Since Iwan Kurniawan started Modalku with two of his Harvard friends, his deep passion in bridging the financing gap for small and medium enterprises in Indonesia has resulted in starting Modalku: the largest P2P lending platform in Southeast Asia, spawning more than one trillions funding for businesses in Indonesia that will allow them grow to the next level. With his deep-baritone voice and calm composure, Iwan walks us through the origin of Modalku and why P2P lending is necessary for small and medium enterprises in Indonesia.
Can you tell us a little bit about your background?
I was born in Jakarta and then I went to Singapore until I finished my senior high school there. Soon afterwards, I went to Cornell University in the US for a Business Undergraduate program. I decided to return back to Indonesia later on to be back with my family.
So what did you do after you come back from the US?
My first year in Jakarta, I was working in a consulting firm for about a year. I created business strategies for state-owned enterprises and the governments. After that, I joined a global management consulting firm, to be based in Singapore, to focus on works in the financial industry. So I was working with banks, insurance companies and asset management companies to help them build business strategies as well as risk management.
What makes you think that P2P lending is necessary in Indonesia?
When I was in management consulting, I was fortunate to work with several financial institutions across Asia. During that time, I found that despite the best efforts of our financial institutions, many SMEs still face challenges to receive funds to grow their business. Most SMEs do not own sufficient collateral to meet the requirements of financial institutions, or to receive the full amount that they need for their business, and are hence unserved or under-served. Entrepreneurs may also requires specific types of financial products, which are not currently available in the industry. As such, I was inspired to start Modalku along with Reynold Wijaya (CEO of Modalku) and Kelvin Teo (Co-Founder of Funding Societies) to deliver a technology-based solution to bridge the financing gap for SMEs in Indonesia.
So how do you get to know about P2P lending?
During my time at the consulting firm in Singapore, one of the works I did was in China where I was doing some analysis of a company that was doing P2P lending like Modalku. The company was considered as one of the most promising companies back then because the Founder used to build a similar, wildly successful solution in the United States, and management team was full of superstars.
So after you got back to Indonesia, how did Modalku start?
After working for a few years, I was bored and felt like I needed a new challenge. Back then, I was around 25 or 26 years old and I knew that I was ready to do more. One of the biggest e-commerce companies in Southeast Asia now actually offered me a top position, but I refused. I feel like as a young entrepreneur, I should leverage what I have learned to deliver the best impact. Afterwards, I was introduced to Kelvin, who later introduced me to Reynold. He then shared with me that he was setting up a P2P platform in Singapore.
So Modalku started in Singapore?
Yes, we call it Funding Societies both in Singapore and Malaysia and Modalku in Indonesia. Long story short, Kelvin introduced me to Reynold as his partner who is also a student at Harvard. They told me to to join them to build Modalku together because Reynold and Kelvin was still in university at that time, and I would be their go-to person for Indonesia’s operation in particular.
What are the challenges you face when starting Modalku?
There are plenty but we find ways to mitigate those challenges. One of the problems in the beginning was managing the regulations, as well as risk management. For risk management, the data available in Indonesia are not as detailed and as comprehensive as we would like to. Talent-wise, we also found challenges in hiring because we were a small company and our brand was not well-known yet. We also had to find ways to build trust from the public because in the beginning, most of them don’t understand the concept of P2P lending.
Can you give us a real life example of how Modalku is making an impact on SMEs in Indonesia?
A few days ago, I met up with a major agricultural products distributor and they work with farmers to sell their products locally and overseas. While the owners of the business have been doing well for themselves, I saw an opportunity to support them even further. If we are able to help them with financing, they can become a bigger business than they are right now. It is double meaningful for me and Modalku, because A: I am helping the company to grow and B: I will be indirectly helping the farmers they work with.
What do you worry about the most and keeps you up at night?
My biggest worry is always whether my team and I can fully realise the vision of Modalku, which is to help as many SMEs as we can in Indonesia and Southeast Asia. This is only possible if we get the mandate and continuous support from our community. Thankfully the Government, Regulators and Public have so far been very supportive of our work.
What would be the biggest indicator to you that you are doing the right thing?
The biggest indicator to do a startup is when there is a major underserved need that technology can help solve. For example, the SME financing gap in Southeast Asia is US$120B large per annum. Technology (along with other ingredients) can solve for that and help SMEs succeed.
Is there anyone/anything who inspired you to manage the company the way you do, and to define the culture Modalku has?
Working on the dynamic business that is Modalku today, it is no longer a single person nor one single ‘aha’ moment that makes me or my team better. To solve the myriad of challenges that we have faced to date, we have benefitted from valuable input from our advisors, investors, industry contacts, friends and team as well as learning from lessons in the field, whether positive or negative. Running a company is a constant journey, and we try to make the best of what we have.
Want to read more about Iwan Kurniawan? Part 2 of our interview is coming soon, so follow us on Instagram, Facebook and Twitter to keep yourself updated!