When Hendra Kwik was looking for funding for his nascent fintech startup, the Indonesian entrepreneur struggled to get past the first meeting with venture capitalists. As he watched other overseas-educated founders raise capital, Kwik felt his lack of an Ivy League diploma made him uninvestable.
Fast forward to today, and his five-year-old company, Payfazz, is on a roll.
The startup, which enables financial inclusion through a network of agents that reach into rural areas, raised US$53 million in July 2020 from esteemed US investors Tiger Global and DST Partners. It then became an investor itself in March, when it put US$30 million into Singapore-based online payment enabler Xfers, creating a joint venture called Fazz Financial Group. It was a rare example of two Southeast Asian startups combining their ambitions.
All this wouldn’t have been possible if an organisation some 14,000 km away from Jakarta had not set the ball rolling. Investor attitudes changed, said Kwik, when Payfazz graduated from Y Combinator (YC), a three-month startup accelerator programme based in Silicon Valley, in August 2017. (Xfers graduated YC in 2015.)
California’s Silicon Valley is a Mecca for startups, and YC is very much the standard-bearer for startup programmes. Founded in 2005, it helps founders find product-market fit for their service, and coaches teams on startup fundamentals. More broadly, it gives them access to an enviable network of investors and programme graduates.
That network is broad. More than 2,000 companies have passed through YC, including publicly listed Dropbox, Airbnb, and Coinbase. The programme is dominated by US startups, but YC has targeted international companies in recent years. Southeast Asia represents a small but rapidly growing portion of its intake.
The programme’s most recent winter 2021 batch included 11 participants from Southeast Asia—its highest contingent yet. All told, 42 startups from the region have graduated from YC since Philippines-based hiring platform Kalibrr became the first in 2013, according to YC’s startup tracker tracker Y Combinator Startup Directory Read more .
Payfazz isn’t the only YC graduate that’s extolling the virtues of the programme to others in Southeast Asia. Indonesian digital payments startup Xendit raised US$64.6 million in March, while Jakarta-based logistics startup Shipper raised US$63 million in April. Philippines-based online payment service PayMongo PayMongo The Ken After earning its Stripe, PayMongo shoots for Philippine SMEs Read more has raised US$20 million in under two years, with payments giant Stripe among its backers.
A glance at India shows how things could develop in Southeast Asia. YC has graduated 131 Indian startups, out of which two have gone on to become unicorns. Payments enabler Razorpay and social commerce service Meesho are valued at US$3 billion and US$2 billion, respectively.