Indonesian fintech startup banks funding from Insignia Ventures Partners

Indonesian fintech startup Flip has secured an undisclosed amount from Insignia Ventures Partners, says an industry source. This marks the company’s first institutional investment, having raised previous rounds from angel investors.

Both Flip and Insignia Ventures Partners declined to comment on the matter.

The Flip team / Photo credit: Flip

Founded in 2015 by three friends from the computer science program at the University of Indonesia, Flip lets users transfer funds between different banks in Indonesia without paying the customary processing fee. It is similar in concept to the UK startup TransferWise, though Flip only handles transactions between local accounts.

Flip has since launched a premium service called Big Flip that caters to businesses. After some initial regulatory hurdles, it’s now licensed by Indonesia’s central bank.

The company has 650,000 users with transactions in the “hundreds of billions of rupiah” per month, says co-founder and CEO Rafi Putra Arriyan. (For context, 100 billion rupiah is worth roughly US$7 million). He also claims that it has been profitable since late 2017.

Expanding into premium

In Indonesia, fund transfers between accounts in the same bank are free, but if they are in different banks, there’s customarily a processing fee of about 6,500 rupiah (US$0.46) per transaction. To bypass the fees, Arriyan enlisted the help of friends who had an account in the destination bank.

That gave rise to the initial idea behind Flip: why not create accounts in multiple banks and facilitate fund transfers for a larger number of people?

Arriyan and co-founders Ginanjar Ibnu Solikhin and Luqman Sungkar tested a rudimentary version of the product by opening accounts in multiple banks and disseminating a Google Form among their university cohort before making the fund transfers manually. To his surprise, Arriyan recalls that some of the requests on the Google Form came from users they didn’t know.

“They were sending us money to transfer without any real collateral [on our side],” he adds. “That’s where we got the validation, that people were willing to take a risk just to save 6,500 rupiah.”

Once the product got too big for the Google Form, they closed it down, and by late 2015, they had launched a website and raised money from an angel investor. In June 2016, they facilitated 13 billion rupiah (roughly US$920,000) in transfers.

That caught the attention of Bank Indonesia, the country’s central bank, though initially for the wrong reasons – it turned out that Flip didn’t have the necessary licenses, including one for remittances. But as stressful as that was, Arriyan says that the central bank was ultimately supportive of the product.

Photo credit: Flip

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