<p>Paolo Limcaoco is the Southeast Asia Principal for Accion Venture Lab, Accion’s seed-stage impact investment initiative in fintech for the underserved. Paolo has over nine years of experience across impact investing and investment banking. Prior to joining Venture Lab, Paolo was the Southeast Asia Investment Manager for LGT Venture Philanthropy, the global impact investing arm of the LGT Group where he was responsible for the activities and investments in the region. Paolo also spent some time in Uganda working for the Mango Fund, a non-profit financing institution that lends to and invests in Ugandan SMEs. Paolo has a bachelor’s degree from Ateneo De Manila University and an MBA from the MIT Sloan School of Management.</p>
<p><a href="mailto:plimcaoco@accion.org">Contact Paolo</a></p>


Principal, Southeast Asia

Paolo Limcaoco

Why we invested in Semaai, a company building full-stack, agritech solutions to improve livelihoods

Article

This week, we <a href="https://www.accion.org/indonesian-agtech-startup-semaai-closes-a-bridge-funding-round-bringing-total-raised-to-us2-9-million" target="_blank" rel="noopener noreferrer">announced our investment in </a><a href="https://www.accion.org/indonesian-agtech-startup-semaai-closes-a-bridge-funding-round-bringing-total-raised-to-us2-9-million">Semaai</a>, a company with big plans to digitize Indonesia’s $100 billion agriculture industry. We are excited to work with the talented founding group of Abhishek Gupta, Yoga Anindito, and Gaurav Batra — and the rest of the Semaai team — to support the stakeholders in this vital sector. Semaai is Accion Venture Lab’s fourth investment in Indonesia and our sixth in Southeast Asia. Our first agritech investment in the region, the company offers a full suite of solutions to support the agriculture ecosystem.
<h3>Addressing pain points of small-scale agricultural retailers</h3>
Semaai works with small mom and pop shops that sell agricultural inputs such as fertilizers, seeds, pesticides, and other products to farmers. These retailers, locally known as<em> toko tanis</em>, traditionally build their inventory by bartering with numerous distributors over WhatsApp or SMS. Because of this analog and traditional sourcing process, small-scale toko tanis struggle to access fairly priced stock, direct deliveries, and product information.

That’s where Semaai comes in. The company provides toko tanis with a digital marketplace, allowing them to buy inventory from their phones without leaving their store, saving them costly downtime. These small retailers can source the products they need through an easy-to-use application with direct delivery. Semaai not only makes purchasing and receiving products simpler but also provides key data points on each product it carries, giving the toko tanis better visibility on what they purchased.

And the procurement platform is just the beginning. The company aims to solve another challenge for these small retailers — the lack of access to financing. As toko tanis build their transaction history, they will soon be able to purchase inventory on credit, freeing them from cash constraints and giving them the opportunity to grow their business.
<h3>Aiming to reach another key stakeholder — the farmer</h3>
These small retailers are just the initial customer for Semaai. As a next step, the company wants to support smallholder farmers. For this, the toko tanis move from being a customer to becoming a critical partner for Semaai. The retailers, who have deep relationships and are trusted by the farmers, will be Semaai’s ambassadors on the field. Through these retailers, Semaai will help farmers sell their produce directly to buyers. With the toko tanis serving as an extension of the company, Semaai will efficiently provide offtaking services to the farmers, giving them clear and reliable access to market at fair prices.
<h3>Closing gaps and finding opportunities in a fertile and vital industry</h3>
[caption id="attachment_27769" align="alignright" width="237"]<img class=" wp-image-27769" src="https://content.accion.org/wp-content/uploads/2023/03/Screen-Shot-2023-03-02-at-20.31.07-e1677809329181.png" alt="Semaai app screenshot" width="237" height="303" /> <em>Semaai app screenshot</em>[/caption]

Indonesia’s agriculture industry is massive and vital to the country’s economy and food supply. The sector includes almost <a href="https://www.bloomberg.com/news/articles/2021-11-26/millennial-jobs-indonesia-s-plan-to-create-new-farmers-shows-promising-numbers" target="_blank" rel="noopener noreferrer">40 million farmers</a> and many small businesses, accounting for about 30 percent of employment. It also significantly contributes to the country’s GDP (<a href="https://www.ifad.org/documents/38714170/39972509/Investing+in+rural+people+in+Indonesia.pdf/70e8e737-5a47-4826-89db-de5c60da6c02" target="_blank" rel="noopener noreferrer">13.5 percent</a><a href="https://www.ifad.org/documents/38714170/39972509/Investing+in+rural+people+in+Indonesia.pdf/70e8e737-5a47-4826-89db-de5c60da6c02">)</a>. However, the agriculture industry and its stakeholders remain highly marginalized and underinvested. The farmers and all the small businesses that work with them are crucial for all of us to continue living our lives, yet we have not supported them enough. Given this, there is a need (and significant opportunity) in this industry, and Semaai wants to play a crucial role in empowering the farmers and retailers and improving their livelihoods.
<h3><span lang="EN">Having a solid founding team with great complementary skills</span></h3>
[caption id="attachment_27762" align="aligncenter" width="1024"]<img class="size-large wp-image-27762" src="https://content.accion.org/wp-content/uploads/2023/03/Screen-Shot-2023-03-02-at-20.29.22-1024x680.png" alt="Semaai co-founders: Yoga Anandito, Gaurav Batra, Abhishek Gupta" width="1024" height="680" /> <em>Semaai co-founders: Yoga Anandito, Gaurav Batra, Abhishek Gupta</em>[/caption]

Each member of Semaai’s founding team brings a different but complementary set of experience and knowledge. <a href="https://www.linkedin.com/in/abhishekg-a/" target="_blank" rel="noopener noreferrer">Abhishek</a> sees things from 10,000 feet, with an eye on the numbers and KPIs. He understands what has worked (or not worked) in various national and local programs focused on rural area development. He has a development finance background after a career with the World Bank in the US, Indonesia, and India. <a href="https://www.linkedin.com/in/yoga-anindito-4bba7161/" target="_blank" rel="noopener noreferrer">Yoga</a> is the operator and key person on the ground, with extensive experience working on the ground and seeing firsthand the pain points people face in the space. He previously ran a fertilizer distribution startup making him perfectly placed to figure out what solutions are essential and needed. Lastly, <a href="https://www.linkedin.com/in/gaurav-batra-b4665240/" target="_blank" rel="noopener noreferrer">Gaurav</a> is the tech and product head who previously led multiple tech teams for local and global startups in India and Indonesia. Gaurav has long been looking to build something of his own that is meaningful and now leads tech at Semaai.
<h3>Seizing the right moment to support the agriculture ecosystem</h3>
[caption id="attachment_27763" align="aligncenter" width="1024"]<img class="wp-image-27763 size-large" src="https://content.accion.org/wp-content/uploads/2023/03/Screen-Shot-2023-03-02-at-20.29.42-1024x575.png" alt="Semaai team at a drone demo" width="1024" height="575" /> <em>Semaai team at a drone demo</em>[/caption]

<a href="https://www.accion.org/how-we-work/invest/accion-venture-lab" target="_blank" rel="noopener noreferrer">At Accion Venture Lab</a>, we invest and support startups providing digital solutions and financial services to underserved people and communities. Agriculture is a key focus theme given how the sector remains underinvested and the key players highly marginalized.

While Semaai is our first foray into backing an agritech startups in Southeast Asia, it joins many other fast-growing agritech companies in our portfolio, including <a href="https://www.pula-advisors.com/" target="_blank" rel="noopener noreferrer">Pula</a> and <a href="https://www.accion.org/learning-new-skills-helped-this-longtime-farmer-thrive" target="_blank" rel="noopener noreferrer">Apollo</a> in Africa, <a href="https://www.accion.org/agri-inputs-b2b-marketplace-agrim-emerges-from-stealth-mode-with-2m-in-seed-funding-from-omnivore-india-quotient-and-accion-venture-lab" target="_blank" rel="noopener noreferrer">AgriM</a> and <a href="https://www.accion.org/farm-automation-tech-opens-financial-access-for-aquaculture-farmers-in-india" target="_blank" rel="noopener noreferrer">AquaExchange</a> in South Asia, and <a href="https://www.accion.org/how-one-company-uses-tech-to-support-brazilian-farmers" target="_blank" rel="noopener noreferrer">Terra</a><a href="https://www.accion.org/how-one-company-uses-tech-to-support-brazilian-farmers">Magna</a> in Latin America.

We have seen how Indonesia’s agriculture industry has recently started becoming more tech-enabled, with a wave of agritech startups emerging. In addition, we can see that stakeholders are increasingly going digital and younger generations are beginning to join the family business. Combining these factors with the massive market that the sector represents, we can see significant opportunities for companies like Semaai to create sustainable impact and return.

With this latest round of funding, Semaai will continue to work with toko tanis and deepen their relationship further by addressing other pain points in addition to sourcing inputs. Semaai is in the early stages of piloting a financial product for their key customers, allowing them to buy inventory on credit. The company will continue innovating and partnering with toko tanis to serve smallholder farmers.

We believe Semaai is tackling massive problems in the agriculture industry, and doing so in a carefully phased, innovative, and sustainable way. We are excited to be with the company in this early stage and see the impact they can bring to industry stakeholders, especially the toko tanis and smallholder farmers. We are proud to support their journey.

Empowering Indonesian agribusinesses through digitization

Why we invested in MyRobin, a digital platform in Indonesia that provides blue-collar workers with access to fair employment opportunities, training, and embedded financial services

In Indonesia, blue-collar workers — like couriers, warehouse staff, cleaners, and daily laborers — fill essential roles but are highly marginalized because they have informal positions, short-term contracts, incomplete work profiles, irregular and fully cash-based salary payments, and no opportunities to move up and upskill. All of this has led these workers to be excluded from accessing formal financial services. So, we are truly excited to now partner with <a href="https://myrobin.id/" target="_blank" rel="noopener noreferrer">MyRobin</a>, a digital platform that provides these blue-collar workers with improved opportunities and much-needed financial services, a goal aligned with Accion Venture Lab’s mission. <a href="https://www.accion.org/myrobin-id-workforce-as-a-service-marketplace-announces-close-of-pre-series-a-led-by-accion-venture-lab-sosv" target="_blank" rel="noopener noreferrer">As participants in MyRobin’s</a> pre-Series A round, we are thrilled to have the opportunity to work with founders Siddharth Kumar and Ardy Satria Hasanuddin, the team, and our co-investors to help the company reach and support blue-collar workers in Indonesia.

We invested in MyRobin because they:
<h4><strong>Serve and improve the lives of blue-collar workers in Indonesia</strong></h4>
The company <a href="https://www.bps.go.id/statictable/2009/04/16/970/penduduk-15-tahun-ke-atas-yang-bekerja-menurut-lapangan-pekerjaan-utama-1986---2020.html" target="_blank" rel="noopener noreferrer">estimates that there are at least 50 million blue-collar workers in Indonesia</a>, and this figure is expected to grow as demand for workers to fill roles from fast-growing industries of e-commerce, logistics, and others will continue to increase. However, despite being an integral part of these businesses, these workers normally find themselves outside of proper employment and the formal financial system. Most of them work part-time, lack employment certificates, receive less than $300 per month on average, and struggle to progress into higher-value roles.

MyRobin works to provide these workers with a better alternative. By addressing the various problems that these workers are facing, starting with employment, the company aims to play a role in uplifting the lives of these workers. From couriers to warehouse workers, kitchen staff to field personnel, a significant portion of the population depends on these roles for employment, and it is crucial to continue finding ways to support them.
<h4>Take a holistic approach to build their platform</h4>
MyRobin understood that uplifting the lives of these workers start with helping them secure their livelihood, so they intervene at the start of this process – the job search. Blue-collar workers find roles via informal means like social media and referrals. Given this, MyRobin focused on: (1) building a strong community where workers can support each other and refer jobs, (2) partnering with enterprises and sharing open positions, and (3) creating a seamless and fully digital application process. MyRobin has organized and streamlined the job-hunting process, allowing workers better chances at landing fair employment opportunities (MyRobin also vets the roles on their platform).

The company’s support does not stop here. After landing a role, workers have access to other benefits such as affordable motorbike leases, discounts on daily needs such as motor oil, ability to build a digital profile (their version of LinkedIn, which is useful for keeping track of work history for future applications), and trainings and upskilling programs. MyRobin also provides embedded financial services, starting with advance access to their earned salaries but with plans to expand further to other credit products and microinsurance. These features add tremendous value to the workers in both the present and the future. MyRobin has built a platform truly focused on serving the blue-collar worker needs, and it is only through this holistic approach that the company will be able to impact the lives of these workers and build long-term resilience.
<h4>Solve the pain points of enterprises by providing a fully digital solution</h4>
As open roles are a key value proposition of the platform, MyRobin partners with large enterprises that hire blue-collar workers. And for those partnerships to work, MyRobin knew that it was crucial that the company solved the pain points faced by those corporates. The company worked diligently to understand the issues faced, and the major pain points were clear: (1) hiring and managing workers at scale and (2) reducing worker turnover.

For this, MyRobin built an end-to-end digital solution for enterprises that allows them to hire pre-screened, quality blue-collar workers at scale and in under 24 to 36 hours. In addition, MyRobin provides a dashboard to help monitor and track these workers and handles the salary payments, significantly reducing management costs. Finally, MyRobin also decreased churn of the workers through the value-added services available on the platform. By solving these pain points, MyRobin has turned itself into a key partner of enterprises, which will allow them to continue sustainably providing holistic support to the blue-collar workers on their platform.
<h4>Shown impressive growth and execution despite the challenges of the pandemic</h4>
MyRobin launched their platform in the midst of the COVID-19 pandemic with Siddharth (CEO) stuck in Singapore and Ardy (CTO) in Jakarta. As I had conversations with the company, the founders and team continued to demonstrate success as they built their business despite the challenges. MyRobin was able to develop the initial version of the platform, secure partnerships with key corporates including Shopee, Anteraja, Shipper, and others, and grow their blue-collar community to over two million members — all during the pandemic.

Ultimately, MyRobin has the opportunity to transform the lives of blue-collar workers in Indonesia by providing them providing fair employment opportunities, access to benefits such as a digital profile and upskilling programs, and much-needed financial services. We are excited to work with and support the company as they bring greater financial inclusion and resilience to these workers.

MyRobin is our fifth portfolio company in Southeast Asia and the second made during the pandemic, along with <a href="https://www.accion.org/building-resilience-in-southeast-asia-through-inclusive-fintechs" target="_blank" rel="noopener noreferrer">our investment in Fairbanc</a>. We also recently <a href="https://www.techinasia.com/pintek-series-a-funding" target="_blank" rel="noopener noreferrer">followed on in the Series A</a> of <a href="https://www.accion.org/making-education-accessible-through-fintech" target="_blank" rel="noopener noreferrer">specialized education lender Pintek</a> in Indonesia while continuing to actively support <a href="https://www.accion.org/innovation-msme-finance-philippines" target="_blank" rel="noopener noreferrer">digital B2B SME lender First Circle</a> and <a href="https://advance.ph/" target="_blank" rel="noopener noreferrer">earned-wage-access (EWA) platform Advance</a> in the Philippines. This is only the beginning of our work in the region, and we look forward to working with and supporting more innovative and impactful founders and startups that contribute to greater financial inclusion.

Improving the lives of blue-collar workers in Indonesia through a digital platform

How fintechs can play a role in helping families and small businesses in the region recover from the COVID-19 crisis

Southeast Asia is home to over 650 million people and is a region that, despite strong economic growth pre-COVID-19, still has a significant amount of the population with unmet essential needs. <a href="https://internationalfinance.com/southeast-asias-growing-digital-banking-landscape/" target="_blank" rel="noopener noreferrer">More than 70 percent of people in Southeast Asia</a> do not have access to bank accounts, insurance penetration rates range between one and three percent, and nearly two-thirds of small businesses don’t have access to formal financing options. While already an issue before COVID-19, there is even greater need to address the problem now given the loss of livelihoods and income and the disproportionately negative effect of the pandemic on the lower-to-middle income segment.

This is where we believe that fintechs can play a significant role and why we are eager to expand our work in Southeast Asia. There is a clear opportunity and opening to break through and support those that live outside the formal financial system. Through over 50 investments globally, we have seen how fintechs play a pivotal role in driving inclusion and we believe that this can be the case as well here in Southeast Asia. Here are some ways fintechs can play a key role in pushing forward the recovery of the region:
<h3>Target consumers and businesses that now have digital profiles</h3>
Two trends have influenced a growing digital base. First, the rise in internet users – <a href="https://internationalfinance.com/southeast-asias-growing-digital-banking-landscape/" target="_blank" rel="noopener noreferrer">over 40 million people went online for the first time last year</a>. Second, pandemic-related lockdowns, by necessity, have led to an increased usage of online and digital channels for both individuals and enterprises. The outcome is the creation of millions of new digital profiles and data points. Those that were previously invisible to the formal financial system now have an expanding digital record that can be confirmed. With the digital push, consumers and small businesses are now more than just their (lack of) credit history. Highly relevant data is now available, and fintechs can use that information to serve this untapped market.
<h3>Explore platforms and partnerships for data and acquisition</h3>
Fintechs have always utilized business models that push the boundaries of data and acquisition. One recent trend that has been gaining momentum is embedded finance, where financial services are added on top of core offerings of tech platforms. By going through a platform approach or by partnering with other stakeholders, fintechs can minimize acquisition costs, gain access to transaction data, and efficiently deliver financial products. A good example is our most recent investment in Indonesia, a startup called Fairbanc. <a href="/an-embedded-finance-platform-helps-mom-and-pop-shops-grow-in-indonesia" target="_blank" rel="noopener noreferrer">Fairbanc partners with FMCGs to provide their merchants</a>, normally small mom-and-pop stores, with a buy-now, pay-later solution. Integration and partnerships can greatly improve the economics of financial services. As more consumers and businesses use various types of tech platforms such as e-commerce sites and procurement and inventory platforms, fintech startups can find a way to efficiently reach new customers and provide high-quality financial solutions.
<h3>Meet the financing needs of adjacent, underserved sectors</h3>
Financial services have always been cross-functional, able to operate across all sectors. But we see this becoming more relevant now as more agri-fintech, health-fintech, ed-fintech, and even property-fintech startups have sprung up. Pintek in Indonesia is a great example within education. They focus on supporting the education industry by <a href="/making-education-accessible-through-fintech" target="_blank" rel="noopener noreferrer">financing key stakeholders such as schools and students</a>. With this approach, fintechs provide tailored solutions through deep sector and customer knowledge to an underserved segment. While most models cast a wide net initially and look to serve the widest customer bases, we are now seeing increasing focus on key verticals. And fintechs can benefit from this focus, as it gives them domain expertise that leads to strong product-market fit and quick adoption. In addition, the understanding of and relationship with the customer can lead to quick and effective responses to challenging situations such as the pandemic.
<h3>Provide highly relevant financial products that increase inclusion and resilience</h3>
Finally, fintechs must now take a more holistic perspective. While credit has always been the low-hanging fruit, it is key now for fintechs to be able to offer a suite of solutions that address key pain points and build inclusivity. Advance, our Philippine <a href="/a-digital-solution-for-people-living-paycheck-to-paycheck-in-the-philippines" target="_blank" rel="noopener noreferrer">portfolio company that provides employees a way to bridge paychecks</a>, has financial wellness as a key part of their roadmap and overall mission. We believe that this is a necessary approach for fintechs to ensure that the product they develop increases the overall wellbeing and long-term resilience of their customers.

As we continue to face the unprecedented challenges from COVID-19, it is clear that fintechs can and must play a role in the recovery. There is a need to help those that have been hit hardest by this pandemic by connecting them to the resources needed to lift themselves out of it and build a safety net for future difficulties. Inclusive fintech can cross barriers and meet that need for many people and businesses.

At Accion Venture Lab, we look forward to investing in and supporting innovative and highly impactful founders and fintech for inclusion ventures and building the broader ecosystem here in Southeast Asia. We are now on the ground thanks to the generous support of our partners, especially the <a href="https://www.credit-suisse.com/about-us/en/our-company/corporate-responsibility/economy-society/asia-pacific/apac-foundation.html" target="_blank" rel="noopener noreferrer">Credit Suisse APAC Foundation</a> who are providing core funding as part of their commitment to supporting financial inclusion in the region. We believe now is the right time to push the boundaries of innovation, technology, and financial services. While the region is not out of the woods yet, and recovery from the pandemic will take some time, we remain hopeful that by working closely with fintechs, we can play our part in supporting families and small businesses as they recover from the COVID-19 shock and find a way to thrive.

Building resilience in Southeast Asia through inclusive fintechs

Why Accion Venture Lab invested in Fairbanc, a digital platform in Indonesia helping small merchants grow with a seamless inventory financing solution

Mom-and-pop stores are pillars of neighborhoods in lower-to-middle income communities. These family-owned retail shops — called <em>warungs</em> in Indonesia, <em>sari-sari</em> stores in the Philippines, or <em>kirana</em> shops in India — serve as the place where people gather, catch up with friends, and purchase daily essentials like food, mobile phone reloads, sachets of shampoo and soap, and even cigarettes by the stick. Often called “the community pantry,” these small shops play a crucial role in meeting the everyday needs of their neighbors.

Despite the important role they play in their communities, these small businesses can rarely access any form of formal financial support. Even as online payments and other digital financial services gain traction, these small businesses have remained largely unchanged, cash-based, lacking formal record-keeping, and therefore left out of the financial system. Without access to financial products, especially the credit needed to purchase inventory, these small merchants are constrained by the cash they have on hand and can’t properly grow their business or meet increasing demand from their customers.

With this in mind, we are excited to <a href="/fairbanc-secures-funding-from-adb-ventures-accion-venture-lab-east-ventures-and-sampoerna-to-scale-indonesians-micro-merchants-access-to-embedded-credit-products" target="_blank" rel="noopener noreferrer">announce our investment in Fairbanc</a>. Fairbanc is a tech platform in Indonesia that enables inventory financing for small retail shops with a buy now, pay later product that is integrated in the ordering apps of large FMCGs (fast-moving consumer goods) and other retail partners. Fairbanc uses partnerships, technology, and integration with retailers to increase the access to financing for small merchants in Indonesia, 70 percent of which are owned and managed by women.

Here is why we are excited to welcome <a href="https://fairbanc.app/" target="_blank" rel="noopener noreferrer">Fairbanc</a> to the Accion Venture Lab portfolio:
<h3>Seamless user experience for small mom-and-pop shops increases adoption and usage</h3>
As we have worked with more and more small businesses, we have come to understand the importance of providing these microentrepreneurs with a solution that is as seamless an experience as possible. We are excited by Fairbanc’s approach, as the team has been very thoughtful about their design to make sure their pay-later solution is as frictionless as possible for small mom-and-pop shops. There is no need to download an application, buy a device, or complete complicated loan application forms. As most microentrepreneurs aren’t tech savvy and don’t possess sophisticated devices, Fairbanc’s approach is critical in increasing usage and adoption, creating a more impactful solution for this underserved population.
<h3>Closed-loop inventory financing helps businesses grow</h3>
For these small shops, cash continues to be king, especially when it comes to procurement. Unable to access credit from formal sources, inventory is typically purchased through cash at hand (sometimes, they resort to informal lenders) which is a major barrier to buying more goods. Through its pay later solution, Fairbanc removes this constraint and allows the mom-and-pop stores to buy more stock, which they can pay for after they have sold to their customers. The increase in inventory leads to growth in sales, which then starts a positive reinforcing loop through an increased credit line and more purchases. In addition, Fairbanc’s provides closed-loop financing, which means that no cash is exchanged. Instead, the credit provided is used only to purchase inventory, ensuring that the financing they receive is always productive and reinvested into their business.
<h3>Integration with corporate partners creates efficiency</h3>
We have recently seen several successful B2B2C models (or B2B2B in Fairbanc’s case) that acquire end-customers through corporate partnerships. While these initial B2B relationships can have longer sales cycles, they can acquire end customers at scale and efficiently. In Fairbanc’s case, the company works with Unilever, Danone, and other FMCG partners to reach and connect with the small merchants that sell their merchandise. These FMCGs allow access to their merchants because they understand the value proposition – integrating Fairbanc’s the pay-later solution increases inventory purchases of merchants, which in turn leads to top line growth. This win-win collaboration between Fairbanc and their corporate partners allows the company to acquire merchants efficiently and serve the microentrepreneurs in a scalable way. Partnerships are always key when serving the underbanked and underserved, and we can see how Fairbanc has made it a major focus of their business.
<h3>Data-driven approach leads to smart lending decisions</h3>
The integration with FMCGs also gives Fairbanc access to a wealth of historical data on the merchants. By utilizing AI and machine learning, Fairbanc analyzes the data and determines which merchants would benefit from credit – shops that are seeing increased demand but lack the ability to purchase more inventory to meet it. Fairbanc also relies on data analysis to offer a dynamic credit line that is updated each week based on merchants’ weekly performance. This data-driven approach ensures that the credit provided is utilized well and that those shops that are experiencing increases in sales and demand have the opportunity to continue to grow their business with a larger line.
<h3>The pandemic proved how critical this product is for small merchants</h3>
Most of Fairbanc’s pilots took place during the pandemic when small merchants desperately needed credit to keep their stores stocked and businesses operating. Across the different pilots of their product, and especially in the rural areas, Fairbanc saw a substantial increase in usage during the pandemic, indicating the additional funding needs of merchants during this time. The additional credit helped merchants keep doors open and even grow their businesses. It is clear from this experience that Fairbanc’s product is highly relevant, especially now as we continue to support small businesses and help entrepreneurs to remain resilient during this challenging time.

Fairbanc marks our fourth investment in Southeast Asia, alongside <a href="/making-education-accessible-through-fintech" target="_blank" rel="noopener noreferrer">specialized education lender Pintek</a> in Indonesia and <a href="/innovation-msme-finance-philippines" target="_blank" rel="noopener noreferrer">digital B2B SME lender First Circle</a> and <a href="https://advance.ph/" target="_blank" rel="noopener noreferrer">earned-wage-access (EWA) platform Advance</a> in the Philippines. We continue to be excited about supporting innovative and impactful founders and startups that bring greater financial inclusion to the region. We believe that Fairbanc’s platform can have a tremendous positive impact, and we are excited to support the team as they reach more small retailers across Indonesia.

An embedded finance platform helps mom-and-pop shops grow in Indonesia

Inclusive fintech helps both schools and students in Indonesia transition to remote learning during the coronavirus pandemic 

From primary schools to universities, the global COVID-19 pandemic has left education systems worldwide reeling as strict quarantine measures and social distancing protocols have forced schools to pivot their operations. As the crisis continues with no clear end in sight, the education sector must adapt and find a way to go on. For many schools, this has meant transitioning to online distance learning, as this is the safest option for teachers to continue classes for their students. But both lower-income students and small and medium schools risk falling behind as they struggle to have adequate internet access, reliable technology and equipment, and the capability to teach and learn remotely.

<a href="https://www.worldbank.org/en/country/indonesia/brief/world-bank-and-education-in-indonesia" target="_blank" rel="noopener noreferrer">More than half of secondary schools</a> and 90 percent of universities and colleges are private institutions in Indonesia. With fewer options for quality public education, many lower-income families must send their children to private schools. These families have limited access to financial support to help them pay for tuition fees and other school expenses. This burden has only become more challenging as household incomes have dwindled during the pandemic. Pintek, an Indonesian fintech and Accion Venture Lab portfolio company, <a href="/making-education-accessible-through-fintech" target="_blank" rel="noopener noreferrer">makes education more accessible</a> to low and middle-income families and supports small and medium private schools through specialized education lending products.

The pandemic has forced schools to improve their facilities so that teachers can safely host their students back in the classrooms or effectively teach their students at home through online instruction. Pintek understands the urgent need to continue supporting these schools and their students so that learning can continue. Education opens up opportunities for people to build better futures and support themselves and their families.
<h2>Moving classrooms online in Indonesia</h2>
<img class="alignright wp-image-22678 size-medium" src="https://content.accion.org/wp-content/uploads/2020/11/Hacktiv8-coding-student-300x200.jpg" alt="coding student learning at Hacktiv8" width="300" height="200" />Bina Mutu Bangsa is a vocational school located near Jakarta in Depok, Indonesia, that preps students for careers in hospitality, healthcare, and other sectors. The school completely shut down from March through June, cutting off the income generated from enrollment fees while classrooms were closed. Teachers have now transitioned to remote learning by creating online modules and videos for their students to access from home. The school follows government-recommended health protocols for limited in-person instruction by providing masks, face shields, rapid COVID-19 tests, and thermometer guns to conduct health screenings for teachers and students entering the school.

Hacktiv8 is an edtech platform that prepares students for careers in the technology sector. Hacktiv8’s staff quickly transitioned their operations from a mix of in-person teaching and digital modules to fully online instruction when the coronavirus outbreak reached Indonesia. The school prioritized continuing classes with minimal disruption so their students can keep building the skills needed to secure jobs. Though remote learning has been a mostly smooth transition for the school, many students struggle with unreliable internet service, making it difficult to use Hactiv8’s learning platform from their homes.
<h2>How fintech has supported education during this difficult time</h2>
Schools like Bina Mutu Bangsa need support to get through the transition from physical classrooms to online schools. Pintek provided financial support to help Bina Mutu Bangsa and others cover these unforeseen and unbudgeted costs of this transition and bridge the gap when low enrollment fees leave them unable to fund these new initiatives.

<img class="alignleft wp-image-22679 size-medium" src="https://content.accion.org/wp-content/uploads/2020/11/Hacktiv8-tech-school-students-300x200.jpg" alt="students learning in Indonesia" width="300" height="200" />Just as schools face this burden, so have the families and students. Many students and their families are overwhelmed by the burden and additional costs of distance learning on top of regular school fees during this time of significant economic and health challenges. For students of Hactiv8, reduced income has made staying in the online course challenging. To help these adult learners continue their education and parents keep their children in school, Pintek continues to innovate and provide flexible financial products in addition to the normal tuition and student loan support they offer. Pintek introduced a new program, called Pintek Instant, that offers families additional support in the form of small educational loans for things beyond school fees, including books, e-learning content, equipment, and devices. They are also providing loan restructuration for families affected by COVID-19.

From children learning to read to adults gaining new, more relevant skills, education opens opportunities for people to envision a bright future and achieve their dreams. While the pandemic has added significant challenges for both schools and families, finding a way for these institutions and their students to cope with the new normal of learning can help ensure that no one falls behind during these difficult times. By developing new products and providing additional support to its clients, Pintek aims to continue improving lives in Indonesia through accessible education, even if this may be remote.

Schools go virtual with fintech support in Indonesia

Accion Venture Lab invests in Advance to help low- and middle-income workers bridge their cash flow needs and fund unexpected expenses in between paychecks

In the Philippines, <a href="https://www.bworldonline.com/bsp-check-shows-most-filipinos-unbanked/" target="_blank" rel="noopener noreferrer">more than 40 percent of loans</a> come through informal channels. Due to a lack of trust and access to banking institutions, many people turn to their family, friends, and other informal lenders as their main source of consumer credit. People who work in blue collar jobs and entry level or junior positions often live paycheck-to-paycheck and find themselves needing to borrow money when unexpected expenses arise. This is especially apparent during the current COVID-19 crisis as lending firms have scaled back operations but household costs have increased.

At Accion Venture Lab, we understand the importance of responsible consumer financing to help people make ends meet, especially during difficult circumstances. Situations like the coronavirus pandemic place a heavy strain on low-income households that don’t have a safety net. That’s why we’re happy to announce our investment in <a href="https://advance.ph/" target="_blank" rel="noopener noreferrer">Advance</a>, an online platform in the Philippines that allows employees to receive a portion of their salary when they need it. Advance bridges the gap between paychecks and helps its customers cover unforeseen costs and meet payment deadlines. As medical costs, utility bills, rent, and other expenses rarely coincide with the timing of payday, the company provides the liquidity and financial stability these workers need to get by.

We are excited about Advance because they:
<h2>Target an underserved population</h2>
Advance’s target market is low to middle income wage earners with a monthly income of $300 to $700, who are in their early-20s to mid-30s and work in the outsourcing, manufacturing, and services industries. This segment of the workforce is significantly underserved as financial institutions prefer to focus their consumer loans on higher income workers and executives in senior management positions. Advance understands that this is a market where access to responsible credit can greatly improve people’s financial health and stability.
<h2>Provide a responsible alternative to payday lending</h2>
Advance provides a safer, more affordable, and more accessible way for employees to bridge their cash requirements between salary payments. Advance offers an online and fully digital platform that workers can quickly access during times that they are cash strapped. The company also practices responsible lending and avoids over indebtedness by giving its customers a credit limit and a lower-priced product, with an APR similar to rates of credit cards, which have been reserved only for middle and high income users.
<h2>Use other forms of assets as new collateral</h2>
Physical assets have always been the preferred type of collateral for financial institutions. This inevitably places lower-income individuals at a disadvantage when it comes to obtaining credit. Advance uses technology and partnerships to utilize a new form of collateral — salary. One of our key focuses at Accion Venture Lab is to search for ways to unlock financing for the underbanked. We support how Advance is doing this by securing a new form of collateral and serving clients in a responsible and consumer-friendly manner.
<h2>Leverage B2B partnerships for customer acquisition</h2>
Key relationships have allowed Advance to acquire large pools of their end customers efficiently. The company uses partnerships to gain access to and onboard large employee pools. Advance also provides an additional benefit to their business partners. Because many human resources departments don’t have the capacity to offer this employee support, they are happy to partner with Advance to help increase staff retention and morale.
<h2>Operate in the Philippines — a key market for Accion Venture Lab</h2>
Southeast Asia continues to be a relatively new but important market for Accion Venture Lab. Advance marks our third investment in the region, alongside <a href="/innovation-msme-finance-philippines">digital SME lender First Circle</a> also in the Philippines and <a href="/making-education-accessible-through-fintech">specialized education lender Pintek</a> in Indonesia. The Philippines is a country with a large population and a nascent but emerging startup ecosystem, but only <a href="http://www.bsp.gov.ph/downloads/Publications/2017/2017FISToplineReport.pdf" target="_blank" rel="noopener noreferrer">22.6 percent of people</a> have a formal financial account. We are excited to expand our work in this market and support another fintech for inclusion startup continue to scale.

During the current COVID-19 crisis, we have seen the value of Advance’s product as many people are struggling with reduced income and increased medical and food expenses. As liquidity in informal lending sites have dried up and access to ATMs has been disrupted, Advance’s digitally enabled platform continues to provide access to funds for a sizeable population. The Advance team is actively engaging with its clients and working hard to meet their increased financial needs during this pandemic.

We look forward to working with this promising startup’s founders, senior management team, and co-investors to help push forward Advance’s mission to serve the lower- and middle-income workers in the Philippines. We believe there is a strong financial inclusion component to Advance’s offering, and we are excited by the opportunity to support the team as they work towards improved financial health and stability for their customers.

A digital solution for people living paycheck-to-paycheck in the Philippines

We're investing in Pintek to provide educational financing for schools and students in Indonesia

Education is a powerful tool, one that is critical in uplifting the lives of those who live in poverty. Indonesia, Southeast Asia’s largest country, has more than <a href="http://www.gbgindonesia.com/en/education/article/2017/an_overview_of_the_indonesian_education_system_11747.php" target="_blank" rel="noopener noreferrer">111 million people under the age of 25</a> but only over <a href="https://www.worldbank.org/en/country/indonesia/brief/world-bank-and-education-in-indonesia" target="_blank" rel="noopener noreferrer">50 million students</a>. And while the government has increased its education budget and pushed reforms, there's still a substantial gap in accessibility and quality — <a href="http://www.compareyourcountry.org/pisa/country/IDN?lg=en" target="_blank" rel="noopener noreferrer">almost half of students fail to meet minimum standards</a>.

Part of the struggle is that the two key players in the sector — schools and students — do not have access to the financial products they require. That is why Accion Venture Lab is happy to announce our investment in <a href="https://pintek.id/" target="_blank" rel="noopener noreferrer">Pintek</a>, a specialized education lender in Indonesia. Pintek provides financing to small &amp; medium private schools and low-middle income families.

These private institutions often face challenges investing in serving their students. Regulation requires privately held schools to register as foundations. This restricts their ability to provide collateral and access long-term loans to improve facilities and hire staff. This has become an even more urgent obstacle as schools find themselves in need of extra funding to cope with the COVID-19 pandemic. Now they need to invest not only in the regular expenses for maintaining and improving buildings and classrooms and recruiting qualified educators, but also in their online competencies and e-learning platforms. As the future of learning is quickly being accelerated, schools need to be able to adapt and improve their digital capabilities and offerings.

On top of the challenges schools face, students have their own obstacles to overcome. Capacity constrains mean most are left outside of the coveted public system (<a href="https://www.timeshighereducation.com/world-university-rankings/2019/world-ranking#!/page/0/length/25/locations/ID/sort_by/name/sort_order/asc/cols/stats" target="_blank" rel="noopener noreferrer">the five Indonesian universities in the top 2,000</a> are public), so families resort to private options. Students can't attend school if they can't pay the tuition fees. Especially in the last few weeks, as households have seen their income decline as wages have been cut and livelihoods lost, installment payments are necessary to prevent a big decline in enrollments.

At Venture Lab, we are excited that Pintek is serving schools and students through inclusive finance, technology, and innovative processes. And as this pandemic has underscored, investing in critical industries, such as education, is imperative for our shared future. We chose to invest in Pintek because:
<ul>
 	<li><strong>Underserved target customers:</strong> Private schools, which make up more than half of total secondary institutions and 90 percent of colleges and universities, are mostly small or medium size institutions that are not well-funded and cannot obtain loans. Low-middle income families, meanwhile, do not have the cash flow nor the assets to borrow for education. More than half of Pintek’s student loans are provided to first-time borrowers with no credit history.</li>
 	<li><strong>Compelling impact thesis for increased access and quality in education:</strong> Supporting schools and students leads to improved facilities and better enrollment rates. With the ability to borrow and smooth cash flow, private institutions invest in themselves and provide higher-quality service. For students and parents, expanding the tuition payment into more manageable installments opens the doors for lower-income families.</li>
 	<li><strong>Strong growth potential given scalable partnership model:</strong> Despite the country having over 17,000 islands, Pintek has been able to reach schools in 26 out of the 34 provinces through strategic partnerships. Cost-effective customer acquisition is crucial to the company and by reaching customers through its partnerships, Pintek can affordably reach and serve new customers.</li>
 	<li><strong>Southeast Asia is a key market for Venture Lab:</strong> With more than 650 million underbanked people, Southeast Asia is a critical market for Venture Lab as we tackle the issue of financial inclusion. Along with our other portfolio organization in the region, Philippine <a href="https://www.accion.org/innovation-msme-finance-philippines" target="_blank" rel="noopener noreferrer">digital small business lender First Circle</a>, we are looking forward to expanding our activity in the region and supporting more social entrepreneurs by sharing key learnings, experience, and best practices from our work with over 40 fintech companies globally.</li>
</ul>
During the current pandemic, we are proud of how the team has handled the issue and continued to support and work with its customers. Pintek quickly teamed up with edtech platforms and school management systems to provide their school partners financing for these products. The team also sent out a survey to parents to understand their needs and help shape Pintek’s product offering.

As we continue to actively work with Pintek through this crisis, we understand that this is just one bump in the road and we have a long journey ahead. We have seen how Pintek is addressing critical needs, and we are excited to work with the founders, co-investors, and other key partners in pushing forward the company’s mission of providing sustainable and inclusive finance to the education industry. By making good education more accessible, we can build a brighter future for everyone.

Making education accessible through fintech

News

Accion Venture Lab’s Paolo Limcaoco was quoted in this piece on how the investment climate in Southeast Asia, and how the pandemic has changed Venture Lab’s due diligence process. Read the full article, which includes insights from several active investors in Southeast Asia, <a title="https://e27.co/gearing-up-for-the-new-normal-what-do-vcs-want-and-how-can-startups-ace-their-funding-applications-20210921/" href="https://e27.co/gearing-up-for-the-new-normal-what-do-vcs-want-and-how-can-startups-ace-their-funding-applications-20210921/">here</a>.

Gearing up for the new normal: What do VCs want and how can startups ace their funding applications

<span data-preserver-spaces="true">Due Diligence (DD) is an inevitable part of an investment process. In the VC parlance, DD is </span>about the investor and the startup getting to know each other and getting into a comfort level. DD is a long process and often takes weeks or months to complete.

In this episode of <strong>e27</strong>‘s <em>Fundraising Fundamentals</em> webinar series, <strong>Paolo Limcaoco, Investment Officer at Accion Venture Lab</strong> (a fintech VC firm), talks about the three aspects of the process.

<a href="https://e27.co/due-diligence-is-like-dating-before-the-long-term-marriage-accion-venture-labs-paolo-limcaoco-20210323/" target="_blank" rel="noopener noreferrer">Listen on e27's website. </a>

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