Moduers Story – P2P and Crowdfunding


The investment world is surprisingly broad. It’s a shame if we only limit ourselves to just savings and deposits. After investing in mutual funds, I started wondering if there were other investments I could explore. That’s when I discovered investing in insurance which is quite similar to term deposits but with a relatively higher interest rate. The drawback of investing in insurance is that I am required to start with a bigger amount, not even 10 million Rupiah can get you started let alone 10 thousand Rupiah as with mutual funds. The holding period also varies and some can take a minimum of a year. But finally, after some initial hesitation, I made up my mind, even more, determined to try investing and less confused than the first time round.


After a year of investing in insurance and seeing favourable returns, I didn’t look back and kept wondering to myself if there were other good investments. So, after looking around I stumbled upon equity crowdfunding which is investing in a business joint venture. Imagine having ownership in Indomaret, a restaurant, a breeding pond or even a beauty salon with only a few million in capital.


I started reading up on the business to see if it was legitimate and not some money game, whether it was regulated by OJK and what sorts of businesses had potential. In equity crowdfunding, I needed to read up on company financial reports and get smart forecasting projections. The drawback of this investment is that the business is not running yet and so besides betting on returns, we can also suffer losses if the business fails. Because I was prepared for losing part of my investment, I began to study more on this investment.


Two sectors caught my attention namely breeding ponds and minimarket retail. Unfortunately investing into minimarket is closed indefinitely and I keep missing out on the breeding pond business. Finally, I started looking into the Food and Beverages (F&B) and the wellness business opportunity and after reviewing several proposals, I decided to join crowdfunding in F&B. Apparently it was not my time. Not long after transferring the funds and enrolling, they refunded my money back because it turns out that I was a little late in my submission and replaced by someone else. Well, maybe it wasn’t meant to be but right now I am grateful they didn’t accept my application. The reason being is since the pandemic, the F&B is one of the hardest-hit sectors affected by the coronavirus. It’s true that behind one obstacle we still need to be grateful. Investing is not as easy as turning over your palm and surely takes a lot of perseverance and knowledge.


Failing to invest in equity crowdfunding was not a deterrent for me. While continuing with my old investments, I started to look for other opportunities. It was not long before I discovered P2P (Peer-to-Peer) lending which was a new concept I had not heard before.


P2P (Peer-to-Peer) lending is a financial service bringing lenders and borrowers together. Fed up with the money game experience and before I got started again, I immediately called OJK. It might look as though I am exaggerating, but it seems like a wise decision to avoid being trapped in the money game again. License looked okay, the green light is now on, I started studying into P2P.


Data from OJK reveals that there are more than 100 fintech companies in Indonesia having processed their permits, and at that time only 11 had permits finalized. The P2P that I was looking at needed to be an early player. Here I learnt new terms namely NPL (Non-Performing Loan) or the default rate, and also TKB90, which is the success rate of Fintech P2P Lending administrators facilitating the settlement of borrowing obligations within a period of up to 90 days since the due date.


I feel that fintech has a very bright future given the rapid growth in technology. Without a doubt, fintech will likely manage large amounts of fund, and perhaps able to compete with banks in the short-run (although in reality both are synergized and competing in the amount of fund under management). The TKB90 for the P2P that I saw at the time is above 98% and sometimes reaching 99%, a pretty impressive number. Even though 1-2% were late in paying after 90 days (this, however, does not mean they will fail to pay). After calculating, I felt that 1-2% in risk is worth to try and so finally I started pulling funds into P2P.


The shortcomings of P2P (which I have chosen) will require us to look at each company’s ability to repay our loan, whether payment is on time, the company’s finances and their credit rating score. At first, it feels quite daunting with many new terms I did not understand such as DER, EBIT, EBITDA, etc. However, with the limited knowledge that I had, I continued investing. After feeling comfortable with my first project and very minimal funding, I continued on to the second, third, fourth project and without realizing reached close to 80 projects.


At that time due to my busy schedule, I did not really have the time to monitor my investments which started out quite well in the beginning until one day all that changed and suddenly the NPL dropped to 95%, even though 3% looks quite small. But of the projects I had financed, around 35 projects are complete, 45 are still running and 13 are giving red flags, aka on halt. Thirteen projects mean that 30% of them are starting to show the late payment. It is true that 35 projects are complete and I have profited. However, the number of stalled projects is starting to erode my investment capital, losing me money and reaching almost 25% of my investment capital. Instead of making fortune, I was making loses.


Because I couldn’t do much about it, I surrendered and could only pray and wait. While waiting, I did not stop investing and was still diligent in investing. With patience, it turned out that the floating loss I experienced did not materialize and so I made some profit. The world of investing is indeed unpredictable, full of surprises and requires a lot of patience.



Moduers Story is a column written by Moduit users. All experiences are personal to and have become the responsibility of each writer.


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