1. Startups

DBS Indonesia Bank Thesis Provides Loan Facilities to Startups

Throughout 2022, DBS has provided productive loan support to Kredivo, eFishery, and Broom through credit schemes and "joint financing"

PT Bank DBS Indonesia is actively strengthening its strategic portfolio with startup players. One of them is through the provision of credit facilities for business capital (including channeling through platforms lending). Throughout 2022, DBS Indonesia has provided loans to startups several times, namely Kredivo, eFishery, and most recently Broom.

Some time ago, DBS Indonesia formalized a credit facility cooperation agreement for financing startups showroom mobile Broom of IDR 100 billion. This strategic agreement was officiated by Co-founder & CEO of Broom Pandu Adi Laras and Executive Director of Institutional Banking Group Kevin Tanuwidjaja.

In October, DBS Indonesia also just gave short term loans to startups aquatech eFisheries of IDR 500 billion. Then in 2021, the company facilitates loans to Kredivo of IDR 2 trillion with the scheme joint financing. This is an increase from the previous loan of IDR 1 trillion and IDR 500 billion for initial funding Kredivo.

DBS Indonesia's steps to start actively collaborating with startups are considered to be in line with the growth of the digital economy in the country. Referring to the e-Conomy SEA 2022 report by Google, Temasek, Bain and Company, the value of Indonesia's digital economy is projected to reach $130 billion in 2025 with a CAGR of 19%.

Kevin said, this is a form of the company's commitment to creating banking solutions that are more impactful and affordable for startups or actors fintech. "We see that the startup industry has very good potential in driving the growth of Indonesia's digital economy," said Kevin, contacted separately by DailySocial.id.

He did not elaborate further on the investment thesis and the metrics used. However, aspects of need, risk profile, and targeted solutions are said to be the main factors in determining the feasibility of a startup. His party also considers the startup's financial track record and funding.

Source: Bank DBS Indonesia, reprocessed by DailySocial.id

"We strive to create a fast, reliable and sustainable ecosystem in providing solutions and experiences according to our principle 'Live More, Bank Less'. Through strategic collaboration with startups and their ecosystem, we are expanding into fintech services. We believe the impact we create can be felt outside of banking," he said.

Furthermore, his party seeks to take a role in the growth of the digital economy by intensifying activities and advocacy focusing on sustainability issues and paying attention to issues environmental, socialand governance (ESG) in line with DBS Group's commitment to achieve net zero emissions by 2050.

Currently, DBS Group has three pillars of sustainability as its rationale, namely Responsible Banking, Responsible Business Practice, and Impact Beyond Banking.

credit facility

In his official statement, Broom Pandu Co-founder & CEO Adi Laras revealed that this credit facility is additional liquidity that will support the company's business development. Meanwhile, these funds will be used to expand coverage showroom used cars in Indonesia.

"This credit facility will accelerate Broom to reach 5.000 showroom and expanding operational areas in other big cities on the island of Java until the end of 2022," said Pandu.

Previously, Broom had obtained similar credit facilities from several other financial institutions in early 2022. In addition, Broom also obtained pre-start funding $3 million (over IDR 43 billion) led by AC Ventures, also participation of Quona Capital and some angel investors, such as the founders of Kopi Kenangan and Lummo.

Meanwhile, Co-founder & CEO of eFishery Gibran Huzaifah assessing a loan facility from a bank is cheaper in the long term than using equity which requires it to release valuable shares to investors. Meanwhile, if the company grows well, the price issued can be more expensive than when it first released [the shares].

For information, this is the first collaboration between DBS Indonesia and eFishery. For DBS Indonesia, this is the first loan portfolio in the aquatech sector, while for eFishery it is the first loan facility from a bank since its establishment in 2013.

More Coverage:

In Indonesia, it seems that not many banks are willing to disburse credit for business capital for startups. A number of factors are still a big consideration why startups are not yet a potential segment for banks.

Banking is an industry with strict regulations and prioritizes management aspects and risk profiles. This is done to reduce or control risks in the products offered, one of which is lending.

Meanwhile, it is considered that startup companies have not been able to fulfill a number of aspects above, considering that the initial startup actors do not yet have them cash flow clear, guaranteed, financial track record, and certainty of income from the products they develop.

Based on reports CB Insights, there are five reasons for startups to fail, including misreading market needs (42%), running out of funds (29%), inappropriate team composition (23%), losing competition (19%), and price or costs (18%) ).

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