Indonesian fintech startup BukuWarung gets new funding to add financial services for small merchants

A month after completing Y Combinator’s accelerator program, BukuWarung, an financial tech startup that serves small businesses in Indonesia, announced it has raised new funding from a roster of high-profile investors, including partners of DST Global, Soma Capital and 20VC.

The amount of the funding was undisclosed, but a source told TechCrunch that it was between $10 million to $15 million. The new capital will be used to hire for BukuWarung’s technology team. TechCrunch first profiled BukuWarung in July.

Angel investors in the round include several high-profile founders and executives: finance technology platform Plaid’s co-founder William Hockey; Tinder co-founder Justin Mateen; Superhuman founder Rahul Vohra; Adobe chief product officer Scott Belsky; Clearbit chairman and startup advisor Josh Buckley; former Uber chief product officer Manik Gupta; Spotify’s former head of new markets in Asia Sriram Krishnan; 20VC founder Harry Stebbings; Nancy Xiao, an investor with Bond Capital; and Fast co-founder Allison Barr Allen. Angel investors from WhatsApp, Square and Airbnb also participated.

Launched last year by co-founders Chinmay Chauhan and Abhinay Peddisetty, BukuWarung is targeted at the 60 million “micromerchants” in Indonesia, including neighborhood store (or warung) owners. The app was originally created as a replacement for pen and apper ledgers, but plans to introduce financial services including credit, savings and insurance. In August, the company integrated digital payments into its platform, enabling merchants to take customer payments from bank accounts and digital wallets like OVO and DANA. BukuWarung’s goal is to fill the same role for Indonesian merchants that KhataBook and OKCredit do in India.

 

One of the reasons BukuWarung launched digital payments was in response to customer demand for contactless transactions and instant payouts during the COVID-19 pandemic. Since introducing the feature, the company said it has already processed several million U.S. dollars in total payment volume (TPV) on an annualized basis. The company says it now serves about 1.2 million merchants across 750 locations in Indonesia, focusing on tier 2 and tier 3 cities.

Digital payments is also the first step into building out BukuWarung’s financial services, which will help differentiate it from other bookkeeping. The payments features is currently free and BukuWarung is experimenting with different monetization models, including making a small margin on fees.

“The reason why we launched payments is also very strategic, because there is a lot of pull in the market. We have already seen several millions annualized TPV in less than a month, because the payments we offer are cost-efficient as well and cheaper than to get from a bank,” Chauhan told TechCrunch.

“If you look at the Indian players, like Khatabook, they have also launched digital payments. The reason for that is because it’s a very essential step for building a business and monetization,” he added. “If you don’t have payments, you can’t do anything like that.”

Chauhan added that building a financial services platform is the difference between providing a utility app that replaces bookkeeping ledgers, and becoming an essential service for merchants that will eventually include lending for working capital, savings and insurance products. The bookkeeping features on BukuWarung will feed into the financial services aspect by providing data to score creditworthiness, and help small merchants, who often have difficulty securing working capital from traditional banks, get access to lines of credit.

Atlanta gets a billion dollar startup business as Greenlight’s family-focused fintech nabs $215 million

Greenlight Financial Technology, the fintech company that pitches parents on kid-friendly bank accounts, has raised $215 million in a new round of funding.

The round gives the Atlanta-based startup a $1.2 billion valuation thanks to backing from Canapi Ventures, TTV  Capital, BOND, DST Global, Goodwater Capital and Fin VC.

It’s a huge win for the Canadian-based venture investor Relay Ventures .

Since it launched its debit cards for kids in 2017, the company has managed to set up accounts for more than 2 million parents and children, who have saved more than $50 million through the app.

“Greenlight’s rapid growth is a testament to the value they bring to millions of parents and kids every day. My wife and I trust Greenlight to give us the modern tools to teach our children how to manage money,” said Gardiner Garrard, Founding Partner at TTV Capital, in a statement. “TTV Capital is thrilled to provide continued investment to help the company empower more parents.”

The company pitches itself as more than just a debit card, with apps that give parents the ability to deposit money in accounts and pay for allowance, manage chores and set flexible controls on how much kids can spend.

It’s a potentially massive business that can lock in a whole generation to a financial services platform, which is likely one reason why a whole slew of companies have launched with a similar thesis. There’s Kard, Step, and Current which are pitching similar businesses in the U.S. and Mozper recently launched from Y Combinator to bring the model to Latin America.

“Greenlight’s smart debit card is transforming the way parents teach their kids about responsible money management and financial literacy,” said Noah Knauf, general partner at BOND. “Having achieved phenomenal growth year-over-year, this is a company on the fast-track to becoming a household name. We look forward to working alongside the Greenlight team to support their continued growth.”

Brazil’s banks try to outflank challengers by investing in a $15 million round for Quanto

Trying to outflank competition from neo banks and other potential challengers, two of Brazil’s largest financial services institutions, Bradesco and Itaú Unibanco, have invested in Quanto, a company developing technology to let retailers and other businesses access financial information and services.

Joining Brazil’s two largest banks are Kaszek Ventures, one of Latin America’s largest venture capital firms, and Coatue, the multi-billion dollar hedge fund. 

Bradesco joined the round through its InovaBra Ventures investment fund while Itaú invested directly and had its participation approved by Brazil’s Central Bank, according to a statement.

“Open banking changes the way we understand and consume financial services, but it’s quite exciting to see the Brazilian market embracing this new moment in such a positive way,” said Richard Taveira, Quanto’s chief executive, in a statement. “Brazil has the potential to lead the use of open banking worldwide, and this round is a testament to that.”

Brazil’s Central Bank is deeply invested in the prospect of opening up banking regulation to allow information and data sharing between payment processors and technology providers, retailers, and other service providers in the financial services value chain.

Quanto, which provides standardized bank data application programming interfaces that allow institutions to slash the time it takes to ccess bank account data.

“Open banking is an important evolution in the financial services market and we believe that Quanto can contribute in an impactful way in creating a more competitive market, focused on the customer experience,” said Rafael Padilha, Director at Bradesco Private Equity and Inovabra Ventures, in a statement.

The Quanto technology could enable financial product distribution through the same API platform as business to business services, the company said. Quanto claims that its services will make it easier for customers to access low-interest credit lines with a single sign-on model and to receive competitive interest rates by sharing banking data with multiple lenders in a single flow.

“Quanto provides the rail for banks and fintechs to compete, and consumers are the ones who win”, said Taveira.

Indonesian insurtech startup PasarPolis gets $54 million Series B from investors including LeapFrog and SBI

PasarPolis, the Indonesian-based startup focused on making insurance policies more accessible in Southeast Asia, announced today it has closed a Series B round totaling $54 million. Investors include LeapFrog Investments and SBI Investment, both firms that focus on financial services; AlphaJWC; Intudo Ventures; and Xiaomi.

Gojek’s venture capital arm, Go-Ventures, which participated in PasarPolis’ Series A two years ago, also returned for the new round.

Founded in 2015 by chief executive officer Cleosent Randing and chief operating officer Michael Saputra, PasarPolis operates in Indonesia, Thailand, and Vietnam. The company says the number of insurance policies it issues monthly has grown 80 times since August 2018, when it closed its Series A, and that it now partners with more than 30 insurance providers.

Randing said the the insurance penetration rate in the ASEAN region is currently just 3.6%, and the startup’s goal is to reach people who have never purchased insurance before through products including inexpensive “micro-policies” that cover broken device screens.

In 2019, the company says PasarPolis issued more than 650 million policies to people buying insurance for the first time, including ride-hailing drivers, delivery couriers, and online merchants. Sales continued to grow during the COVID-19 pandemic because it increased demand for insurance, while also prompting people to make more purchases online (most of PasarPolis’ policies are sold through its mobile apps). In June alone, the company claims it served more than four million new customers, and has now provided policies to more than 35 million customers in total.

Nishant Kumar, PasarPolis’ chief technology officer, told TechCrunch that the new funding will be used on its AI-based claim automation platform, which allows the company to customize insurance products for different industries.

It also plans to invest in PasarPolis Mitra, an onboarding platform for agents. Soft-launched in May 2020, PasarPolis allows people to apply to become Mitra, or insurance agents, for the company. PasarPolis currently has a network of about 10,000 agents in Indonesia, who help customers chose policies and process claims.

“We plan to invest in infrastructure to help our Mitra be able to engage with our customers more,” said Kumar. “We believe it’s important for us to implement both online and offline strategies as an insurtech player.”

Kumar added that even though technology plays a “pivotal role” in making insurance products accessible to more people, PasarPolis does not “see digital as just a medium to sell insurance. We think that technology can be used to segment risk in real-time and provide more affordable insurance to the masses.”

Two of PasarPolis’ main competitors in Southeast Asia include Qoala, another Indonesia-based insurtech startup that recently raised funding, and Grab Financial Group, which launched a new portfolio of consumer financial services last month, including expanded insurance offerings.

Randing told TechCrunch that PasarPolis’ competitive advantage is its “ability to offer highly customized and modular insurance products that are integrated with partners’ systems,” including health and accident coverage for Gojek’s drivers and passengers; insurance for small- to medium-sized businesses that cover damaged products and missing items; and policies that protect e-commerce customers.

An example of the kind of customized insurance products PasarPolis can create is a policy for Gojek drivers that covers stolen vehicles and costs less than USD $4 a year.

The company is also a licensed insurance broker, which is why it was able to operate PasarPolis Mitra. “The platform is so unique to Indonesians, that it enables anyone, from professional insurance Mitra, Gojek drivers, stay-at-home moms, and furloughed employees, to earn additional income, especially during the new normal,” said Randing.

Banks aren’t as stupid as enterprise AI and fintech entrepreneurs think

Announcements like Selina Finance’s $53 million raise and another $64.7 million raise the next day for a different banking startup spark enterprise artificial intelligence and fintech evangelists to rejoin the debate over how banks are stupid and need help or competition.

The complaint is banks are seemingly too slow to adopt fintech’s bright ideas. They don’t seem to grasp where the industry is headed. Some technologists, tired of marketing their wares to banks, have instead decided to go ahead and launch their own challenger banks.

But old-school financiers aren’t dumb. Most know the “buy versus build” choice in fintech is a false choice. The right question is almost never whether to buy software or build it internally. Instead, banks have often worked to walk the difficult but smarter path right down the middle — and that’s accelerating.

Two reasons why banks are smarter

That’s not to say banks haven’t made horrendous mistakes. Critics complain about banks spending billions trying to be software companies, creating huge IT businesses with huge redundancies in cost and longevity challenges, and investing into ineffectual innovation and “intrapreneurial” endeavors. But overall, banks know their business way better than the entrepreneurial markets that seek to influence them.

First, banks have something most technologists don’t have enough of: Banks have domain expertise. Technologists tend to discount the exchange value of domain knowledge. And that’s a mistake. So much abstract technology, without critical discussion, deep product management alignment and crisp, clear and business-usefulness, makes too much technology abstract from the material value it seeks to create.

Second, banks are not reluctant to buy because they don’t value enterprise artificial intelligence and other fintech. They’re reluctant because they value it too much. They know enterprise AI gives a competitive edge, so why should they get it from the same platform everyone else is attached to, drawing from the same data lake?

Competitiveness, differentiation, alpha, risk transparency and operational productivity will be defined by how highly productive, high-performance cognitive tools are deployed at scale in the incredibly near future. The combination of NLP, ML, AI and cloud will accelerate competitive ideation in order of magnitude. The question is, how do you own the key elements of competitiveness? It’s a tough question for many enterprises to answer.

If they get it right, banks can obtain the true value of their domain expertise and develop a differentiated edge where they don’t just float along with every other bank on someone’s platform. They can define the future of their industry and keep the value. AI is a force multiplier for business knowledge and creativity. If you don’t know your business well, you’re wasting your money. Same goes for the entrepreneur. If you can’t make your portfolio absolutely business relevant, you end up being a consulting business pretending to be a product innovator.

Who’s afraid of who?

So are banks at best cautious, and at worst afraid? They don’t want to invest in the next big thing only to have it flop. They can’t distinguish what’s real from hype in the fintech space. And that’s understandable. After all, they have spent a fortune on AI. Or have they?

It seems they have spent a fortune on stuff called AI — internal projects with not a snowball’s chance in hell to scale to the volume and concurrency demands of the firm. Or they have become enmeshed in huge consulting projects staggering toward some lofty objective that everyone knows deep down is not possible.

This perceived trepidation may or may not be good for banking, but it certainly has helped foster the new industry of the challenger bank.

Challenger banks are widely accepted to have come around because traditional banks are too stuck in the past to adopt their new ideas. Investors too easily agree. In recent weeks, American challenger banks Chime unveiled a credit card, U.S.-based Point launched and German challenger bank Vivid launched with the help of Solarisbank, a fintech company.

What’s going on behind the curtain

Traditional banks are spending resources on hiring data scientists too — sometimes in numbers that dwarf the challenger bankers. Legacy bankers want to listen to their data scientists on questions and challenges rather than pay more for an external fintech vendor to answer or solve them.

This arguably is the smart play. Traditional bankers are asking themselves why should they pay for fintech services that they can’t 100% own, or how can they buy the right bits, and retain the parts that amount to a competitive edge? They don’t want that competitive edge floating around in a data lake somewhere.

From banks’ perspective, it’s better to “fintech” internally or else there’s no competitive advantage; the business case is always compelling. The problem is a bank is not designed to stimulate creativity in design. JPMC’s COIN project is a rare and fantastically successful project. Though, this is an example of a super alignment between creative fintech and the bank being able to articulate a clear, crisp business problem — a Product Requirements Document for want of a better term. Most internal development is playing games with open source, with the shine of the alchemy wearing off as budgets are looked at hard in respect to return on investment.

A lot of people are going to talk about setting new standards in the coming years as banks onboard these services and buy new companies. Ultimately, fintech firms and banks are going to join together and make the new standard as new options in banking proliferate.

Don’t incur too much technical debt

So, there’s a danger to spending too much time learning how to do it yourself and missing the boat as everyone else moves ahead.

Engineers will tell you that untutored management can fail to steer a consistent course. The result is an accumulation of technical debt as development-level requirements keep zigzagging. Laying too much pressure on your data scientists and engineers can also lead to technical debt piling up faster. A bug or an inefficiency is left in place. New features are built as workarounds.

This is one reason why in-house-built software has a reputation for not scaling. The same problem shows up in consultant-developed software. Old problems in the system hide underneath new ones and the cracks begin to show in the new applications built on top of low-quality code.

So how to fix this? What’s the right model?

It’s a bit of a dull answer, but success comes from humility. It needs an understanding that big problems are solved with creative teams, each understanding what they bring, each being respected as equals and managed in a completely clear articulation on what needs to be solved and what success looks like.

Throw in some Stalinist project management and your probability of success goes up an order of magnitude. So, the successes of the future will see banks having fewer but way more trusted fintech partners that jointly value the intellectual property they are creating. They’ll have to respect that neither can succeed without the other. It’s a tough code to crack. But without it, banks are in trouble, and so are the entrepreneurs that seek to work with them.

Lana has launched in Latin America to be the one-stop shop for gig workers’ financial needs

Lana, a new startup based in Madrid, is looking to be the next big thing in Latin American fintech.

Founded by serial entrepreneur Pablo Muniz, whose last business was backed by one of Spain’s largest financial services institutions, BBVA, Lana is looking to be the all-in-one financial services provider for Latin America’s gig economy workers.

Muniz’s last company, Denizen, was designed to provide expats in foreign and domestic markets with the financial services they would need as they began their new lives in a different country. While the target customer for Lana may not be the same middle to upper-middle-class international traveler that he had previously hoped to serve, the challenges gig economy workers face in Latin America are much the same.

Muniz actually had two revelations from his work at Denizen. The first — he would never try to launch a fintech company in conjunction with a big bank. And the second was that fintechs or neobanks that focus on a very niche segment will be successful — so long as they can find the right niche.

The biggest niche that Muniz saw that was underserved was actually in the gig economy space in Latin America. “I knew several people who worked at gig economy companies and I knew that their businesses were booming and the industry was growing,” he said. “[But] I was concerned about the inequalities.”

Workers in gig economy marketplaces in Latin America often don’t have bank accounts and are paid through the apps on which they list their services in siloed wallets that are exclusive to that particular app. What Lana is hoping to do is become the wallet of wallets for all of the different companies on which laborers list their services. Frequently, drivers will work for Uber or Cabify and deliver food for Rappi. Those workers have wallets for each service.

(Photo by Cris Faga/Pacific Press/LightRocket via Getty Images)

Lana wants to unify all of those disparate wallets into a single account that would operate like a payment account. These accounts can be opened at local merchant shops and, once opened, workers will have access to a debit card that they can use at other locations.

The Lana service also has a bill pay feature that it’s rolling out to users, in the first evolution of the product into a marketplace for financial services that would appeal to gig workers, Muniz said.

“We want to become that account in which they receive funds,” he said. “We are still iterating the value proposition to gig economy companies.”

Working with companies like Cabify, and other, undisclosed companies, Lana has plans to roll out in Mexico, Chile, Peru and, eventually, Colombia and Argentina.

Eventually, Lana hopes to move beyond basic banking services like deposits and payments and into credit services. Already hundreds of customers are using the company’s service through the distribution partnership with Cabify, which ran the initial pilot to determine the viability of the company’s offering.

“The idea of creating Lana was initially tested as an internal project at Cabify,” Muniz wrote in an email. “Soon Cabify and some potential investors saw that Lana could have a greater impact as an independent company, being able to serve gig economy workers from any industry and decided to start over a new entrepreneurial project.”

Through those connections with Cabify, Lana was able to bring in other investors like the Silicon Valley-based investment firm Base 10.

“One of the things we’ve been interested in is in inclusion generally and in fintech specifically,” said Adeyemi Ajao, the firm’s co-founder. “We had gotten very close to investing in a couple of fintech companies in Latin America and that is because the opportunity is huge. There are several million people going from unbanked to banked in the region.”

Along with a few other investors, Base 10 put in $12.5 million to finance Lana as it looks to expand. It’s a market that has few real competitors. Nubank, Latin America’s biggest fintech company, is offering credit services across the continent, but most of their end users already have an established financial history.

“Most of their end users are not unbanked,” said Ajao. “With Lana it is truly gig workers… They can start by being a wallet of wallets and then give customers products that help them finance their cars or their scooters.”

The ultimate idea is to get workers paid faster and provide a window into their financial history that can give them more opportunities at other gig economy companies, said Ajao. “The vision would be that someone can plug in their financial information for services. If they’re working for Rappi and have never been an Uber driver and they want to be an Uber driver, Lana can use their financial history with Rappi to offer a loan on a car,” he said.

That financial history is completely inaccessible to a traditional bank, and those established financial services don’t care about the history built in wallets that they can’t control or track. “Today if you’ve been a gig worker and you go to a bank, that’s worth nothing,” said Ajao.

As it adds Jeremy Milken to the partnership, Watertower Ventures nears $50 million close for its new fund

Derek Norton and Jeremy Milken have known each other for twenty years. Over their longtime personal and professional relationship, the two Los Angeles-based serial entrepreneurs have invested in each other’s companies and investment firms, but never worked together until now.

Milken is taking the plunge into institutional investing, joining Norton as a partner in Watertower Ventures just as the firm prepares to close on a $50 million new fund.

It’s an auspicious time for both Los Angeles-based businessmen, as the LA venture community sees a wave of technology talent relocating from New York and San Francisco in the newly remote work culture created by the COVID-19 epidemic.

“I see two things happen. One people look at the effects of where the market’s going. We’re seeing a lot more companies that are starting up now as a result of a [the pandemic],” said Norton. “New company formation is happening faster than before covid. [And] a lot of venture capitalists that have relocated to LA. They’ve moved down to LA for lifestyle reasons and they’re saying that they don’t need to go back to San Francisco.”

For Milken, the opportunity to get into venture now is a function of the company creation and acceleration of digital adoption that Norton referenced. “The pandemic is accelerating change in the marketplace. Things that might have taken a decade are taking two years now,” Milken said.

These opportunities are creating an opening for Watertower Ventures in markets far beyond the Hollywood hills. The firm, whose original thesis focused on Los Angeles, San Francisco, and New York, is now cutting checks on investments in Texas and Utah, and spending much less time looking for companies in the Bay Area.

Derek Norton, founder, Watertower Ventures: Image Credit: Watertower Ventures

Norton’s latest fund is the only the most recent act in a career that has seen the investor traverse the financial services digital media and the early days of the internet. Norton built Digital Boardwalk, a pioneering internet service provider and the second commercial partner for the trailblazing browser service, Netscape.

Later, at Jeffries Technologies, and the $120 million Entertainment Media Ventures seed and early stage venture capital fund, Norton was intimately involved in bringing tech to market and focusing on early stage investments. With that in mind, the Watertower Ventures group, which launched in 2017 with a small, $5 million fund, is a return to those roots.

The plan, even at the time, was always to raise a larger fund. After founding and running the boutique investment banking business at Watertower Group, Norton knew he had to raise a starter fund to prove the thesis he was working on.

That thesis was to provide a bridge between early stage companies and large technology companies using the network that Norton has built in the Southern California tech and entertainment community over decades.

“We want to take our contacts at Google, Apple, Facebook, Disney, Microsoft, Cisco, Verizon, AT&T, Comcast, and other companies we believe should have a relationship with our portfolio companies, and help the CEOs and management teams more effectively do business development,” Norton told SoCal Tech when he closed his first fund in 2017. “We want to connect them to the right person at those companies to create a commercial relationship. That has a really large impact on early stage companies, who typically don’t have a deep network of relationships, and the ability to get to those type of people. It’s because of our advisory business that we have those relationships, and that’s also why those relationships stay fresh and active, versus people who aren’t in those businesses. It’s almost a full time job to maintain that, and that’s where our value-add is.”

Milken, who has spent his professional career in entrepreneurship, was ready to try investing, and was intimately familiar with Watertower and its portfolio, as an investor in the firm’s first $5 million fund.

“Two years ago we started having those conversations,” said Norton in an interview. “As Jeremy exited his business in September it created the opportunity to go out and raise together as the evolution of our partnership.”

Jeremy Milken, general partner, Watertower Ventures. Image Credit: Watertower Ventures

With the new capital coming in, Norton expects to back some 30 to 35 companies, he said. And, in a testament to the first fund’s performance, which has it in the top decile of venture funds for its vintage, Norton said he was able to raise the capital amidst the economic uncertainty caused by the COVID-19 pandemic. Some 70 percent of the existing portfolio has been marked up, according to Norton.

Even though limited partners, the investors who back venture funds, were reluctant to commit capital to new firms in March and April, fundraising returned with a vengeance in June and July, according to Norton. The paper performance likely was enough to woo additional limited partners and individual investors including TikTok chief executive Kevin Mayer, the former head of streaming at Disney.

Mayer’s presence in the firm’s investor base is a testament to the firm’s pitch to founders. “We view fundraising as a massive distraction for these early stage companies from their business. We try to deliver that network that’s ours to those founders,” said Norton.

“I think we’re in a unique position starting with a fresh fund here,” says Norton. “Uncertainty creates opportunity and people are bringing solutions. We haven’t noticed any slowdown whatsoever, we’re working with twenty five companies per week. Since the inception of the fund, we haven’t seen deal flow at this level.”

Grab launches new consumer financial services, including micro-investments and loans

Grab announced today that its financial unit, which previously focused mainly on services for entrepreneurs and small businesses, is launching a slew of consumer products, including micro-investments, loans, health insurance and a pay-later program.

Based in Singapore, Grab began in 2012 as a ride-hailing company before expanding into on-demand deliveries and other services. In January 2019, it formed a joint venture with ZhongAn Insurance to build a digital insurance marketplace. Since then, its financial services portfolio has grown through a series of partnerships and the acquisition of Bento, which allowed it to offer investment and wealth management services as well.

In February, Grab announced that it had raised up to $856 million to speed up development of its payments and financial services.

Yesterday, Bloomberg reported that Grab raised $200 billion from South Korean private equity firm Stic, bringing its total funding so far to more than $10 billion at a valuation of about $14.3 billion. A Grab spokesperson declined TechCrunch’s request for comment on that raise.

Tapping into a growing market

During a call with reporters today, when asked if Grab has a timeline for reaching profitability, Reuben Lai, senior managing director at Grab Financial Group, said there isn’t one yet, but “research has shown that there is a real demand for the products we are launching today. What we really want to do is focus on consumers and make sure we deliver products they use. We think profitability and sustainability will follow.”

Grab Financial Group’s new products including AutoInvest, a platform that allows consumers to invest small sums of money through Grab’s app; consumer loans; a buy now, pay later program; and expanded insurance offerings, including hospital insurance that will first launch in Indonesia.

While Grab’s new consumer products were in the works before the COVID-19 pandemic, Lai said the crisis has accelerated demand for services like online shopping, digital payments and insurance.

Grab’s consumer products will compete with services like StashAway, an online investment platform based in Singapore, but Lai said Grab Financial Group’s competitive edge is that there are already millions of Grab users in Southeast Asia. This gives it a built-in consumer base and also data to continually refresh the scoring models it uses to determine creditworthiness.

According to a 2019 report by e-Conomy Asia, a research program run by Google and Temasek, about 70% of people in Southeast Asia are “underbanked,” meaning that they lack access to credit cards or long-term savings products. Even in Singapore, one of Asia’s financial centers, about 40% of consumers qualify as underbanked. Bain and e-Conomy estimate that the digital financial services in Southeast Asia can generate $60 billion in revenue by 2025, making it a lucrative market for Grab.

Micro-investing and insurance

Most of the unit’s insurance was previously focused on Grab’s ecosystem, including drivers and merchants on its platform. But new products, like hospital coverage that will launch in Indonesia first to supplement the country’s national healthcare system, are targeted at consumers.

Chandrima Das, who founded Bento in 2016 and is now head of GrabInvest, said Grab’s new micro-investment product will be accessible through Grab’s digital wallet. Returns can be cashed out and spent on Grab services or merchants that accept GrabPay. it is partnered with liquid fixed-income funds managed by Fullerton Fund Management and UOB Asset Management, and allows users to invest as little as SGD $1 at a time, with the potential to earn returns about about 1.8%. It will launch first in Singapore at the beginning of September.

While Grab Financial Group already offers working capital loans to drivers and purchase financing for merchants on its platform, its new consumer credit products include PayLater, which allows users to pay for Grab services at the end of each month, and will first be available in Singapore and Malaysia.

The company is also offering consumer loans with an application process that it Ankur Mehrota, Grab Financial Group’s head of lending, says is so simple “you can do it while sitting on your couch watching Netflix.” Grab will partner with licensed banks and financial institutions to help verify users’ creditworthiness. Once approved, lenders can use Grab’s Buy Now Pay Later services, which allows them to pay in monthly installments or defer payments to the following month.

Mehrota said benefits of the program for merchants include increased gross merchandise value, larger basket sizes and lower cart abandonment rates.

With Robinhood’s UK launch delayed, eToro to bring out UK debit card following acquisition

Investment app eToro is to launch a debit card, following its acquisition of Marq Millions Ltd, the UK based e-money business. Marq Millions will now trade as eToro Money and will be the issuer for eToro’s card. The acquisition was for an undisclosed amount, and the Marq Millions management team stays on.

The card will initially be available to eToro Club members in the UK, then Europe, and will later be extended to non-eToro users. eToro has over 14 million registered users and expects take-up of the card to be strong.

A spokesperson said the card could now provide instant ‘cash-out and cash-in’ functionality to customers, a feature which their user-base has been requesting for a while.

The debit cards won’t launch immediately but will launch first in the UK, followed by other markets. eToro Money has a Principal Membership with VISA and an EMI License permission from the Financial Conduct Authority . This means they are likely to hit the ground running, subject to approval from the FCA.

Commenting on the acquisition, co-founder and CEO of eToro, Yoni Assia, said in a statement: “The launch of a debit card is a natural next step for eToro as we broaden the range of services that we provide to our users… The debit card will provide instant cash-out and cash-in functionality, greatly improving the user experience. We expect to see a strong take-up of the card – initially from our client base.”

eToro allows customers to invest in stocks and commodities, as well as crypto assets like Bitcoin. It claims to have 14 million registered users, all of whom share their investment strategies, similar to a social network. It’s regulated in Europe by the Cyprus Securities and Exchange Commission, by the Financial Conduct Authority in the UK and by the Australian Securities and Investments Commission.

Mahmood Kamran, former COO of Marq Millions and now Managing Director of eToro Money, commented: “We are incredibly excited to become part of the eToro Group. The backing of this leading global fintech, will allow us to issue a debit card which we are confident will become a market leader globally.”

The context to this is that eToro is racing to build up it’s UK user-base ahead of a potential launch by competitor Robinhood . The US-based investment platform , which has made waves in the US, has had to delay its UK launch “indefinitely” after one of its customers killed himself in the US, with the consequent regulatory interest in its activities.

Robinhood previously said it had a waiting list of more than 250,000 people in the UK ahead of a launch planned for this year, showing that there will likely be strong demand for eToro’s services, given it now has a ‘head start’.

eToro has had over 256,000 new registrations in the UK since it launched zero commission stocks in May last year, (over 3 million globally), and says it can afford to offer zero commission as it is multi-asset and global.

TradeDepot adds $10 million to add financial services to its supply chain services for African SMBs

Nigeria’s e-commerce startup TradeDepot, which connects international brands to small businesses in Africa, has raised $10 million in a new round of funding to expand its business into financial services and credit offerings for retailers.

First launched in 2016, TradeDepot has built up a network of 40,000 small businesses in Nigeria and connects them to local distributors of global consumer brands like Nestlé, Unilever, GB Foods and Danone, according to a statement.

The initial business model managed to attract a $3 million investment led by Partech back in 2018. And now, as the firm invests from its largest African fund, Partech returned to co-lead TradeDepot’s latest round with the International Finance Corp., Women Entrepreneurs Finance Initiative and MSA Capital.

TradeDepot’s business depends on making a range of household supplies like milk, soap, and detergent more accessible and affordable for the street-side vendors and small shops that provide goods and services for hundreds of communities in cities like Lagos — where the company is headquartered.

Using the company’s mobile apps on Android or Whatsapp, USSD short code messaging or a toll-free phone number, retailers can place orders and have goods and services delivered through TradeDepot’s fleet of vans and tricycles. They can make payments, order stock, and manage inventory online or through the app as well.

For consumer brands, they have a central hub through which to distribute directly to vendors on the continent, along with data that can help them manage their relationship with these small vendors.

Image Credit: TradeDepot

Africa’s offline retail market is estimated at $1 trillion, and this new investment allows us to capture an even greater segment of that market,” said Onyekachi Izukanne, in a statement. “We will continue to use data to drive efficiencies and provide an easier stock acquisition service for our [over] 40,000 retailers, driving down costs for them by negotiating even better deals with our global manufacturing partners, whilst simultaneously providing a better, faster route to market for our suppliers.”

The company said that a new store comes online to use its services every three minutes and that the company receives an order from retailers every four seconds, on average.

Now, with the new capital, TradeDepot will expand into a suite of financial services and lending products for its retailers. Many of the company’s customers lack a credit rating, but TradeDepot has alternative ways to score credit based on the data it has from its existing trading relationships.

“The founders’ vision to build a digital platform that improves the unit economics of serving the mass market is one we feel privileged to support,” said Wale Ayeni, the head of Africa Venture Capital investment at the IFC.

That support disproportionately goes to helping women entrepreneurs, according to the company. Women account for over 75% of the retailers on the company’s platform. Now, with the help of its new investor We-Fi, TradeDepot will look to offer mentorship opportunities and link these business owners to global markets.

“Women play a pivotal role in driving economies across Africa, but lack of access to capital, limited market linkages, cultural norms and other challenges often prevent them from achieving the success they want,” saiid Hanh Nam Nguyen, who represents the We-Fi initiative with the IFC. “We-Fi financing will incentivize TradeDepot to build stronger women-led small and medium enterprises (SME) retailer and distributor networks, which will support them to become drivers of economic growth in their communities.”