Norfund representative said, "We are very excited to partner with AwanTunai making it our first equity investment in fintech Southeast Asia. We were impressed with the way AwanTunai leveraged fintech to reach and finance the underserved or unbanked segments of the MSME sector in Indonesia with a unique ERP solution that captures proprietary data across multiple layers of the traditional FMCG supply chain and applies their patented risk management solution to achieve excellent credit performance."

Previously AwanTunai had collected series A funding in three rounds, includes a $2018 million first round in 4,3 led by Insignia Venture Partners and AMTD Group. Then continued with the second round in 2021 worth $11,2 million with the involvement of Atlas Pacific, BRI Ventures, OCBC NISP. Then the series A3 round in 2022 worth $8,5 million involving International Finance Corporation, Global Brain, and a number of investors.

"FinnFund (through OP FinnFund Global Impact Fund I) is very excited to support AwanTunai's growth in Indonesia, where the FMCG sector has huge working capital problems that cannot be solved by traditional financial institutions. Through this investment, we are on a mission to increase digital inclusion and finance to MSMEs as well as encouraging gender equality because small retailers, which are dominated by women, are underserved," said a representative of FinnFund, a sovereign funds and managed funds from Finland's largest bank.

Received high interest from global investors

With a unique value proposition as financing supply chain for MSMEs, AwanTunai claims to have a solid business model. Dino said that the company has achieved positive EBITDA and is targeted to become profitable (after tax) by the end of this year.

"We only need to increase the volume to around IDR 3 trillion per month to achieve initial economies of scale. In the world of lending, the loan amount is actually quite small, which reflects how efficient our business model is compared to other alternatives on the market," said Dino.

He also revealed that there is still significant excess demand from large PE and global investors, so it is possible that this series B funding round will continue. It was even stated that there would be funding debt which was immediately recorded separately to meet the still large loan needs.

President & CEO of MUFG Innovation Partners (MIUP) Nobutake Suzuki said, "We are impressed with AwanTunai's commitment to empowering Indonesian MSMEs in the FMCG sector by digitizing their operations and giving them access to financial services. In addition to gaining visibility into their clients' operations, AwanTunai leverages data science to analyze unstructured transaction data to manage loan risk. We hope AwanTunai can strengthen its collaborative relationship with MUFG's partner bank, Bank Danamon, to provide better financial access to the underserved SME segment in Indonesia."

AwanTunai value proposition

AwanTunai's two main products are AwanTempo stall stock financing services and Supplier Financing wholesale financing. Through technological innovation embodied in an integrated ERP, AwanTunai has created a system that allows MSMEs and FMCG suppliers to gain smoother financial access. The ERP platform is also an important data source to help companies carry out more comprehensive risk analysis.

In fact, data has so far been the main challenge for lending to MSMEs. Poor data has implications for poor credit ratings, sometimes making companies or traditional institutions are also facing serious problems regarding refunds. Meanwhile, the MSME segment that has not been served by banking credit facilities is still very large in Indonesia, of more than 60 million MSMEs, only around 27% have had access to credit facilities.

The risk management system (including credit scoring) is an important foundation that has been carefully developed from the start by AwanTunai. It is considered that their great attention to this aspect makes them superior in providing funding distribution to MSMEs.

"AwanTunai is fortunate to have patient investors, giving us the foundation to first develop a competitive advantage in risk management in the difficult unsecured MSME space, before starting to increase volume. It is this strong foundation that allows us to continue to grow healthily in a difficult operational environment ," said Dino.

From the start, AwanTunai has focused on the general trading sector which supplies people's daily needs. This market is considered very large, so they chose to focus on these two main products, rather than increasing products or expanding into different segments.

"This funding will be used to build our equity base to support the expansion of capital loan facilities to cover more than $2 billion in annual inventory purchase financing by the end of 2024, as well as continuing the development of our risk management technology," concluded Dino.