[JAKARTA] Modalku, the Indonesian arm of a financial technology firm started by two Harvard alumni, has secured from Sequoia the largest single round of funding for a Southeast Asian peer-to-peer lender to date.
Sequoia India led a 100 billion rupiah (S$10.3 million) Series A funding round in which existing investor Alpha JWC Ventures also participated.
Modalku, a unit of Singaporean startup Funding Societies, matches loan-seeking businesses with investors seeking returns. The lender, whose name means "my capital", has a 0-per cent default rate on its 10 billion rupiah worth of loans since launching in January.
"Stronger SMEs build a stronger Indonesia," Reynold Wijaya, who co-founded the company while studying at Harvard Business School, said in a statement.
"With the latest funding round, we will accelerate our mission of empowering SMEs all throughout Indonesia, starting from our expansion into Bandung next month."
The company began as an idea tossed around between Mr Wijaya and co-founder Kelvin Teo in a tiny room off one of the tunnels between buildings on Harvard's campus.
Traveling to Asia during school breaks, the pair raised US$1.2 million from venture capitalists in Singapore and Jakarta to back their project, which also earned them academic credit.
They pooled another US$400,000 on their own.
They now have deals signed with DBS Group Holdings Ltd, South-east Asia's largest bank by value, and PT Bank Sinarmas, a Jakarta-based lender held by billionaire Eka Tjipta Widjaja.
Sinarmas is committing an initial 10 billion rupiah of funds for Modalku to distribute as loans.