bukukas Secures $10M Funding to Empower Indonesian SMEs

Indonesia’s economic foundation is comprised of small and medium-sized enterprises, contributing 60% of the nation’s gross domestic product. While many of these businesses have traditionally managed finances manually, the challenges presented by COVID-19 have accelerated their adoption of digital solutions. BukuKas, a startup focused on assisting SMEs with their online transition, recently announced the completion of a $10 million Series A funding round, spearheaded by Sequoia Capital India.

Established in December 2019 as a digital bookkeeping application, BukuKas is broadening its service offerings with the ambition of developing a comprehensive “end-to-end software stack” tailored for small businesses. The company’s long-term objective includes the launch of a digital banking platform specifically designed for SMEs.

This funding round, increasing BukuKas’ total funding to $22 million, saw participation from existing investors including Saison Capital, January Capital, Founderbank Capital, Cambium Grove, Endeavor Catalyst and Amrish Rau.

By November 2020, BukuKas had registered 3.5 million small merchants and retailers as users, with 1.8 million actively using the platform each month. The platform processed $17.4 billion in annualized transactions during that period, representing over 1.5% of Indonesia’s $1.04 trillion GDP.

BukuKas was co-founded by Krishnan Menon, serving as chief executive officer, and Lorenzo Peracchione, the chief operating officer. The two initially connected eight years ago while working at Lazada Indonesia.

Menon’s prior venture was Fabelio, an Indonesian online retailer specializing in home furnishings. He regularly visited smaller Indonesian cities, such as Jepara and Cirebon, to source furniture.

“It became clear that the conditions in Jakarta are significantly different from the rest of Indonesia, ranging from the adoption of software to access to financial services,” he explained to TechCrunch. Through conversations with merchants and suppliers, Menon observed a lack of products specifically designed with their needs in mind, despite the presence of 56 million small businesses nationwide.

Peracchione stated that he and Menon had been exploring potential startup concepts for some time. “When he shared his vision for addressing cash flow visibility for SMEs, it immediately resonated with me,” Peracchione said. “My father was a small business owner, and I personally witnessed the challenges and successes inherent in running a small enterprise.”

Following discussions with 1,052 merchants, they determined that starting with digital bookkeeping would provide valuable data, ultimately facilitating access to more financial services.

“Our vision has evolved to encompass providing a complete software solution to digitize SMEs and support them across various operations, as a precursor to establishing an SME-focused digital bank,” Menon stated.

Beyond digital ledger capabilities, BukuKas provides features such as payment reminders via WhatsApp, automated invoice generation, inventory management, and expense analysis to help businesses understand their profitability. The company is planning to integrate digital payments this month, and will introduce additional tools throughout 2021 to assist businesses with online sales, including online storefronts, promotional tools, and social media sharing capabilities.

“The COVID-19 pandemic has prompted SMEs to embrace digitization, but they require user-friendly, mobile-first tools to manage their businesses and expand their online presence,” Menon noted.

The application primarily serves smaller cities and towns in Indonesia, as approximately 73% of BukuKas users are located outside major metropolitan areas like Jakarta. These users represent diverse sectors, including retail, food service, grocery stores, mobile credit providers, social commerce sellers, wholesalers, and service businesses. In September 2020, BukuKas expanded its market reach by acquiring Catatan Keuangan Harian, a digital ledger app with 300,000 monthly active users.

Indonesia’s substantial number of SMEs makes it an attractive market for companies supporting digitization efforts. For instance, India’s Khatabook, valued between $275 million and $300 million after its May 2020 funding round, recently launched BukuUang in Indonesia. Other companies in this sector include Y Combinator-backed BukuWarung, Moka and Jurnal, all offering solutions to help SMEs digitize their operations.

Menon believes BukuKas’ strength lies in the team’s experience building businesses in Indonesia over the past seven years. They launched a “Know Your Profits” module based directly on user feedback, and offer a streamlined onboarding process, a simple interface, and an offline mode for users with limited internet connectivity.

“While individual features can be replicated, we are confident that our ‘integrated end-to-end software stack’ approach, combined with our unwavering focus on simplicity, deep understanding of our users, and exceptional service, will distinguish BukuKas from its competitors,” he added.

The Series A funding will be allocated to user acquisition, expanding the engineering and product teams in Jakarta and Bangalore, and introducing new services for merchants. While potential expansion into other Southeast Asian markets is being considered, “our immediate priority is to consolidate and strengthen our leadership position within the SME sector in Indonesia,” Menon said.