August 12, 2022

Flight Plan #17 - Our Investment in Kini

Pioneering access to financial products for Indonesia's 'unbanked', here are the details on our follow-on investment into Kini.

Written by

Lachlan Duffy

We are super excited to announce our US$500k follow-on investment into Kini's US$4.3m Seed round.

Kini (meaning now in Bahasa) is building an Early Wage Access (EWA) platform for Indonesia to help bridge the financial access and liquidity gap faced by more than 180m people in this region. Many Indonesians live paycheck to paycheck. According to the Bank of Indonesia, 75% of Indonesians could not cover unexpected expenses of up to US$36 (Rp 500,000). 66% of Indonesians are underbanked and are thus susceptible to 400%+ APR (annual interest rates) with existing payday lending offerings.

Lead by top-tier Indonesian VC Firm, East Ventures, the round proved to be incredibly competitive. We continue to support the great work that founders Jordan Fain and Sidnei Budiman have achieved since our initial investment last year.

Since we lead Kini’s Pre-Seed round in 2021, we have been impressed by the rapid execution of their product roadmap and initial traction. As such, we are doubling down in their Seed Round.

Early Wage Access (EWA) means payroll-on-demand. On a typical monthly payroll cycle, by the end of each month, some workers may experience unplanned expenses or be 'short' in the lead-up to payday.

They are currently faced with limited options of finance which include predatory lending and payday loans, or informal means such as asking friends and family for money, or their employer for an 'advance'. These are all sub-par solutions for the millions starved of easy access to reasonably-priced credit. The EWA model is a well-known and exciting model that has scaled well in other comparable markets. We are backing Jordan and Sidnei to become the market leaders in Indonesia.

Co-founder, Jordan Fain (CEO & co-founder) has extensive start-up and scale-up experience at Uber AND more recently, a global stealth real-estate tech company. Sidnei Budiman (CTO & co-founder) is a serial entrepreneur and has built a fintech-focused development agency in Indonesia. He has built e-money and payments products for large Indonesia financial institutions. Their background combined with strength in sales, commercial and go-to-market, plus deep technical domain experience on product, are proving to be a dynamic duo and executing fast.

Problem

180m people in Indonesia are considered ‘unbanked’ with no access to bank accounts, savings accounts, or other to financial products.

When it comes to credit, their access is almost non-existent. Most of the current ways that this demographic accesses credit is through loansharks and other forms of predatory lending which are unaffordable. Banks consider the ‘unbanked’ as high risk borrowers making credit access even harder.

The lack of access also poses issues for employers, including the fact that they have to set aside cash on their balance sheet to loan out to employees. Financial stress can also result in reduced employee productivity while increasing absenteeism and turnover. These were the challenges that Sidnei experienced firsthand at Blipcom, which helped spark the idea behind Kini.

The EWA Model

Early Wage Access and Payroll Liquidity is a proven model across Western markets with exceptionally fast-growing companies across the US & UK funded by some of the world's leading investors. As outlined above, we're seeing new players starting to be funded in emerging markets. See below some of the players that have emerged:

From what we're observing, payroll liquidity is a universal problem for the hundreds of millions of workers around the world who live paycheck to paycheck. We've formed this opinion based not only on the mass adoption that these players are seeing but also because some of the world's leading investors have backed comparable international opportunities to the tune of hundreds of millions of dollars. As outlined above, there is a trend where the EWA model is rolling out aggressively to emerging markets and finding product-market fit. We believe EWA will provide a welcome solution to underserved emerging markets and that there is strong potential for technology-savvy products and fintechs to capture these markets.

Vision: Product / Platform & Solution:

Kini has an expansive vision to bridge the HR/Fintech gap between employers and employees, allowing employers to seamlessly pay their employees and manage their pay on demand.

There are tens of millions of people in South East Asia who cannot get access to cheap, easy, and non-punitive credit and Kini has set out to fix this.

Kini has built a two-way product system for both employers and employees, enabling them to better manage the HR Finance operations as well as for employees to access their money sooner and more easily, as well as to save money on common everyday bill payment options.

Kini has built out an initial product suite for their customers’ workers which enables them to then ‘cashout’ their earned wages before payday for a small fee, which stops employees from having to use payday lenders or rely on friends and family for cash when they are running short.

Kini also allows employees to pay their electricity and utility bills through their application, in addition to receiving discounts on purchasing Airtime (phone credit) and purchasing items and different merchants through a QR-code purchasing integration.

Why we Invested:

  • Top-tier talent joining the team: Jordan and Sid are proving that they have the ability to attract top-tier talent to their team. Success in fintech in Indonesia revolves around deep integrations and partnerships with legacy platforms and systems, and Kini has onboarded a deep bench of engineering talent who will enable them to swiftly open up product opportunities and partnerships. We believe they will have an edge on their competition and expect this to flow onto the calibre of future engineering hires.
  • Region-leading VCs joining the round:  East Ventures are a top-tier multi-stage Indonesian fund, which is a very strong signal about the future potential of Kini and the strength of its founding team. East Ventures have invested in Indonesian unicorn giants like Tokopedia (Alibaba of Indonesia - now merged with GoJEK), Traveloka, and large infrastructure companies like Xendit and Bukuwarung.
  • Strong Early Traction: Kini have onboarded thousands on workers onto their platform, ramping GTV as well as proving out product-market-sales fit, with the platform being used by more than 50 corporations, including industry majors Ismaya Group, Asaba, Doku, and several public companies.

With strong traction and an innovative product roadmap on the horizon, we are excited to be back again for our second investment in Kini alongside lead investors East Ventures.

You can read more about their latest round in TechinAsia here.

Safe Travels,

Lachlan Duffy

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