On Tuesday, Indonesia saw the launch of its first equity crowdfunding platform Akseleran at Freeware Space, Kemang, South Jakarta.
Having launched its beta version in December, Akseleran targets startups, and small and medium enterprises (SMEs) in their campaigns. The company aims to solve the issue of funding gap which is predicted to reach up to US$50 billion by 2020.
“Eighty per cent of SMEs in Indonesia are having trouble accessing funding … There is also a serious funding gap in the startup scene. The government has the mission to turn Indonesia into the Digital Energy of Asia by 2020, but startups are well-known for cash burns, making them unbankable,” explained Akseleran CEO Ivan Tambunan at the launching event.
Existing solutions consist of angel investors, venture capital firms, and P2P lending platforms, but equity crowdfunding platforms have its own particular edge.
“For startups and SMEs, there are many benefits. The first is that you don’t need to have any debt burden, as there is no interest rate as well … The process is safe and efficient, we do all the process online from due diligence, marketing, to closing the funds in the end … Startups and SMEs only have to focus on making sure that the material is right, approach as many people as possible to invest in their campaigns,” Tambunan said.
“We even help them to make their business plan and financial forecast,” he added.
Akseleran claimed to have received 50 applicants since December. The platform currently houses campaigns from SMEs and startups in various sectors, such as a fashion warehouse, a herbal medicine business, and an online travel agency startup.
There is also a beer house, a swimming pool builder, and even a property development company looking to build a new apartment block.
The Jakarta-based company is founded by brothers Ivan Tambunan, Mikhail Tambunan, and Christopher Gultom. Each of them had left their previous jobs in banking transaction law, financial consultant, and accounting to start Akseleran.
The company itself is currently funded by an undisclosed angel investor.
Akseleran does not charge investors for using their platform, and investors can start investing for as low as IDR100,000 (US$7.50). It monetises by charging startups and SMEs a total of IDR10 million (US$750) for admin and consultancy fee, and for a three per cent share at the companies.
On regulation and other matters
Equity crowdfunding is a new concept to Indonesia, though the country has seen the rise of several P2P lending platforms in the past two years.
In February, the Indonesian Financial Services Authority (OJK) announced that it will allow local fintech companies to lend money directly to their customers, a practice known as on-balance-sheet model. The announcement came only two months after the agency banned the practice for fear that it may trigger direct competition with banks and traditional financial institutions.
In terms of regulation, like many other subsectors in the fintech industry, there are no specific terms that regulate equity crowdfunding platforms.
“We met with OJK back in December, and they are basically very welcoming especially after we explained how we are going to do this, with our clear financial risks and proper legal documentation,” Tambunan said.
However, the startup has to be mindful of requirements such as public offering threshold. One of them being the obligation for companies that are doing public offerings to announce it in the media. As a solution, the potential deals existing in the platform and related information are only accessible to users who have registered in it.
The Indonesian crowdfunding scene
Looking at the recent trends in Indonesian crowdfunding sector, there seems to be a strong tendency for the market to lean towards crowdfunding for social projects.
Crowdfunding platform Kitabisa pivoted from focussing on creative projects to charity projects after noticing that the more successful campaigns are the one with strong social message in it. Meanwhile, Wujudkan’s shutdown as a crowdfunding platform for creative projects also indicates the inclination towards the trend.
Akseleran itself remains positive about the prospect of this market.
“If we are looking at what KitaBisa is doing, they are taking the angle of that touches the heart of potential backers, such as raising funds to cure a sick person or to renovate a mosque. And that’s a good business! But it doesn’t mean that donation is the only thing in Indonesians’ mind,” Tambunan said.
“The fact is that there are 50 million SMEs out of 240 million Indonesian population. [This proves that] many Indonesians are entrepreneurs and they are looking to raise funds … In my opinion, as long as the campaign is okay, and is able to give an excellent return, equity crowdfunding can be a great alternative for investment,” he closed.
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