Patamar Capital raising second fund as it looks into lending, SME enablers in Indonesia

Patamar Capital, the Silicon Valley venture capital firm that focuses on emerging markets in Asia, is in the midst of raising its second fund even as the spread of Covid-19 has slowed fundraising across the region’s tech startup space, says the firm’s Jakarta-based partner Dondi Hananto.

The firm is confident it will raise US$150 million by the end of this year (though progress has been affected by the virus). Its first fund of US$45 million was launched back in 2014 and has been fully deployed. The same is true for its more recent US$3 million “mini-fund” focused on female founders.

Photo credit: Unsplash

Patamar has a portfolio of 20 startups across India, Indonesia, the Philippines, and Vietnam. These companies include fintech startup Mapan (acquired by Gojek in 2017), fintech lender Dana Cita, and Indonesian ecommerce platform Sayurbox.

While the firm remains focused on these four main markets, its investment strategy has somewhat evolved since the first fund, Hananto says. For Indonesia in particular, Patamar is eyeing opportunities in online lending as well as small and medium-sized enterprise (SME) enablers.

Online lending and SME enablers

With the Indonesian payments space dominated by market leaders Ovo and GoPay, Hananto believes the opportunities are in lending, including lending that specializes in specific niches. Such companies are already present in Patamar’s current portfolio – Dana Cita is a fintech lender that focuses on student loans, while Kinara Capital provides loans to micro and small enterprises.

“There are many multifinance companies in Indonesia – big ones as well – that focus solely on car and motorcycle loans,” Hananto says. “I believe the new lending fintech startups can also be quite specific [but also] grow big or [become] scalable enough to be in that specific sector.”

Insurance is of interest to the company as well, including those that protect small-ticket items. One example, Hananto mentioned, is Grab’s recent partnership with Indonesian insurtech firm Qoala, which lets Grab drivers insure their mobile phones – an important productive resource.

Such insurance products can be sold through online channels, Hananto says, while bigger-ticket items – whether it is vehicle or life insurance – would still need to be sold face-to-face through agents. “We learned a lot from Aldi [Haryopratomo] on how the company grew their network of agents,” he says, referring to the co-founder of Mapan.

Credit risk

While Patamar remains bullish on fintech, Hananto says it’s been a challenge to assess the risk for microloans.

In underbanked markets such as Indonesia, verifying borrower data is a challenge due to a lack of credit scoring for many consumers. While, the amount of alternative data to verify creditworthiness – such as mobile phone activities, ecommerce transactions, and the like – have started to proliferate and are being used by many of the country’s online lenders, Hananto says such data still isn’t sufficient to predict a borrower’s behavior.

“The only way to create this is to get people to start borrowing [then] basically your credit model will improve over time,” he says. “We’ll just need to see who can survive until we have a real, working, proper, and robust credit model.”

Sayurbox, an ecommerce platform for fresh produce, is one of the firm’s portfolio companies / Photo credit: Sayurbox