Is Akulaku the next unicorn of Southeast Asia?
For Akulaku, a digital consumer finance platform in Indonesia, COVID-19 was a boon. Thanks to the pandemic, the ‘buy now, pay later’ (BNPL) company’s revenue and userbase witnessed massive growth.
Revenue for H1 2021 jumped 153 per cent to US$274 million from the same period last year, while the userbase rose 111 per cent to 23 million. Total GMV for the 6-month period grew 86 per cent to US$1.9 billion, and Akulaku expects this number to reach US$5.1 billion by the year-end.
Akulaku has is also a heavily-funded company. To date, it has amassed US$218 million over four equity rounds from investors such as Ant Group, Sequoia India, Qiming Venture Partners, and Arbor Ventures. As per a DealStreetAsia report, the fintech venture is currently in talks to raise US$100 million afresh in a pre-IPO round. It could value the company at over US$1 billion, turning it into a unicorn.
In March, Akulaku’s Bank Neo Commerce (BNC) launched its digital banking app, Neo+. At the end of June, Neo+ claims to have acquired over 2.2 million new customer accounts. In addition, the number of downloads grew 2.5 million in the first three months of launch; monthly active users increased to around 2 million from less than 1,000 at the beginning of April.
In this email interview, CEO William Li speaks about Akulaku’s growth amidst the ongoing global crisis, valuation and public listing plans.
In 2019, Akulaku raised US$100M at a US$450M valuation. What is the company’s current valuation? Are you already a unicorn?
At this stage, we cannot comment on our current valuation. We are more focused on operational numbers, ensuring payments are made on time and building a stellar global team.
We have seen strong demand for our financial products since 2019, mainly through COVID-19. So we consider our valuation to have grown substantially in the past few years.
As per a news report, you are in talks for US$250M pre-IPO funding. Can you share the details with us? Also, when do you look to close this round?
We don’t share information on potential capital market deals until we sign them. We are constantly exploring funding opportunities given our explosive growth. We’ll share details once they become available.
How is your IPO plan coming along? How close are you to launch an IPO? Given the SPAC frenzy in the region, do you rethink launching a public listing via the SPAC merger?
We are not currently undertaking an IPO, as we hope to expand both our geographic reach and scope of services before considering that step. It is certainty planned down the line, but we are more focused on operational priorities right now.
We’ll consider both options once we are ready to launch a public listing.
In April last year, Akulaku was suspended from Mintos, a global online marketplace for loans. Can you tell us what led to the situation?
The COVID-19 pandemic came as a shock and brought uncertainty around its economic impact on Southeast Asia. Therefore we delayed repayment and reached a series of restructuring agreements with Mintos.
Given the robust recovery of businesses in Akulaku’s core markets and a solid operating performance in the last several quarters, Akulaku accelerated the repayment schedule in 2021 and has repaid all obligations six months before the scheduled repayments.
In the H1 financial results, the revenue for the period grew 153 per cent to US$600M from the previous year. The user base also rose 111 per cent. What triggered this growth?
This tremendous growth illustrates Akulaku’s resiliency and ingenuity and signals the increased demand for digital banking solutions.
Akulaku brings together the key strengths of fintech from more established markets, traditional financial institutions, and high-growth internet companies to our position as a regional platform with enormous potential markets in multiple countries.
Our high user engagement, full licenses, and extensive risk management capabilities make us the unique solution to the financial needs of people in the region.
How has been the overall BNPL sector in Indonesia growing? How do you compare the pre-covid and post-covid periods?
COVID-19 hit the entire region hard. Alongside many other companies, we had to readjust and evaluate in that initial period of uncertainty.
We are emerging out of the pandemic in a solid position to build for the future. We’re now committed to helping the entire region rebuild stronger in the aftermath of the pandemic.
Because of customers’ uncertain income flows during COVID-19, we found customers increasingly becoming aware of and interested in BNPL offerings, which provided them more financial flexibility in uncertain times. This acted as a natural marketing tool for us. The more customers became aware, the more demand increased.
The BNPL sector market size and penetration in Asia will be US$134 billion in 2023, which is only 4 per cent of the total e-commerce sales; it has excellent potential vs 35 per cent of e-commerce sales in Europe. Post-COVID-10, more people are shopping online and adopting BNPL services naturally.
Indonesia has a massive unbanked and underbanked population. How do you tap into this segment with your products?
Akulaku exists to help meet the daily financial needs of underserved customers in emerging markets through consumer financing, digital investment, digital banking, and insurance brokerage services. We are a pioneer in this industry, which means we educate our customers and build the industry as we grow.
Banks and financial institutions tend to focus on serving middle to upper-class individuals, leaving a large market segment underserved. We serve the large, fast-growing, underpenetrated Southeast Asia market. We believe that our success can be enhanced by educating first-time consumers on financial literacy topics such as banking, wealth management, and insurance, making them informed and knowledgeable customers.
Can you talk about your digital banking app?
Our technology ecosystem is laying the foundation to leapfrog previous generations’ traditional brick-and-mortar banking services straight to digital finance, which will fuel the region’s economic recovery. The momentous results from Neo+ in its first quarter is just the next step as we seek to make financial services accessible to all people in Southeast Asia.
Combining Akulaku’s innovative technology and risk underwriting capabilities with Bank Neo Commerce’s solid financial and regulatory foundation has positioned the company to lead the digital banking market in Indonesia and the region.
As the transition from cash currency to digital banking accelerates globally, Akulaku remains focused on providing inclusive financial services that are accessible and beneficial to everyone. This commitment is made manifest to Neo+ customers with easy access to the app and a customer experience that is continuously improved by artificial intelligence and machine learning.
It is the #1 daily most downloaded digital bank app in Indonesia and bagged 5.2 million total customers within four months of operation.
Given the massive growth in the fintech sector in Indonesia in recent years, do you plan to acquire new companies?
We are a fully licensed fintech company in Southeast Asian markets in banking, digital credit, and insurance. Our most active M&As were back in 2018 and 2019 when Akulaku was the first fintech company to acquire traditional banks and insurance companies.
As we build out additional financial products and services, we look at niche companies to invest in or acquire. We also have plans to expand into different countries and regions with our cutting edge financial technologies, which may result in us looking at local acquisition targets.
There are over 60M MSMEs in Indonesia. How do you plan to leverage this massive market? Do you have plans to foray into this fast-growing sector with new products and services?
Akulaku, our virtual credit card and e-commerce platform, combines direct sales and marketplace sales models, which plays a strategic role in providing use cases for credit consumption and offers short term loans and cash instalments.
BNC will also play a significant role in giving MSMEs access to banking services such as online accounts, digital payments, pay role services, cash management, etc.
Image Credit: Akulaku
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