ZVC and Cento Ventures Back Finfra’s Push for Inclusive Lending Solutions in Indonesia

Jakarta-based lending infrastructure provider Finfra secured $2.5 million in a recent funding round, led by Cento Ventures with participation from Z Venture Capital, Accion Venture Lab, Matiss Ansviesulis (founder of Avafin), and other existing investors. This new funding aims to bolster Finfra’s efforts to deliver more efficient lending solutions for underserved business sectors across the region.

Embedded finance is reshaping the lending landscape worldwide, improving user experience while reducing customer acquisition costs (CAC) for businesses. This model is gaining momentum among consumer lenders in Southeast Asia, especially within the Buy Now, Pay Later (BNPL) sector. 

However, the potential within business lending remains largely unaddressed. For instance, Indonesia’s MSME (Micro, Small, and Medium Enterprises) sector alone faces an estimated financing gap of $234 billion, according to a 2023 report by the International Finance Corporation (IFC).

Finfra aims to lead Southeast Asia’s business-to-business (B2B) embedded finance sector, leveraging its full licensing and API-driven platform for tailored integration. 

Offering “Lending as a Service” (LaaS), Finfra enables non-financial companies to extend credit services to their MSME (micro, small, and medium enterprise) clients using existing transaction data. 

Through this model, platform businesses can provide lending services without directly bearing the complexities of regulatory compliance or the responsibility of being a lender. Finfra manages technology integration, data analysis, and access to licensed lending resources, creating a sustainable lending ecosystem for businesses and borrowers.

With this approach, Finfra benefits a wide array of stakeholders. Lenders gain entry to underserved MSME segments without needing their own lending licenses, which is crucial in Indonesia’s tightly regulated market, especially following the OJK’s (Financial Services Authority of Indonesia) freeze on new license issuance in late 2021. 

Platform businesses can increase customer retention, boost lifetime value, and drive up revenue and Gross Merchandise Value (GMV). Borrowers, in turn, gain access to lending products that were previously inaccessible.

Z Venture Capital (ZVC) sees Finfra as uniquely equipped to bridge the MSME credit gap with a scalable, low-risk model that operates as a facilitator rather than a direct lender. 

By avoiding exposure to Non-Performing Loan (NPL) risks and the need for disbursement capital, Finfra mitigates two major challenges in the lending sector. The company’s regulatory licenses and proprietary technology for embedded financing provide a robust advantage in a market with significant barriers to entry. 

ZVC is also optimistic about potential synergies with its affiliate, LINE Bank. It anticipates that Finfra’s model could complement LINE’s banking operations as the company grows globally.

The new funding will help Finfra expand its customer onboarding capabilities and enhance its data analytics, credit scoring, and risk assessment tools, further reinforcing its responsible lending practices. 

Additionally, Finfra’s partnership with Tyme Group, a digital banking operator with a presence in South Africa and the Philippines, marks a major step toward expanding in Indonesia. This collaboration will enable Tyme to deliver embedded lending solutions like merchant cash advances to Indonesian SMEs, supporting Finfra’s goal of fostering a more inclusive lending ecosystem in Southeast Asia.

With Cento Ventures and Accion Venture Lab joining as fellow backers, ZVC expressed enthusiasm for supporting Finfra’s growth journey, noting its plans to help the team scale its impact within the regional market.

After this funding round, Finfra’s total raised capital is $4.3 million. Since its previous fundraising, Finfra has expanded its client base by twofold and is on track to more than double its quarterly gross profit in Q4 2024 compared to the same quarter last year. 

To date, Finfra has facilitated over $65 million in credit for underserved businesses and entrepreneurs in Indonesia, counting notable tech scaleups like GoCement and Mekari among its clients.