Skorlife, the fintech that wants to give Indonesians more transparency into their credit scores, has raised $4 million in seed funding. The round was led by Hummingbird Ventures with participation from QED Investors, and returning investors AC Ventures and Saison Capital.

The startup’s last funding round was $2.2 million in pre-seed funding announced in September. Co-founded by Ongki Kurniawan and Karan Khetan,  Skorlife launched to the public around the same time.

Since then, it has reached 100,000 downloads. Other milestones Skorlife has hit over the past eight months include being the only credit builder admitted by the Financial Services Authority (OJK) of Indonesia into a regulatory sandbox, and receiving ISO 27001 and ISO 27701 certifications.

Skorlife’s app shows users their credit scores and reports from Indonesia’s credit bureaus and gives personalized advice on how they can improve their credit and keep safe from identity theft. For example, it will remind them to pay bills on them, improve their credit mix and watch the age of their credit. It also provides an Identity Monitoring feature, which alerts users when someone tries to use their identity to apply for a loan.

Skorlife founders Ongki Kurniawan and Karan Khetan

Kurniawan told TechCrunch that many Indonesians have limited access to fair credit because banks and financial institutions tend to be very conservative about approvals due to lack of a robust credit scoring infrastructure and data. As a result, low interest credit products, including credit cards, are usually only accessible to people with the highest credit scores, or super primes. On the other end, subprime lenders are served by peer-to-peer lending and buy now, pay later platforms, but those tend to have high interest rates.

This leaves people in the middle, with prime or near-prime credit, who have good repayment histories but still don’t make the cut for affordable credit products. Skorlife helps by giving Indonesian consumers access to their scores from Indonesian credit bureaus, along with personalized advice on how to improve them.

Skorlife will work with local regulators as part of the OJK’s regulatory sandbox, which gives it more flexibility to plan its business model. Its new funding will be used on product development, marketing and hiring.

Indonesia’s Skorlife gets funding to give Indonesians power over their credit scores by Catherine Shu originally published on TechCrunch

Singapore-based BandLab Technologies, the parent company of social music creation platform BandLab, has raised $25 million in Series B1 funding that bumps its post-money valuation to $425 million. The round was led by returning investor Cercano Management (formerly Vulcan Capital), with super-pro rata participation from Prosus Ventures.

The new funding adds to BandLab Technologies’ $65 million Series B, which it raised at a $315 million post-money valuation and announced in April 2022. The company is the digital division of Caldecott Music Group, which also includes Vista Musical Instruments and NME Networks.

In total, BandLab Technologies has 60 million registered users. BandLab’s suite of features include a digital audio workstation called Studio, royalty-free sample and loops service Sounds and AI music generator tool SongStarter. BandLab Technologies’ other properties are Cakewalk, a digital audio workstation for professional musicians, ReverbNation, a professional services site for indie musicians and producers, and beat marketplace Airbit.

The new funding will be used on hiring and developing new music creation tools, as well as initiatives like BandLab for Education.

Singapore-based BandLab Technologies raises $25M at $415M valuation by Catherine Shu originally published on TechCrunch

Embedded insurtech is still hot, as the $196 million in funding landed by bolttech proves. The company, which started in Singapore but now has operations around the world, said it is now valued at $1.6 billion. The funding was led by Tokio Marine, Japan’s first insurance company, and life insurance leader MetLife through its subsidiary MetLife Next Gen Ventures. Other participants included new and existing shareholders, and Malaysia’s sovereign wealth fund Khazanah Nasional.

Bolttech earlier announced that Tokio Marine will lead its Series B funding round, which then valued the company at an up-round valuation of $1.5 billion. Group CEO Rob Schimek said the current funding is part of the same round. “Bolttech’s Series B is closed to new interest from the market, but we continue to engage with the investor community in case of future opportunities,” he told TechCrunch.

Founded three years ago, bolttech says its Series B funding is the largest straight equity Series B for an insurtech in the last year, and that its Series A round, announced in 2021, was also the largest ever for an insurtech.

Embedded means insurance or protection products that are embedded into the customer experience as they buy a product or sign up for a service. For example, someone purchasing a smartphone might be prompted to purchase a protection plan that that offers repair, device replacement or trade-ins.

Schimek said bolttech’s model uses a B2B2C approach, which means it connects more than 700 distribution partners around the world with 230 insurance providers, who offer 6,000 products to consumers.

Bolttech bills itself as one of the world’s leading embedded insurance providers. Its customers include LibertyMutual, PayMaya, Progressive, Lazada, Samsung and HomeCredit. It has licenses to operate throughout Asia, Europe and all 50 United States states. The startup currently quotes about $55 billion worth of annualized premiums.

Some examples of how bolttech’s embedded insurance works include device protection, which Schimek describes as a “hero product” for bolttech. Both white-labelled and cobranded protection products are offered to end-customers through partners like Samsung, Windtre, LG U+, BackMarket and HomCredit.

Device protection isn’t the only product bolttech offers. For example, it enables JKOPay in Taiwan and Maya in the Philippines to offer insurance marketplaces through their apps.

“Overall, we can help any kind of business—whether they are insurers, brokers, agents or non-insurance businesses like telcos, e-commerce, retailers, fintech—to embed insurance at the point of need for their customers,” Schimek said.

Bolttech launched in Singapore in April 2020 and was able to establish an international presence for several reasons. The key one was the partnerships it forged with 700 distribution partners and over 230 insurers around the world.

“We were very intentional about making sure that we have established the right partnerships for success in specific geographies. We generally follow our partners into a geography with business already established,” said Schimek. “We were also able to grow our international footprint as we established greenfield operations in several markets and completed a number of acquisitions that helped us accelerate our expansion.”

He added that bolttech now has 1,500 team members around the world, including insurance and tech experts, and that helps them find innovative new ways to distribute insurance products.

The Series B will be used on bolttech proprietary technology, with plans to pioneer the use of artificial intelligence and machine learning in its operations and the insurance and protection value chain, including computer vision, generative AI/natural language processing, advanced analytics and robotic automation.

Schimek said bolttech also plans to enhance its insurance distribution tech, including its purchasing experiences and quoting engines, optimizing claims automation, fraud detection and inventory management.

Insurtech bolttech gets $196M at $1.6B valuation from investors like MetLife by Catherine Shu originally published on TechCrunch

According to the founder of Singapore-based telehealth platform Ora, 90% of its patients are less than 39 years old and have not been treated for their conditions offline. That puts the onus on Ora to make sure its patients, mostly millennials who live in cities, have a good experience. Ora wants to perform with verticals focused on specific health issues, like women’s and men’s health and skincare. They also run an end-to-end platform that handles everything from consultations to prescription delivery and post-care.

Today, Ora announced it has raised $10 million in Series A funding, which it says is the biggest telehealth Series A round in Southeast Asia. The investment was co-led by TNB Aura and Antler, with participation from Gobi Partners, Kairous Capital and GMA Ventures.

This brings Ora’s total raised since its inception in 2020 to $17 million. Ora was founded by Elias Pour, the former CMO of Zalora, and says it has had uninterrupted >20% month-over-month growth since it launched last year.

Pour told TechCrunch that while working at Zalora, he “saw a very clear trend from customers investing in looking good, driven by fashion buys that allowed them to express themselves, to feeling good, which is connected to physical appearance such as skin, hair, weight and overall well-being.” He started looking for segments that were underserved and found a major opportunity in healthcare.

Ora founder and CEO Elias Pour

Pour added that Southeast Asia has one of the highest out-of-pocket health expenditures globally, so there didn’t need to be a behavioral change in order to convince people to move to direct payments. “People are already used to paying out of pocket for their healthcare costs, suiting this category well for DTC.”

Ora says it has delivered over 250,000 doctor consultations since its launch in 2021. It has an end-to-end model, meaning it covers consultations, pharmacy, medication delivery and post-purchase care. Ora monetizes with subscriptions, with subscriptions accounting for more than 70% of its revenue.

Ora is vertically-integrated, and currently operates three brands. The first, called Modules, is focused on online dermatology consultations and prescription skincare. The second, andSons, offers male health care, and the third, OVA, treats female reproductive healthcare.

The platform primarily treats a young clientele. The company says that 90% of its patients are first to condition, under 38 years old and have never been treated before online. Younger patients demand flexibility and speed, which is why Ora’s telemedicine model is attractive to them.

Pour said that one of the challenges healthcare providers face in Southeast Asia is the “large disconnect between the patient population,” which skews young, and the legacy experience of healthcare. He believes that over the next decade, about 80% of healthcare services will be brought online.

“Today, men and women in their 20s and 30s living in capital cities represent 36% of the total population. It’s the fastest growing segment, forecasted to represent half of the population in most markets by 2030,” he said. Pour added that Ora is “establishing a strong relationship with them at this early stage, to earn their trust, remaining relevant to address the healthcare needs they will have as they age.”

Pour said Ora differentiates from other telehealth players like Doctor Anywhere, Speedoc and Alodokter because it focuses on specific health issues. Ora is also combining prescription, OTC and strong consumer products to provide post-treatment service and clinical continuity.

Ora’s new funding will be used to expand into new markets and brings its brands to more than 1,300 retail stores.

In a statement, TNB Aura founding partner Charles Wong said, “[Ora’s] combined focus on specialized, and often taboo, healthcare verticals as well as a direct-to-patient approach has led the team to clearly differentiate itself while delivering market-leading unit economics that meet the tailored needs of patients across the full value chain.”

Singapore’s Ora takes a vertically-integrated approach to telehealth by Catherine Shu originally published on TechCrunch

Jenfi, a “growth-capital-as-a-service” platform, can provide online businesses with revenue-based financing in a little as a day. The Singapore-based startup announced today it has raised $6.6 million in pre-Series B funding, led by Headline Asia. Participation came from returning investor Monk’s Hill Ventures, which led Jenfi’s Series A two years ago, ICU Ventures, Granite Oak, Korea Investment Partners & Golden Equator Capital and Atlas Ventures.

Since Jenfi’s inception four years ago, it has deployed more than $25 million in non-dilutive capital to about 600 companies. Its customers include Gushcloud, Ralali, Hello Health, Lamer Fashion, Buy2sell and Mystifly. The new funding will be used to grow its customer base in Singapore, Vietnam and Indonesia, and expand into new markets in Southeast Asia, like Malaysia, the Philippines and Thailand. It will also enable Jenfi to refine its credit underwriting and risk assessment capabilities, including its proprietary risk assessment engine.

The fintech was founded in 2019 by Jeffrey Liu and Justin Louie, who exited from their previous startup, fitness marketplace GuavaPass, when it was acquired by ClassPass. Jenfi’s “growth capital as a service” model was developed after the two realized that online business owners, like e-commerce sellers, SaaS and consumer tech providers, often had trouble getting capital to fund their growth expenses from traditional financial institutions.

Jenfi co-founders Jeffrey Liu and Justin Louie

Businesses that apply to Jenfi can get financing ranging from $10,000 to $1 million to spend on marketing, inventory and growth campaigns. Liu told TechCrunch that aggregate sales generated by companies in Jenfi’s portfolio is now more than $150 million.

Decisions about what businesses to lend to are made with Jenfi’s proprietary risk assessment engine, which integrates into data sources like accounting software, payment gateways, e-commerce platforms, online marketplaces and digital advertising. This lets Jenfi continuously monitor its borrowers’ business activity, including revenue growth and marketing return on investment.

As Jenfi grows, it is adding more local market data sources, including selling management platform Haravan and POS management software KiotViet in Vietnam, and almost all banks in Singapore, Vietnam and Indonesia.

Jenfi’s proprietary risk engine is one of the main ways it differentiates from other companies offering revenue-based financing to digital-native businesses, said Liu, because it means more comprehensive assessments of creditworthiness and tailored financing solutions.

Since its Series A was announced, Jenfi has deployed its first machine learning-assisted underwriting system, which Liu said enables it to make faster underwriting decisions, with better accuracy and less human involvement.

In the future, Jenfi will work with synthetic data to get a better understanding of client behavior and possible future outcomes. The company also plans to develop a tech platform to allow third-parties to use its proprietary scoring models in their own native infrastructure.

Another way Jenfi differentiates from competitors is the flexibility of its repayment plans, said Liu. They range from three to twelve months and are designed to flexible, taking the needs of each business in mind. Repayment amounts are based on a pre-determined percentage of revenue, but that varies widely depending on business type. For example, a high-margin software business may be granted a higher revenue share percentage than businesses in another sector.

The total amount of fees that a company pays depends on the credit score generated by its proprietary risk engine. Liu said rates are transparent and competitive, with no hidden fees or charges.

Jenfi’s plans for the near future include offering growth capital to more clients through the use of dynamic limits, which can be adjusted based on client needs and creditworthiness. It will also launch an on-demand financing product to cover recurring growth capital needs like variable monthly ad spend.

In a statement, Headline Asia partner Aki Okamoto and principal Jonathan M. Hayashi, said “We have been continuously conducting research on revenue-based financing, and have talked to almost every single player in this field in Asia. Jenfi absolutely stood out to us. Their technology, product, operation and traction are significantly better than their peers.”

Jenfi raises more funding for its “growth capital as a service” platform by Catherine Shu originally published on TechCrunch

Much of our computer time is spent in a web browser, where we check emails, create documents, transfer files, carry out online banking, shop or stream entertainment. This leaves us vulnerable to security threats like phishing, identity theft and session hijacking, but many cybersecurity tools were created when the main threats were file viruses, worms and network attacks, said Vivek Ramachandran, the cybersecurity entrepreneur and researcher who discovered the Cafe Latte attack.

To combat browser-based vulnerabilities, Ramachandran founded SquareX. The Singapore-based cybersecurity startup announced today it has raised $6 million in seed funding from Sequoia Capital Southeast Asia, which it will use on R&D engineering and its go-to-market plans.

SquareX wants to serve as an alternative to current cybersecurity products by being tailor-made for browser-based cloud SaaS tools. It integrates with browsers as an extension and lets users open links and files in disposable browsers that serve as temporary container sandboxes. The headless browsers run in SquareX’s data centers so threats don’t reach users’ computers and they don’t need to worry about their personal information being exposed.

Before launching SquareX, Ramachandran was the founder of Pentester Academy, a cloud-based cybersecurity training startup that lets users and enterprises study how hackers break into their company. Pentester Academy was acquired by INE in 2021.

SquareX founder Vivek Ramachandran

Ramachandran told TechCrunch that while running Pentester Academy, his customers complained about how often their security products were disabled by users because they got in the way of their productivity. For example, someone in the process of receiving of an important Word document from a contact would have that file flagged as malware and would end up disabling security software in order to view it. As a result, Ramachandran realized that many security products are actually counterproductive because they make people less likely to use them.

As a result, he created SquareX, which does not block access to files or resources, even when they have been categorized as potentially malicious. Instead, it uses its disposable browsers. Ramachandran said SquareX is intended as a alternative to VPN, anti-virus, anti-malware and other endpoint security solutions.

SquareX’s disposable browsers enable anonymous browsing from any location. Users can “dispose” of it at anytime, which means no data is retained and the browser session is destroyed and removed from SquareX’s servers immediately. Ramachandran said it is safer and more private than incognito mode because websites the user visits or files they download don’t get stored in their computer.

“By creating disposable environments, SquareX ensures that a user’s identity and data is decoupled when accessing the internet,” he added. “This ensures that even the most sophisticated website trackers would fail to track and log the users activities and tie it to their identity.”

SquareX’s go-to-market strategy will focus on the United States, the United Kingdom and Asia first.

In a statement about the funding, Anandamoy Roychowdhary, Surge partner at Sequoia Southeast Asia, said, “The online world is about to get a whole lot worse as the AI revolution gets channeled towards building malicious code. Every cybersecurity solution out there is only probabilistically successful in protecting internet users, which is not of much comfort if they get hacked and lose money. SquareX is the first solution we’ve seen that takes a 100% protection approach–where irrespective of how new and sophisticated the attack is, it has no chance to infect users. This is the future we think all internet users deserve.”

Backed by Sequoia Southeast Asia, SquareX protects web users with disposable browsers by Catherine Shu originally published on TechCrunch

Small to medium-sized enterprises contribute 60% of Indonesia’s gross domestic product. But companies in the D2C space still struggle to compete against bigger brands. Praktis wants to put them on a more level playing field.

The startup, which handles everything from raw material purchases to order fulfillment for D2C brands and suppliers, announced today it has raised $20 million in Series A funding. The round was led by East Ventures (Growth fund), with participation from Triputra Groiup and SMDV.

Praktis co-founder and chief executive officer Adrian Gilrandy told TechCrunch that even though 60% of Indonesia’s GDP comes from SMEs, many experience difficulties while scaling up their business operations. These include finding reliable suppliers, getting fair pricing, the cost of labor and high exposure to fixed costs.

Praktis’ team

Through its platform, Praktis’ customers are able to manage this business operations, including raw material purchases, production, fulfillment and logistics. Gilrandy said Praktis also aggregates purchasing and processing for economies of scale. This leaves D2C brands free to focus on other parts of their business, including brand building and marketing.

The startup plans to scale up by growing alongside the D2C brands it serves. Gilrandy said its ecosystem can easily be applied to other verticals—for example, it started in fashion before moving on to the beauty industry. Praktis claimed 12x growth year-on-year from 2020 to 2021 as the COVID-19 pandemic accelerated adoption of its services, and 4x growth year-on-year from 2021 to 2022.

Praktis will use its new funding for technology development for both brands and suppliers, building its team and expanding its end-to-end supply chain ecosystem.

The startup also announced today it has appointed Leonard Pontoh as its chief financial officer. Pontoh is also joining its board of directors.

In a statement, East Ventures co-founder and managing partner Willson Cuaca said, “We are thrilled to double down our investment to Praktis as they strive to empower D2C brands in Indonesia and hit profitability much faster than we expected.”

Praktis lands $20M to help Indonesian D2C brands handle their supply chains by Catherine Shu originally published on TechCrunch

Many employee engagement and retention tools were created with the assumption that workers spent most of their time at desks. But the majority of the global workforce is deskless, meaning that they are usually on the move and don’t have constant access to a laptop. A lot of them are also dissatisfied with their jobs, which means companies need to deal with high churn and low retention rates. Based in Singapore, Mercu wants to help with a platform designed specifically to reach deskless employees.

Launched in November 2022, Mercu announced today it has raised $1.6 million in seed funding from 500 Global, TEN13, Flying Fox Ventures, Archangel Ventures, XA Network and returning investor Sequoia Capital India.

Mercu is used by companies in retail, logistics, hospitality and manufacturing to onboard employees, communicate with them and help increase engagement. Its customers include Mexican fast food chain Guzman Y Gomez’s operations in Singapore and Sam Prince Hospitality Group in Australia. It also has customers in the United States, where the seed funding will be used to expand Mercu’s footprint and on hiring.

Before launching Mercu, the startup’s two co-founders, Jascha Zittel and Elliott Gibb, both worked at Grab. Zittel, a product manager there, needed to communicate with millions of drivers in eight countries, and found that engagement for messages sent through WhatsApp and Facebook was much higher than in-app communications or email.

The two told TechCrunch that COVID laid the groundwork for Mercu because it highlighted the importance of the deskless workforce, and also how little their needs were being met. Despite accounting for more than 70% of the global workforce, less than 1% of VC funding gets allocated to startups in the space, they said.

Mercu founders Elliott Gibb and Jascha Zittel

While working at Grab, Zittel and Gibb, a former product designer on Grab’s passenger experience team, saw that many deskless workers feel disconnected from their companies, which negatively impacts retention rates. Keeping workers means staying in constant touch with them and that means meeting them where they are, which is why Mercu works with popular messaging apps instead of requiring workers to download yet another one. This is especially important in emerging markets where there are hardware and data bandwidth restrictions on smartphones.

Mercu can be used to create custom content, or employers can pick from templates for campaigns like engagement surveys. The platform segments employees into groups based on their role, tenure and location, and gives content creators analytics about read and completion rates, industry benchmarks and recommendations.

Some examples of what employers use Mercu for include team dinner invitations, recognition programs, shift swaps and training sign-offs. Guzman y Gomez automated their hiring and onboarding process by using Mercu to perform tasks like sending interview invites and offers through WhatsApp, which reduced the number of no-shows to interviews. The fast food chain also uses Mercu to gauge worker sentiment on a monthly basis to reduce turnover rates.

Sam Prince Hospitality Group uses Mercu to send continuous training, including SOP updates, product information and sales training.

Mercu’s product development team plans to focus on more tools for employees, including looking at how large language models, like ChatGPT, can be used to communicate with employees at scale.

Mercu meets deskless workers where they are by Catherine Shu originally published on TechCrunch

eBay announced today that it has appointed Vidmay Naini as its general manager for global emerging markets, a role that covers the company’s growth in Southeast Asia, India, Eastern Europe, Israel, the Middle East, Africa and Latin America. Before his new position, Naini led eBay’s Southeast Asia and India businesses.

Naini has been with eBay for 18 years and his previous projects include eBay’s strategic investment in Flipkart.

In a statement, Naini said, “the digital economy is exponentially growing in these markets, with small and medium-sized businesses propelling its growth. Global e-commerce platforms such as eBay can revolutionize export opportunities and expand the reach these businesses can achieve.”

In its announcement about Naini’s appointment, eBay highlighted its 2022 Southeast Asia Small Online Business Trade Report, which found that 99% of all small businesses on eBay currently export items to an average of 25 different international markets on an annual basis.

In Southeast Asia in particular, 68% of “eBay-enabled small businesses” in six countries—Indonesia, Thailand, Vietnam, Malaysia, the Philippines and Singapore—export to 10 or more international markets.

Naini told Tech Wire Asia last July that he expects to see strong growth in Southeast Asia and that eBay’s business in the region was just beginning to take hold. “We’ve seen significant growth in our business, especially with the SMBs selling from this region to the world. The truth is, we are just scratching the surface because we see eBay as a very nascent business here still, and we expect it to grow multifold.”

eBay appoints new head of emerging markets, covering regions like Southeast Asia and India by Catherine Shu originally published on TechCrunch

Founded in 2014, Blossom Finance was first intended for Muslim entrepreneurs in the United States. The microfinancing platform connects investors with small businesses using mudarabah, a shariah-compliant profit-sharing agreement. But founder Matthew Joseph Martin soon realized that the startup, backed by investors like Boost VC and Tim Draper, was serving a relatively niche market in the States. So he started researching markets with large populations of Muslim people. Indonesia emerged as the best choice.

Southeast Asia is already home to a thriving fintech scene, where Grab, GoTo and Sea have built super apps that encompass financial services, and startups like Xendit, Akulaku and Dana (to name a few) have raised hundreds of millions of dollars for payments, banking services and other financial tools. Indonesia and Malaysia, in the heart of Southeast Asia, are among the countries with the largest Muslim populations in the world.

These factors are proving fertile ground for establishing and growing fintechs that focus exclusively on Islamic finance, offering products and services that follow shariah law. Among other things, this forbids accruing interest, speculation and financing non-halal products like pork, tobacco and alcohol.

According to the World Bank, Indonesia has the most Islamic fintech companies in the world – perhaps fitting, since it’s also the most populous Muslim-majority country in the world with about 231 million Muslims.

Some notable Islamic fintech companies include peer-to-peer lending platform and digital bank Hijra (formerly known as Alami), online bank Bank Aladin, LinkAja, which is backed by Telkomsel and Bank Mandri, the largest bank in Indonesia in terms of asset loans and deposits.

Gojek’s GoPay is also partnered with the Indonesia mosque council to allow users to make zakat, or obligatory alms giving, online.

Meanwhile in Malaysia, where 61.3% out of its 33.6 million inhabitants practice Islam, fintech companies that focus on Islamic finance include crowdfunding platform Ethis Ventures and investment platform Wahed, which is the only shariah-compliant robo-advisory platform in the country. Funding Societies, the SoftBank Vision Fund II-backed SME digital lending platform, recently launched a shariah-compliant financing product there, and now offers it as the default product to all its Malaysian customers.

Shariah law calls for a different approach to financial services, and conventional banks are also launching products for Muslim customers. Along with the growing number of Islamic fintech startups digitizing the process, Islamic-compliant services are becoming accessible to more people.

Profit sharing instead of debt

The seed of Blossom Finance was planted when Martin was running a project in the U.S. enabling people to buy Bitcoin. He ran into a receivables problem, and the usual way to finance cash receivables is to get line of credit or receivables financing from a bank. As a practicing Muslim, however, Martin couldn’t use conventional loans. But he also couldn’t find any other options in the U.S.

“Quite naively, I thought there are plenty of Muslims who own businesses, surely they face the same problem,” he said. “They must have a solution. So what is the solution?”

After learning more about the principles of Islamic finance, Martin launched Blossom Finance, a platform that connects investors with microbanks, which in turn disburse shariah-compliant financing to microbusinesses. Headquartered in Delaware, Blossom Finance hosts investors from primarily the United States and Europe, but all of the microbusinesses it serves are in Indonesia.

After initially soft-launching in the U.S., the Blossom Finance team realized that the market there for Islamic finance was very small, said Martin. They started looking for a bigger market, and landed on Indonesia because of the financial inclusion challenges facing micro and small businesses.

Other reasons Blossom Finance chose Indonesia over other countries with large Muslim populations included its relative political stability, Martin said. It also has a strong baseline infrastructure for operating businesses with primarily foreign capital.

“There’s already been over the past two decades prior to us arriving tons of amazing work,” Martin said. “A lot of the groundwork was already there and we were able to come in and operate as a connector where there are inefficiencies, and a lack of capital. We were able to bridge that lack of capital using a technology solution. All that underlying infrastructure for the last mile of serving the microbusinesses was already there and we were able to tap into it.”

Investors on Blossom Finance’s platform pool their money into funds, or cooperatives, which are then managed by microbanks. The microbanks disburse the financing to microbusinesses to purchase inventory and other things they need. All losses and profits are shared pro rata, Martin explained. If an investor’s capital is 1% of a fund, they can expect to receive 1% of its profits, or absorb losses at the same rate.

What makes Blossom Finance’s microfinance platform shariah-compliant is its use of murabaha contracts instead of traditional interest-charging loans. For example, when a microbusiness, like a corner store, needs to buy inventory like beverages or snacks, they go to one of the cooperatives for financing. Martin explains that the basis of the financing is not the capital, but the commodity that needs to be purchased. The cooperative purchases it at wholesale prices and provides it to the business at a markup instead of charging interest. They then share the profit with investors. Martin said cooperatives can often connect microbusinesses with wholesalers that they didn’t previously know, and also benefit from economies of scale, which also helps microbusinesses.

An Indonesian warung, or small store selling snacks, drinks and daily use items (Gratsias Adhi Hermawan/Getty)

Cooperatives don’t set prices, and instead mudarabah agreements are based on current market prices, which microbusinesses agree to. To make sure microbusinesses get fair agreements from microbanks, cost of funding for microbusinesses is one of the things Blossom Finance takes into consideration when deciding whether to work with a cooperative/microbank.

“Let’s say you’re the bank and I want to buy chickens. You agree to buy me 100 chickens. Let’s say it costs $1,000. We will agree that your profit will be 20%, so I have to pay you $1,200 over the course of, say, 12 months. So you as the financier have that 20% profit,” Martin said.

The advantage of working with cooperatives instead of commercial banks is that they provide more flexible payment terms and financing tenure, which is helpful if a business runs into financial difficulty, Martin added.

Martin said there is discussion among Islamic scholars about whether or not profit-sharing is inherently better than debt. But, he asks, “if equity and debt are equal, why is it that the Prophet Muhammed prayed for protection from debt? I think we all inherently know the answer to that question, because debt can trap the poor in a cycle of poverty that they cannot escape. Equity, on the other hand, involves the concept of risk participation. Investors hopefully have a better upside, and the reason they get that better upside is because they’re participating equally with the entrepreneur in terms of risk.”

Fostering financial inclusion

A 2022 report by research firm DinarStandard and fintech Ellipses estimates that the market size of Islamic fintech in the Organisation of Islamic Coorporation (OIC) countries was $79 billion in 2021, making up 0.83% of global fintech transaction volume. While Islamic fintech’s market size is still small, it is expected to reach $179 billion at a 17.9% CAGR by 2026, outpacing traditional fintech’s 13.5% CAGR growth over the same period.

DinarStandard and Ellipses also found that there are 375 Islamic fintech companies around the world. Most are in the P2P financing space, and Indonesia is one of the top markets in transaction volume.

Islamic fintech startups in Malaysia and Indonesia have the support of government policies. For example, Indonesia’s National Islamic Finance Committee is focused on developing Islamic finance and the country’s Islamic economy.

And in Malaysia, Bank Negara’s Investments Accounts Platform is the first Islamic P2P initiative established by a central bank, while the government-owned Malaysia Digital Economy Corporation connects investors with halal business owners. In 2019, the Malaysian government also issued its Shared Prosperity Vision 2030, a 10-year framework for restructuring its economy that includes building an Islamic fintech hub as a key part of its strategy.

The World Bank has said that the growth of Islamic fintech can foster financial inclusion by giving unbanked people access to financial services.

For example, one group of people it can reach are those who avoid bank accounts because their terms are not shariah-compliant, and want usury-free financial transactions based on risk-sharing. Islamic fintech can also help resolve issues that unbanked people face, like lack of money, lack of proper documentation and being located far away from conventional Islamic banks.

Golden Gate Ventures partner Justin Hall, an investor in Hijra and Funding Societies, believes that Islamic fintech makes Islamic financial services accessible to more people.

“Islamic banks are extraordinarily conservative, not only with how they operate, but the cost of financing, who they can lend to, etc.,” he said. “Having companies that differentiate from that and provide a nice consumer experience on the digital banking side, but within the framework of an Islamic bank, there’s an opportunity there.”

The World Bank also says the Islamic microfinancing, or short-term financing with terms of less than 12 months, can play an important role in alleviating poverty in OIC countries since they work with customers who are often underserved by traditional banks.

One example of a fintech company creating shariah-compliant products for underserved customers is Funding Societies, which is headquartered in Singapore with operations in Indonesia, Malaysia and Thailand.

Kien Poon Chai, the country manager of Funding Societies Malaysia, said its shariah-compliant financing product was launched in 2022 to serve relatively new micro- and small businesses, which are usually overlooked by banks when seeking working capital.

Chai said the impetus for launching shariah-compliant financing products was because Malaysia has a large Muslim population and the company was seeing demand from lenders and SMEs looking for financing products in line with their faith.

Funding Societies underwrites its shariah-compliant financing product in the same way as its conventional financing counterparts, but there are several nuances it has to pay close attention to. For example, financing cannot be used for non-halal businesses, including ones that sell alcohol, pork, tobacco or massage houses.

Financial offers also have to be backed by underlying assets, so for every disbursement Funding Societies makes through its shariah-compliant product, it has to purchase underlying commodities through exchanges.

Fee disclosures and charges also have to be shariah-compliant. There cannot be uncertainty in financing products, so all fees and charges must be clearly defined and outlined. For example, penalizing people for early repayment with prepayment fees is forbidden.

Peer-to-peer lending without interest

Another Islamic startup focused on financial inclusion is P2P lending platform and neobank Hijra. Founded in 2018, Hijra has raised $30 million in equity from investors like Quona Capital, Golden Gate Ventures and EV Growth. It first started as an aggregator of traditional Islamic banks serving SMEs, but co-founder and CEO Dima Djani told TechCrunch that after about 9 months, the team realized that the Islamic banking industry in Indonesia couldn’t keep up with the growth of fintech.

As a result, Hijra got licensed by Indonesia’s Financial Services Authority (OJK) in 2019 to operate as a digital lending platform. Then retail lenders began asking for more comprehensive financial services, so Hijra, then known as Alami (which is still the name of its P2P lending platform) acquired a small Islamic bank last year and launched a new digital bank with savings accounts and money transfers.

The main reason Djani wanted to launch an Islamic finance platform is because Indonesia has one of the largest Muslim populations in the world, but the penetration of Islamic finance was still very low, at about 6% to 7% of total banking assets, compared to about 30% penetration in Malaysia. Djani attributes this to low consumer awareness of Islamic finance, but says a new wave of religious teachers, who gain followers on social media, has given rise to a strong halal economy over the last 10 years and also spurred interest among millennial and Gen Z Muslims in adopting services that are tailored to their faith.

In Indonesia, the guidelines for Islamic finance are determined by three authorities, said researcher Fahmi Ali Hadaefi. These are the Financial Services Authority (OJK), which regulates and supervises the financial services sector, Bank Indonesia, which oversees banks, and the Majelis Ulama Indonesia (National Sharia Board-MUI), or the country’s leading Islamic scholars body.

The MUI has published at least two fatwas on fintech. The first, issued in 2017, is about Islamic perspectives on practices related to e-money. The second one, issued a year later with the Financial Services Authority, covers Islamic fundamentals for P2P lending.

Since Muslims are prohibited from interest-bearing transactions, Hijra’s team wanted to provide an alternative for users in need of working capital financing. Like Blossom Finance, it uses a profit-sharing model to avoid interest.

The way it handles P2P loans between lenders and farmers is one example. When a fish farmer needs to buy feed, they don’t take out a loan with interest from a lender. Instead, their lender buys fish feed and sells it at a profit to the farmer, with markups based on current market rates. Instead of paying for the feed immediately, farmers pay it off after harvesting fish in about three to four months.

Islamic finance is meant to create a transparent and fair financial service for everyone,” said Djani. “For example, we view interest or usury as an unfair instrument on its mechanics. In addition, we also view that speculation and gambling as unfair, as they do not commensurate the effort and return evenly.”

Harvesting fish on Ganga Island, North Sulawesi, Indonesia (Giordano Cipriani/Getty)

Hijra’s digital banking app, which it was able to launch after acquiring the small Islamic bank in Jakarta, doesn’t give any yield to depositors at the moment, but it also doesn’t charge them any fees. In the future, Hijra is planning to launch more sharia-compliant financial solutions, like rent-to-own, payments and community-driven savings for groups of people who have a common goal, like saving money for a trip to Mecca.

Building a halal payment gateway

Another example of a company founded to get more Muslims participating in digital financial services is PayHalal, which was created to provide a shariah-compliant online payment gateway.

Co-founder Pat Salam Thevarajah told TechCrunch that he and fellow PayHalal co-founders realized in 2016 that if they wanted to get more people in the Muslim community to adopt online payments, they would have to build their entire tech stack from the ground up, instead of going to a white-label provider like Ayden. Thevarajah said that 55% of the Malaysian population is unbanked primarily because they fear riba, or interest.

“We built it because of the pure necessity to create end-to-end compliance into the transaction. That’s how PayHalal came about. The primary objective is to keep payment free from riba and gharar, or speculation, so that Muslims are able to perform electronic payments in person or e-commerce without any form of non-compliance.”

One of PayHalal’s goals is to create a network like Visa or Mastercard that stays true to Islamic finance principles. One key difference is the lack of interest.

Conventional payment gateways treat money as a commodity, which means it can be sold at a price higher than face value or lent out with interest. PayHalal does not treat money as a commodity, instead only using it to purchase goods and services, and makes profit on the trading of goods or services. PayHalal makes sure its services are shariah-compliant with the help of two team members, scholar Dr. Daud Bakar and co-founder Indrawathi Selvarajah, who was a corporate lawyer before she became a shariah fintech specialist.

Right now, when an instrument comes from a conventional financial institution, PayHalal feeds it into its AI-based non-shariah compliance screening tool. The tool then suggests treatment based on the amount of non-compliance factor, and PayHalal says that it takes the fee it earns on the transaction, writes it off and contributes it to social work, like feeding poor people or building mosques, as part of a process called purification.

Thevarajah said the process is auditable because Islamic financial institutions have internal shariah compliance departments, which in turn undergo regular audits by external shariah supervisory boards. The process of identifying non-compliant transactions, writing off profits and donating fees is documented and reviewed by internal and external auditors for accuracy.

Some examples of shariah non-compliant transactions include ones that involve the sale of forbidden items like alcohol, tobacco and pork. Transactions that involve riba or gharar are also considered non-compliant, and these can include interest charged on late payments or uncertain terms used in sales contracts.

“There is no guarantee that we can keep riba away, unless it’s a closed-loop Islamic transaction,” said Thevarajah. “If it becomes an open-loop transaction, we are then required to do purification.”

Cases of non-compliant transactions it tries to avoid include the exchange of goods for consumption that aren’t made with halal ingredients. Another is in cases of salaam contracts, where a buyer pays immediately for something that will be delivered at a later date. When that kind of transaction is handled by PayHalal, it mitigates chargebacks by making sure customers get their goods at the agreed upon time.

“Transparency is fundamental with Islamic transactions,” Thevarajah said.

One of PayHalal’s goals is to build a super app with different shariah-compliant financial services, like insurance products and saving accounts for pilgrimages to Mecca. It recently took a step toward expanding its product portfolio by launching a shariah-compliant buy now, pay later service with Atome. The BNPL program is interest-free and has no annual and servicing fees. It is currently onboarding merchants who offer halal and shariah-compliant services and products.

Mecca during the Hajj pilgrimage (Reptile8488/Getty)

Thevarajah explains that if a customer defaults beyond the three-month term of the loan, PayHalal can’t charge interest. Instead, it has to underwrite the entire transaction. “Our contract with the merchant would be active participation where we buy the product and we resell it to the consumer for the consideration of a fee,” he said, adding “The contract changes the entire structure of how an Islamic buy now, pay later operates.”

Thevarajah added that transactions are structured as deferred payment sales, which means PayHalal, acting as the seller, buys the product for a supplier and then sells it to a customer at a profit margin. The customer than pays off the total price of the product in installments over a predetermined period of time. The transaction is asset-based, which means that it is secured against the product being sold, not the buyer’s creditworthiness.

Still early days

The rise of Islamic fintech in markets like Indonesia and Malaysia is tied to the growth of Islamic finance in Southeast Asia. According to a S&P report published last year, Southeast Asia’s $290 billion Islamic banking market is expected to continue growing at a CAGR of about 8%. In Malaysia, Islamic banks will make up 45% of the overall commercial banking loan book by the end of 2025, and in Indonesia, Islamic finance’s market share is expected to grow to 10% by the end of 2026, at a faster rate than conventional banks.

But Islamic fintech still makes up a very small percentage of the total market. As stated earlier, DinarStandard and Ellipses estimate that the market size of Islamic fintech in was OIC countries was $79 billion in 2021, or just 0.83% of global fintech transaction volume. But that’s not stopping Hijra from making international expansion plans—the team already has an eye on Malaysia, Turkey and Saudi Arabia.

Golden Gate’s Justin Hall, also an investor in Hijra and Funding Societies, believes Indonesia is uniquely positioned to be a starting ground for Islamic banks to expand to other markets around the world.

“Indonesia is the only country today that has a confluence of operators that understand Islamic banking, as well as serial entrepreneurs, institutional LPs that are willing to capitalize companies that are doing that, and a very, very large domestic market. It’s very rare to find a model unique to Southeast Asia that can go global and I actually don’t know of any but Islamic fintech.”

As Muslim fintechs create a more inclusive market landscape for Muslim users, they are also working on their own inclusivity issues, such as getting more women into the field of financial technology businesses.

Djani said the rate of women working in Muslim fintech is still comparatively low, though some have promoted women to leadership roles, including Hijra’s chief financial officer Febriny Rimenta.

One of the co-founders of PayHalal, Selvarajah, is a woman and Thevarajah said Muslim fintech startups can take several steps to get more women into the space, including building a gender-inclusive workplace based on Islamic values, providing flexible working arrangements, mentorship and promoting transparency to build trust with women employees.

He added that Muslim fintech startups can design products, including savings and investment platforms, to increase women’s financial empowerment.

Martin said the cooperatives Blossom Finance works with typically have a high representation of women, with one that is staffed completely by women.

Barriers exist in other aspects of the space, too. On the fundraising front, Martin said one of the main obstacles he faced in the U.S. was educating investors.

“First you have to explain what does Islam say and why is this even a problem, and then you explain your situation. So that was a challenge. However, I would say for VCs who were able to connect the dots and understand it was a genuine problem—there were some that did say, ok, maybe this is too niche and they passed—but for those who were able to take the time to understand the problem, we didn’t face any barriers.

Perhaps surprisingly, the most pushback he got was from other Muslims.

“Where we did face barriers was within Muslims living as a minority in America. They pushed back against: ‘why are you calling this Muslim? Why are you focused on Islam?’” he said. “Very interestingly, the venture capital investors [who did back us] were like, this makes sense. This is an important niche. I think that goes back to being a minority and post-9/11, and being defensive. There is that resistance versus going to a Muslim-majority [market], where it’s like “well of course you’re doing Muslim finance, why wouldn’t you?”

For Islamic fintechs, finding investors can also mean doing their own due diligence.

PayHalal, which has received $4.5 million in seed funding from Asad Capital, Q Cap, Effective Shields and Crescent Capital, is now in the process of raising a $5 million Series A round at a valuation of $33.5 million. Thevarajah said part of fundraising means assessing potential investors to ensure both they and their fund management is done in alignment with shariah principles.

“Investor interest in the Islamic fintech sector for PayHalal was very high due to its potential in a fast-growing Muslim population worldwide,” Thevarajah said. “While some investors viewed it as a captive market due to the religious beliefs of the Muslim community regarding halal food and transactions, we still had to ensure that potential investors fell within the fit and proper category for Islamic financial services.”

Founders in countries with large Muslim populations say they also had to educate investors, but that is changing. The $30 million Hijra has raised in equity so far is almost all from non-Muslim countries. Djani said several of its investors already had a strong interest in Islamic financial services because it is a growing niche that is able to provide differentiation for fintech players.

“We will need to do education on what we are offering, but dramatically less so over the past few years as Islamic finance has become more mainstream and widely accepted in Muslim-majority countries, like Indonesia,” he said.

Muslims come into the frame in Southeast Asia’s fintech boom by Catherine Shu originally published on TechCrunch

ZEBOX, an international accelerator network founded by shipping conglomerate CMA CGM to introduce more tech innovation into the supply chain industry, announced today the launch of its APAC headquarters. Based in Singapore, ZEBOX Asia will also look at markets like Indonesia, Malaysia, Taiwan, Japan and Korea.

The APAC hub is backed by Enterprise Singapore, a board under the Ministry of Trade and Industry to foster SME development, and the Maritime and Port Authority of Singapore, alongside industry partners Bureau Veritas Marine and Offshore, PSA unboXed and Synergy Marine Group.

Founded in 2018 by CMA CGM Group chairman and CEO Rodolphe Saadé, ZEBOX already has hubs in France, the United States, the United Kingdom, West Africa and the Caribbeans, which have collectively worked with 100 startups that have raised a total of $235 million in funding. It has 20 corporate partners that startups collaborate with while they are in ZEBOX’s incubator, including BNP Paribas, CEVA Logistics, Infosys, BNSG Railway, Port of Virginia and Centrime.

ZEBOX CEO Gwen Salley told TechCrunch that along with access to mentoring, experts, business opportunities and funding, its incubator program gives startups opportunities to test their solutions and work with large corporations. For corporate partners, the advantage is working with startups that can address their specific business challenges and engage in de-risked proof of concepts.

The incubator network picked Singapore for its newest hub because more than 4,000 regional headquarters and startups are based there and it has pro-business policies, an efficient regulatory framework, transparent legal and financial systems and strong digital infrastructure, Salley said. “Additionally, the city state’s strategic location at the crossroads of major shipping lines and air routes connects large parts of Asia to the rest of the world, making it a global logistics hub,” he added.

Some examples of startups incubated by ZEBOX include Searoutes, which uses routing engines and predictive data to show shippers how much CO2 emissions they’re producing at key points in the procurement chain and Sublime Energie, a deeptech startup that focuses on biogas liquefaction tech and provides biogas collection services. Both of these took part in ZEBOX France.

BasicBlock, which took part in ZEBOX America and has iraised more than $78 million in funding, automates invoices and develops financial products for the freight industry. Expedock, also from ZEBOX America, has raised more than $20 million and automates freight documents, payable reconciliation and other manual paperwork. Meanwhile, SMO Solar Process, which took part in Zebox Caribbeans, developed solar-based technology that turns carbon-based waste into other materials, like hydrogen, biochar and carbon powder.

ZEBOX looks for startups in four area. One is operational efficiency, or tech that helps minimize the physical movements of goods in everyday operations. Another is decarbonization and ZEBOX is looking at alternative fuels, net zero energy, asset recovery, green infrastructure, emissions tracking and reporting and sustainable warehousing and distribution. This is an especially critical area for CMA CGM Group, since its goal is to reach net zero carbon by 2050. The company says it has already reduced carbon emissions per container carried by 50% since 2008.

The third area of focus, workflow automation, looks for startups that streamlines and eliminates back office tasks so companies can get more work done in less time. Finally, the future of work will zone in on startups that can innovate in training, workplace safety, employee engagement, talent acquisition, hybrid work environments, ESG and customer experience.

In a statement, Maritime and Port Authority of Singapore chief executive Teo Eng Dih said, “Startups play a critical role in the transformation of the maritime sector by generating value through their innovative solutions. Through working with partners, MPA hopes to anchor more marinetech startups in Singapore to develop, test and commercialize new products and services from Singapore to benefit the global maritime community.”

ZEBOX, an incubator for supply chain startups, launches its Asia hub in Singapore by Catherine Shu originally published on TechCrunch

Betterdata, a Singapore-based startup that uses programmable synthetic data to keep real data secure, announced today it has raised $1.55 million. The seed round, which it says was oversubscribed, was led by Investible with participation from Franklin Templeton, Xcel Next, Singapore University of Technology and Design, Bon Auxilium, Tenity, Plug and Play and Entrepreneur First.

The startup was founded in 2021 by Dr. Uzair Javaid, its CEO, and chief technologist Kevin Yee, with the goal of making data sharing faster and more secure as data protection regulations increased around the world. The company is currently in research and development partnerships with two major universities in Singapore and the United States (it can’t publicly disclose who they are) and its clients include Shanghai Pudong Development Bank.

Betterdata says it is different from traditional data sharing methods that use data anonymization to destroy data because it utilizes generative AI and privacy engineering instead.

Yee explained to TechCrunch that programmatic synthetic data uses generative models, like deep learning models including generative adversarial models used in deepfakes, transformers used in ChatGPT and diffusion models used in stable diffusion, to create and augment new datasets.

These synthetic datasets have similar characteristics and structure to real-world data without disclosing sensitive or private information about individuals.

“The idea is to create a fictional version of a real dataset that can be used safely for a variety of purposes including safeguarding confidential data, reducing bias and also improving machine learning models,” he said.

Programmatic synthetic data helps developers in many ways. A few examples include helping them protect sensitive data, comply with data protection regulations like GDPR and HIPAA, increase data availability between teams, create more data to train, test and validate machine learning models and address data imbalance issues by creating more records for underrepresented groups or classes.

Betterdata’s funding will be used on its product launch and to enhance its programmable synthetic data tech stack, including support for single-table, multi-table and time-series datasets. These are different variations of tabular datasets and Yee explains that the main differences are their structures and the problems thy are created to address.

For example, single-table datasets focus on standalone tables, while multi-table datasets are meant to consider relationships between multiple tables, and time-series datasets deal with data collected over time.

Betterdata also plans to hire more people, including sales and marketing employees, and expand beyond Singapore to more of the Asia-Pacific region over the next one to two years.

In a statement about Investible’s investment, principal Khairu Rejal said, “Betterdata solves one of the biggest issues the AI industry is facing today: lack of high-quality data that also meets privacy requirements. Through its powerful platform, Betterdata generates synthetic data that mimics real-world data without compromising quality and privacy, helping businesses meet global compliance and privacy laws at scale.”

Betterdata uses synthetic data to keep real data safe by Catherine Shu originally published on TechCrunch