Key takeaways

• The complementary dynamic of the founders came in handy navigating the offline lending market.
• Understanding the local fintech ecosystem’s relationship with data led them to a nonobvious but innovative data source.
• Moving fast without depending on partnerships built the momentum to draw in more potential partners and customers, opening up possibilities for higher margin revenue streams, like retail.

Entering into traditional markets waving the technology flag bears huge potential of reaching vast underserved customers, but it can be challenging for startups. These markets exact a high cost of customer acquisition given the effort needed to change consumer behavior. The intuitive reaction would be to slow down or turn back.

For AwanTunai’s co-founders Dino Setiawan, Rama Notowidigdo, and Windy Natriavi, neither of those was an option. It would take forming a team around a vision, finding out where data is accessible, and focusing on fast growth.

1. Form a founding team of complementary specialists under a “Holy Grail” vision.

After more than two years as Chief Product Officer at Go-jek, Rama sold his shares and travelled the countryside. There he found farmers borrowing at 20% interest to buy seeds and fertilizer, then selling to the same lenders at harvest. Rama wanted to break this wheel and replace it with more inclusive financing for the self-employed, who comprise 80% of the Indonesian workforce.

Using offline loan cycles, Rama proved lending at bank interest rates to the unbanked SMEs significantly grew their business. Now it was a question of scale. He brought up his idea with his friend Dino, Silicon Valley veteran and finance specialist. Rama’s vision was the holy grail for Indonesian financial inclusion, and despite knowing how difficult it is to start from scratch, Dino was onboard. “It kind of just came together [over lunch]. This [was] an opportunity I couldn’t pass up.”

One of Rama’s former colleagues at Go-jek, Windy, often met with him to catch up. During one such occasion, she brought up the lack of access to financing problem she was following as VP for Growth. Finding out her mentor had a plan to solve that was all Windy needed to hear. She left Go-jek the same way she went in two and a half years ago — following problems to solve and waiting for no one.

And so a product specialist, finance specialist, and growth specialist came together under one mission: the holy grail of Indonesian financial inclusion.

2. Address limitations to key resources through unconventional channels.  

Having a founding team of experts with complementary skills makes it easier to navigate traditional markets, but it’s only the first step. For fintechs, what data is accessible determines what can be done.

Many of their fintech peers went into online consumer loans, with more accessible data and easier adoption. However, their mission was to focus on the larger offline market. Building a distribution network there would open up possibilities beyond loans.

The question is, “How do we get the offline folks online?” It all boils down to data.

Dino Setiawan, co-founder and CEO at AwanTunai

But it’s not enough to know where to go. Knowing limitations down the road is just as important. Tight regulations on Indonesian fintech early on made accessing data more complicated.

Enter supply chain financing. It meant leaving the conventional route of fintechs behind, but it also made a lot of sense to them. Suppliers have merchant transaction data (ie inventory purchases) that is highly predictive for fraud and credit risk.

3. Focus on fast growth to secure partners, not the other way around.

More than access to data, the supply chain entry point made it easier to set up a distribution network into the offline market. But instead of dragging through lengthy negotiations with big principal suppliers, they initially went to work on their own. Not relying on these big partnerships for growth enabled them to move fast.

We love to execute at speed…We wanted to work with [principal] suppliers at first, but instead of waiting for [business development], we started rolling out [the product].

Windy Natriavi, co-founder and COO at AwanTunai

From there the numbers built a compelling case for productive loans, attracting financing and supply chain partners to their side. Merchants could purchase twice as much inventory than before. Repayment on loans went up more than 97% versus status quo 30-50% default rates.

Tapping into a traditional market is laden with challenges, but AwanTunai played their cards well to grow fast and reduce risk.

1. The complementary dynamic of the founders came in handy navigating the market.
2. Understanding the ecosystem’s relationship with data led them to a nonobvious but innovative data source.
3. Moving fast without depending on partnerships built the momentum to draw in more potential partners and customers, opening up possibilities for higher margin revenue streams, like retail.