Indonesia-based digital loans and credit platform Kredivo added to the initial $100m debt facility closed in July 2020 to a new total of $200m from Victory Park Capital (VPC), touting it as the startup’s largest loan facility to date.
For VPC, it is their largest debt commitment to a FinTech firm outside of the US and Europe. Other notable startups that have received debt financing from VPC include Razor Group, factory 14, Konfio and Elevate.
Kredivo will use the funds to extend consumer loans to its Indonesian borrowers to help achieve its goal of serving 10 million customers in Indonesia. In addition to offering personal loans, the startup also offers buy now, pay later (BNPL) solutions to consumers for both online and offline purchases.
Operated by Singapore-based fintech FinAccel, the startup provides financial inclusion in one of the most exciting emerging markets in the world. Kredivo has more than three million customers and offers two main types of lending products: zero-interest 30-day “‘buy now, pay later” financing for e-commerce and offline purchases, and three-, six- and 12-month instalment loans with an interest rate of 2.6% a month, or a maximum annual rate of 53.36%.
The firm aims to solve the country’s biggest pain point which is Indonesia’s very low credit card penetration rate as banks are reluctant to give unsecured loans, especially to younger customers. Like credit cards from banks, Kredivo also reports customers’ loan histories to Indonesia’s credit bureaus, so they can build credit scores.
Kredivo Indonesia CEO Umang Rustagi said, “The large capital pool made available via this facility increase will enable the business to scale further in 2021 and beyond, and get us closer to our goal of serving up to 10 million customers in Indonesia over the next few years.”
VPC partner Gordon Watson said, “We have been impressed with the resilience and growth of the business and look forward to deepening our partnership with Kredivo. The company presents a unique combination of growth, scale, risk management and financial inclusion in one of the most exciting emerging markets in the world.”
BNPL’s popularity continues to climb around the globe. Its use in emerging markets follows its popularity among consumers who don’t have or don’t qualify for credit cards or to help consumers budget responsibly and build credit.
While BNPL services like Klarna, Afterpay or Affirm offer convenience to customers in the US or Europe, in emerging markets it also serves as a tool to build credit, especially in countries that have low credit card penetration.
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