Danamart Bridges Funding for ESG-Based SMEs

In recent years, crowdfunding securities (SCF) has emerged as an option to raise capital and democratize investment opportunities. This innovative approach allows startups and SMEs to access funding from a diverse pool of investors.

One platform that offers SCF services is Danamart. This platform focuses on SME financing through two main products, namely Invoice Financing and Purchase Order (PO) Financing. Now, Danamart has received an official license as an SCF service provider from the Financial Services Authority (OJK) in early 2023.

To the media, Patrick Gunadi, Founder & CEO of Danamart and Secretary General of the Indonesian Crowdfunding Services Association (ALUDI), explained the focus on financing for the SME and startup segments as well as fundraising plans.

ESG-rated businesses

Securities crowdfunding (SCF) refers to the practice of raising funds from a number of individuals, usually through an online platform, in exchange for securities in a company. Unlike through crowdfunding Traditionally involving donations or pre-purchasing products, SCFs allow investors to purchase shares or other forms of equity in a business.

Danamart claims to be a financing pioneer that applies ESG or sustainability principles to the environment and society. ESG principles are also one of the benchmarks for assessing risk management for SMEs before issuing securities at Danamart.

"To encourage sustainability, we don't fund companies that don't have ESG value. Companies that already have ESG value incentives will be given," said Patrick.

Difficulty in obtaining capital is the main challenge for SMEs to move up in class to develop their business. Therefore, Danamart has two options for investors and companies seeking funding (issue), namely Equity Financing (specifically for startups) and Debt Financing (for MSMEs).

The process of raising capital and financing is carried out online with reduced requirements regarding collateral, asset value and access to capital recorded at the Indonesian Central Securities Depository (KSEI). Danamart only uses the platform fee 6% to issue with a funding ceiling of up to IDR 10 billion.

"When you want to sell shares or debt securities, the company [may] not be able to fulfill a number of requirements in the capital market, especially those related to the IPO nominal. Through crowdfunding securities"The nominal offer can be more affordable for SMEs," said Patrick.

Startups or SMEs who want to seek funding can access directly to web app Danamart. The company claims the registration process can be done quickly in around 8 minutes.

Fundraising plan

Judging from the data they have, currently the young generation ranging from 18-25 years old shows quite a lot of interest in investing in businesses that have social and environmental value. "From the investor's perspective, this could be a new asset. Previously, startups that wanted to raise funds had to go through angel investors and other related parties. "Now through Danamart, everyone can become an investor for startups and SMEs in Indonesia," said Patrick.

Danamart is recorded as having received initial funding, also supported by a number of investors, including Alexander Rusli as shareholder and advisor, as well as venture capitalist Prasetia Dwidharma. According to the company, this year Danamart plans to raise pre-series A funding to support expansion plans to two cities.

To date, Danamart has helped SMEs with business capital through debt-based securities offering facilities. It is possible for issuers of equity or share-based securities to receive additional capital on the Danamart platform. Danamart claims to consistently support SMEs through safe and inclusive SCF services.

Danamart also provides training in the form of: Danamart Academy for free for SMEs to learn business knowledge from experts online. Information is also provided to create a professional company portfolio for business actors who plan to raise funds.