Our Value to Clients
Solution to a Market Problem
BIDUK targets gaps in the market for SME that include:
Investment sizes are often too small relative to transaction and due diligence costs for large investors
Collateral and formal financial statements required by conventional banks are inappropriate
Financial product structures and characteristics are not conducive to actual business needs
Potential investors find it difficult to overcome limited business or operating experience, despite strong business models, products or services,
The lending process is burdensome and rife with unintentional bias for women
Closing the financial gap for Indonesian businesses, with a focus on gender balanced teams
Most formal financial intermediaries are unable or unwilling to develop financial products that meet the actual business needs of SME. Rather, banks and other capital providers develop products that are familiar to them, as financiers, which aren’t always well suited to the cash flow needs of growing businesses.
This means that many SME are forced to retrofit financial products to meet their needs, thereby increasing the risk to the financier and the SGB. Effective financial products serve specific needs, while most banking products serve general needs—thus the mismatch.
Clients at the Center
BIDUK uses a behavioral science approach to investing in Indonesian SME. This means we put clients at the center, identify their needs, and develop solutions to their problems.
How does this make a difference?
Typically, investors and banks focus on transactions:BIDUK tries to give SMEs a longer-term relationship with a financial partner
Investors under-appreciate the need for the entrepreneur to trust them.Many financial transactions are focused purely on whether the investor can trust the entrepreneur.BIDUK builds mutual trust.
Because our loan terms are short (6-12 months), BIDUK is able to learn and grow with the client over several loan cycles, which reinforces the partnership between financial service provider and SME.
Innovative Financial Products
BIDUK looks at all aspects of underwriting—both the ability (measured by quantitative ability to repay the loan) and willingness (whether the client wants to make repayment a priority). Our quantitative analysis is based on the cash flows of the business.
Our loans have some parameters, but we aim to be as flexible as possible, by structuring financial products and services that meet the financial needs of growing businesses.