Stories and Lessons from the "Pivot" Process of the Accelerated Business Model

pivot become one of the business strategies that can be done founder when it reaches a "dead end". Especially when the product that is run does not match what the market wants. Or the developed business model is not successful.

After deciding to pivot Even so, there are many things that must be prepared until the product is finally ready to be marketed. This interesting discussion was brought up by #TuesdayStartup the second week edition of July 2019, invited the Co-Founder & CEO of Akseleran Ivan Nikolas Tambunan.

Acceleration is a platform p2p loans linking lenders to borrowers on a loan basis.

Ivan gave a lot of stories behind his decision to choose pivot with the startup. At the same time provide tips on what to pay attention to founder before and after the "turnover" of business.

The beginning pivot Acceleration

Ivan explained that the initial development of Acceleration was based on the existence of funding gap disbursement of credit and the difficulty of capital owners to access the capital market. From there, the solution for providing loans to SMEs is started in the form of equity participation.

Before the launch of Akseleran, of course, the team conducted research for business validation. Can a concept like this work in Indonesia with reference to abroad? At that time, their hypothesis was "yes", there are many startups out there that have proven to be able to run with a similar business model, and have even been operating since 2012, such as Crowdcube and Seedrs.

"The potential with this business scheme is huge. If we can connect 15 million people and want to provide routine funding of Rp. 100 per month. A year there is Rp. 18 trillion. The potential is big, we think this can work," said Ivan.

The team also thought of the easiest way to help SMEs get funding. Finally decided to help them by making nationwide, financial models monthly for three years, and so on. From the side of the financier it is also easier, they can start investing starting from only Rp. 100 thousand.

It turned out that within six months after the launch in March 2017, Akseleran was only able to collect funds of less than Rp2 billion. This shows that Acceleration does not have product market fit and it's time for pivot

"Even from two months running we've been thinking about pivot because it turns out that our product does not provide a solution to the existing problem."

Learn mistakes

Ahead of the decision to choose pivot, actually Ivan realized that when it officially launched Acceleration's growth was slow. First, the Indonesian market tends to be unreceptive to equity-based funding models. They prefer short-term investments with fixed income.

Meanwhile, if equity is based on a distribution with uncertain results, it can be profit or loss. The tenor is long. The point is, Indonesians don't like things that are uncertain.

Second, the problem of scalability. Acceleration Team made nationwide and financial models for SMEs. Which, this decision is not scalable because the time needed to make all of them can be up to 1-2 weeks. This is only for one SME, of course too much time must be wasted.

Lastly, regarding regulation. Need to know, equity crowdfunding At that time, there was no regulation at OJK. In fact, according to Ivan, in making a startup business, you have to think about the regulations, whether they are regulated and there are many rules.

"So when we first entered, it was full of uncertainty because there were no rules. We finally decided to stop for these three reasons."

Of these three mistakes, it made Akseleran to look in the mirror again. The problems that occur in Indonesia are real and need real solutions, which must also be effective.

Pivot doesn't always go fast

After deciding to pivot however, is not always smooth. Ivan and the team had to start from scratch. The official pivot was carried out at the end of May 2017, the new product was released in early October 2017. Learning from mistakes, Akseleran finally plunged into p2p loans.

The products provided start from invoice financing, inventory financing, capex loansand online merchants. These four products can reach all SMEs from various lines, online, offline, B2B or B2C.

From the lender's perspective, the tenor is short, ranging from 3 months to 1 year. Coupons are made in the range of 18%-21%.

"The result after pivot in six months we have distributed Rp36 billion, from [previous product] Rp2 billion in six months. In fact, the team is the same, problemThe solution is the same, but the solutions and results are different."

Of course, this achievement is not obtained by instant means. His team has validated the market many times to ensure it can feedback from the market, especially when it's only been six months of operation. Iterate many times until you get product market fit.

"When all this is done, then scale up business could be easier. We can make it easier to reach out to investors because they always see traction," he concluded.