Financing Solutions to Promote the Growth of Micro, Small & Medium Enterprises (MSMEs)

Small business in Indonesia
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Financing Solutions to Promote the Growth of Micro, Small & Medium Enterprises (MSMEs)
Financing Solutions to Promote the Growth of Micro, Small & Medium Enterprises (MSMEs)
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SectorMost major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Financials
Corporate and Retail Banking
Business Model Description

Invest in B2C and P2P financing companies that form a link between lenders/investors and the borrowers. Lenders may seek to invest in MSMEs by offering affordable business loans to serve their working capital requirements, including invoice financing, supply chain financing, term loans and microloans. Examples of some companies active in this space are:

PT Mitrausaha Indonesia Grup (Modalku) is an SME digital financing platform in Indonesia that provides business financing to Micro, Small and Medium Enterprises (MSMEs) funded by individual and institutional lenders. Founded in 2016, Modalku offers various productive loans such as invoice financing, supply chain financing, term loans and microloans. In 2022, it raised USD 294m in Series C+ equity and debt lines led by SoftBank Vision Fund 2, with participation from VNG, Rapyd Ventures, EDBI, Indies Capital, Ascend Vietnam Ventures and existing shareholders like Sequoia Capital India and BRI Ventures. (17).

PT Lunaria Annua Teknologi (KoinWorks), founded in 2017, operates a peer to peer lending platform which offers loans relating to business, education, and health. It provides 18% interest rate and provision fund. As of 2020, it has raised USD 59.35 mn, including USD 10 mn from Lendable Ltd and USD 20 mn from East Ventures Pte. Ltd, PT Sinar Mas Digital Ventures and others (17).

Amartha (PT Micro Amartha Fintek), founded in 2010, is a peer-to-peer (P2P) lender that enables investors to find investment opportunities in MSMEs. In 2021, its valuation was USD 140 mn (18), as it raised USD 28 mn funding from Women’s World Banking Capital Partners II (WWB), MDI Ventures and other existing investors (Mandiri Capital Indonesia (MCI) and UOB Venture Management). (19)

Expected Impact

Affordable loans to promote growth of MSMEs and fuel domestic economic growth, improvement in unemployment level and financial inclusion.

How is this information gathered?
Updated: 17 Jan, 2023
Indonesia
Indicative ReturnDescribes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
The Neobanking segment is expected to show a revenue growth of 41.0% in 2023. (22)
Investment TimeframeDescribes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Short Term (0–5 years)
Market SizeDescribes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
> USD 1 billion
Average Ticket Size (USD)Describes the USD amount for a typical investment required in the IOA.
> USD 10 million
Direct ImpactDescribes the primary SDG(s) the IOA addresses.
Decent Work and Economic Growth (SDG 8)
Indirect ImpactDescribes the secondary SDG(s) the IOA addresses.
No Poverty (SDG 1) Reduced Inequalities (SDG 10) Gender Equality (SDG 5)

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Sector Sources
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IOA Sources
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