Get to know Santara, the "Equity Crowdfunding" Platform for SMEs

Santara becomes a platform player equity crowdfunding (ECF) was the first to receive a license to fully operate from the OJK on September 18, 2019. If you are not familiar with equity crowdfunding, actually it's a combination ofp2p loanswith the nuances of the capital market.

The reason for the difference, the Actioncalendar this takes the shares sold by borrowers and can sell it on the secondary market, like buying shares in a company listed on the IDX. This concept can be said to be new, if you want to look back a little, actually this is the initial business of Acceleran. But this startup pivot ke p2p loans since last year.

On the sidelines of Indonesia Fintech Summit & Expo 2019, DailySocial took the time to meet Santara. Co-Founder and CEO Santra Reza Avesena explained that his business trip actually started with him and a group of friends who like to build a business.

In 2012, his team agreed to look for business potentials that could be accelerated in a short time and could immediately get out of the SME zone, the turnover was around Rp. 400 million per month.

"Our capital is from zero, we have a neighbor's garage rental and there is only one tailor to start a convection business cover for motorbikes and cars. We managed to get out of the SME zone after 18 months. Finally moved to another business."

The second business is bag production, within a year it escapes the SME zone. Continuing back to the third business, print photos online and create photo albums. His business sold well, within a month he was out of the SME zone.

"All of our businesses are without capital, everything is organic, there are no outside investors, and We're positive right away."

This confidence made his team known throughout Yogyakarta and decided to enter the business community. The goal is to help those who want their business to be accelerated. It can be seen that the main issue that is often faced is capital.

It was sparked to establish Santara last year. His focus is on the community he has built who become investors to fund curated SME businesses.

"So the buyers [investors] are mostly the buyers themselves, such as Sop Ayam Pak Min Klaten who have taken advantage of the Santara platform. We help them, not for those who close , but help business expansion. Many have opened a business for years but piece can't expand."

Long process waiting for OJK permission

Santara has only been running for two months, around September 2018, Reza had to deal with OJK regarding his business practices. The site must be closed and logged on to the positive internet until it has a registered certificate. "It's quite painful because we are in the news and are called investment scams."

He even made a complaint to the Investment Task Force, why there was no warning beforehand. The Task Force explained that Santara could not operate until a permit was issued, so the business had to be closed until it was issued.

"We want comply with the rules, but our business model is different from IKD because we are a joint venture for share ownership. However, his position at that time was POJK 37 regarding ECF, which was still in the form of RPOJK so he could not process permits. OJK sees that we can be case study before issuing POJK."

His party had to coordinate with OJK's capital market division and was invited several times to Jakarta for presentations about their business. Finally, OJK inaugurated the ECF rules at the end of 2018.

Santara became the first ECF startup to be registered under this legal umbrella. However, the struggle has not stopped. This is because the Task Force has not yet allowed Santara to operate.

OJK wants to learn from previous mistakes, if p2p loans, startups that have been registered may resume operations, but this is not the case for ECF. "It turns out that the ECF is not enough to register, you must immediately have a permit. The OJK wants to learn from the case p2p loans many are registered but there are problems."

This news has a bad impact for the company's internal. Many employees resign, from the beginning about 50 people, now only 30 people are left. There was no income from January to August 2019, meaning Reza and his team had to rack their brains to find additional income.

They decided to make a business book about scale up. He poured all his experiences before founding Santara in the book and Reza claimed to be selling well. Only by selling this book for Rp. 650 thousand, Santara managed to cover the cost overhead.

"We were not in debt here and there when our business wasfreeze. All that time our internals were really rocking. Process recoveryit's long."

Over time, Santara continues to equip himself with various requirements requested by the OJK in order to receive a permit. Regulators emphasize that they want startups to maintain the system, servers are located in Indonesia, all data is safe, and the system complies with CIA (Confidentiality, Data Integrity, Availability).

The startup also completes the requirements for ISO 27001 and third-party tested system robustness tests. The purpose is to help give OJK a second opinion regarding its commitment to protecting the interests of consumers.

"Since we succeeded in proving the CIA, this is why they gave us permission earlier this month. It's great when the site is finally up unlock."

This trip finally prompted OJK to order Santara to establish a special association for ECF. There, Santara can share his knowledge with fellow players. In total, there are currently nine startups engaged in ECF. Most of them are located in Jakarta.

"Friends agree, so that it is appropriate to help them fulfill the permit, it is still coordinating."

Santara's next business model and plans

Reza emphasized that currently Santara is only focusing on financing small and medium-scale businesses that are looking for funding of between Rp. 500 million to Rp. 5 billion. Process screening methods required before the business can be funded, is quite long, about 1-2 months.

He admits that this process is tiring, especially since many SMEs do not understand good recording management. What's more, there are rarely those who are already incorporated as PT. Therefore, he requires businesses that want to enter must have become PT, because only PT whose shares can be distributed.

"Usually there are many owners who are lazy to manage PT, but we usually always give a precise statement, "There is no successful company that is not a PT, if you don't want it to be big, it's better not to do it."

Santara positioned himself as a companion and taught the four components. How about correct bookkeeping, proper financial management, correct tax payments, then talk about company assets.

Businesses that can enter the platform are also not arbitrary. It has been established for at least five years, if they are engaged in the culinary business, at least the food they sell is timeless, no hits only at certain times.

"After fulfilling the four components, then we will make a prospectus for their business predictions for investors to read. We encourage owners to keep controlling their shares because the goal is to make sustain business and long term."

As for investors, they must be verified first. Each business can be funded by a maximum of 300 investors. The nominal amount depends on the existing project. However, according to the POJK, a maximum of 5% of the annual income can only be funded if it is IDR 500 million. On top of that, a maximum of 10%.

Until now, Santara has disbursed financing for 15 businesses worth more than IDR 5 billion. These businesses are mostly engaged in culinary, property, animal husbandry, and fisheries. The number of investors who joined reached 1.082 people, the majority were in Jakarta.

Every successful business is fully funded, Santara quotes a commission of 10%. He reasoned, to make each financing project a success, they provide a lot of assistance, starting from making financial education, making prospectuses, placing online advertisements, and so on.

If investors want to sell their shares, Reza prepares a secondary market that only opens slots twice a year. However, he hasn't set a time yet. "This spirit is for long-term investment, so slot we only open twice a year. We haven't decided on the month yet."

To speed up the process, his team is currently building an AI-tech system to make it faster in processing screening methods, no longer have to wait up to two months. Next, after obtaining the permit, Reza did not want to be too aggressive in providing loans.

Instead, slowly, at least he targets Santara to be able to fund one or two businesses per month. "We want to maintain trust, so that investors remain safe. In addition, we plan to open a representative office in Jakarta to facilitate business and communication with OJK," he concluded.