To fill the gap, we are seeing the rise of alternative models in the region. A promising new model that we’re excited about is revenue-based financing (RBF), offering flexible non-dilutive funding options to digital-first businesses. And today, we are excited to announce our investment in Jenfi, a pioneer of revenue-based financing in Southeast Asia.
A Y-Combinator backed company, Jenfi offers growth-capital-as-a-service (GCaaS) to digital-first businesses and startups that are currently underserved by traditional lenders. With Jenfi, companies can qualify for flexible funding to pursue recurring high-ROI spending related to marketing and inventory. In return, companies pay a percentage of revenue directly attributable to the Jenfi funded growth spending until the funding is fully repaid. In doing so, Jenfi serves as a partner by sharing in the economic success of the underlying business that it backs.
We’ve known founders Jeffrey Liu and Justin Louie since their GuavaPass days, a startup that provided users access to fitness studios across Asia. Having successfully run and exited GuavaPass, Jeff and Justin built Jenfi to help other business owners access growth capital without sacrificing equity. This was also born out of their firsthand experience of not qualifying for traditional sources of credit at their last startup.
We are impressed by the team’s steadfast commitment to their mission and focus on operational excellence. The impact of Jenfi funding on sales is significant: the average customer experiences a compounded sales growth of 26.5% over three months, 60% over six months, and 156% over twelve months.
How are they able to do this? In addition to the team’s strong execution, the proliferation of data, particularly for digital-first companies, is a crucial enabler. Jenfi’s proprietary risk assessment engine is able to determine the creditworthiness of a business and how efficient they are with their growth spending. Unlike traditional lenders whose underwriting model is heavily reliant on cash flow analysis and financial statements, Jenfi taps into a wide array of data sources that offer real-time visibility on how well a company is doing. It integrates with accounting softwares (e.g., Xero and Quickbooks), payment gateways (e.g., Stripe and Braintree), merchant platforms (e.g, Shopify, Shopee, and Lazada), and digital advertising (e.g., Facebook and Google Ads). These integrations allow Jenfi to underwrite an increasing number of digital-native businesses across Southeast Asia, where the Internet economy is expected to exceed $100 billion in GMV this year, tripling to $300 billion by 2025.
Looking into the future, Jenfi does not want to be just another capital provider. Rather, Jenfi aims to be a long-term partner for companies and provide solutions beyond funding. One such example of product development is a suite of analytical solutions to improve marketing and growth efficiency. Jenfi expects to deploy US$15 million over the next twelve months in Singapore, Indonesia, and Vietnam.
As more consumers go digital and spend online, Jenfi is poised to offer better analytical and capital solutions to support the burgeoning digital-native ecosystem in Southeast Asia, and we can’t wait to embark on this journey with Jeff, Justin, and the Jenfi team!