After the boom of P2P business lending, a new funding model has become the talk of the town in Indonesia. Equity crowdfunding (ECF) platforms, which enable private companies to launch "mini-IPOs" by issuing shares to investors, are giving P2P business lenders a run for their money.
Both P2P business lenders and ECF platforms are trying to solve the same problem: SMEs' lack of access to financial institutions to get the capital they need. But the net is cast wider through ECF platforms, which also allow SMEs to retain their private company status as long as they do not cross the 300-shareholder limit,.
Major P2P players like Koinworks and Investree have achieved “centaur” status, a term used to describe startups valued between $100m and $1bn. Niche players like Amartha, which focuses on MSMEs founded by women, are also thriving. However, interest rates for P2P loans can be very high. Koinworks, for example, charges between 0.75% and 1.67% per month, or up to 20% a year.
ECF platforms, on the