The VC-fueled race to become Indonesia’s dominant digital bookkeeper

Small businesses form the bulk of Indonesia’s economic activity, but they lack support.

Around 74% of them still do not have access to financing, resulting in a US$68 billion lending gap in 2019. While peer-to-peer lenders are chipping in to address this, they’ve managed to reduce the deficit by only about 10%.

A big reason for the slow progress is the lack of valid data about these businesses’ processes and cash flow. They largely still rely on pen-and-paper bookkeeping to track transactions and the informal loans that they disburse to customers.

Bookkeeping app / Photo credit: Credibook

While ecommerce is helping to address this, most transactions, even in advanced economies, still happen over the counter.

In India, which faces the same problem as Indonesia, startups like Khatabook and OkCredit have been trying to fill the gap for the past two years.

Their solution is to come up with apps where small businesses can record transactions and remind their customers to pay overdue loans. At the same time, users can build a proper ledger that can be shown to banks and financial institutions whenever they apply for loans.

The apps are free and, as such, have attracted millions of users and plenty of VC funding.

In Indonesia, similar startups such as BukuWarung, BukuKas, and Credibook have emerged. Like their peers in India, they have quickly acquired millions of users by offering their services for free and with the help of huge marketing campaigns.

They’ve also attracted funding from prominent investors such as East Ventures, Sequoia Capital, and Alpha JWC Ventures.

A third-party analytics platform estimates that BukuKas is leading its competitors in terms of active users. It’s still early days for these companies, however, as all of them are still looking for the right business model. As such, in the coming months, we’ll see their funding go toward plenty of experiments to find a model that works.

There’s also the question of user loyalty. Some players say that their biggest homework is to balance growth and customer retention.

Seeing what sticks

Exploring monetization strategy

The end game