Indonesia's Ethis Group is bolstering Shariah compliant crowdfunding platforms, aiming to raise $10 million in an upcoming full Series A round

JAKARTA – Ethis Group, which operates regulated Shariah-compliant crowdfunding platforms in Indonesia, Malaysia and Dubai, has raised $1.6 million in pre Series-A funding.

Ronald Yusuf Wijaya, Co-Founder & CEOof  PT Ethis Fintek Indonesia, told Salaam Gateway the super angel investors include corporate leader Tan Sri Wan Zulkiflee, and Daud Vicary Abdullah, a renowned figure and thought-leader in Islamic finance and banking, both from Malaysia, and Dubai-based Khurram Hilal, CEO of global Islamic banking at a leading international bank.

The funds will be used by Ethis Global Sdn Bhd to scale up operations in existing markets, acquire licenses and set up in new jurisdictions such as Oman and Turkey. It will develop new technology as part of the group’s planned milestones leading up to their full Series A round, with Ethis aiming to raise $10 million from institutional and strategic corporate investors.

“This year we aim to improve our product and market penetration. We will also attend Dubai Expo 2020 in November and hopefully we can promote the Indonesian peer-to-peer (P2P) lending industry and bring more investment to Indonesia,” said Wijaya.

“With the regulator or financial service authority (OJK), we also want to upgrade our operational status from registered P2P lending (limited operation commercially) to licensed P2P lending (fully operation commercially) by the end of this year. Next year, we intend to expand our offerings to include agriculture and waqf issuers and other projects while also monitoring the development of regulation in Indonesia,” he added.

The regulator will soon revise fintech P2P lending regulation POJK Number 77/2016. This will include updates on the fundraising policy where licensed P2P are allowed to raise funds only after three years of operations. OJK also plans to lift the earlier moratorium on new P2P lending registration, in effect since February 2020, according to Wijaya.

Ethis Group was founded in 2014 and has more than 31,000 active users globally. It has been operating in Indonesia via Ethis Indonesia since 2015, matching retail investors from more than 50 countries with impact-investment campaigns, initially focused on property development for social housing and more recently introducing SME supply-chain projects.

GROWING MARKET

Wijaya, who is also the General Chairperson of the Indonesian Sharia Fintech Association (AFSI), said that the Sharia P2P lending industry has been growing by more than 70% in terms of total disbursement volume since the COVID-19 pandemic hit. The total volume of fintech P2P lending financing increased by 70% to 1.7 trillion rupiah ($119.3 million) at the end of 2020, compared to 1 trillion rupiah ($70.2 million) in 2019. For 2021 alone, up to September, the total volume has increased by 75% compared to September 2020.

Ethis Indonesia disbursed 60 billion rupiah ($4.2 million) in financing last year. So far this year, Ethis Indonesia disbursed 100 billion rupiah ($7.02 million) in financing.

“There is wider digital adoption since people have been working from home. The existence of Bank Syariah Indonesia as the first category four Islamic bank has increased awareness, familiarity and literacy of Sharia products for the conventional market. With Bank Syariah Indonesia, the lenders are also having more options to save and place their funds and it make Sharia P2P lending grow,” he said.

There are currently nine Sharia P2P lending platforms registered and licensed by OJK, namely Berkah fintek (registered), Papitupi Sharia (registered), Qazwa (registered), Ethis Indonesia (registered), Kapital Boost (registered), Ammana (licensed), Dana Syariah (licensed), ALAMI (licensed), and Duha Sharia (licensed).

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