Xendit Becomes Indonesia's Latest Unicorn with $150M Funding

Xendit Secures $150 Million Series C Funding, Reaching $1 Billion Valuation

A new company has achieved unicorn status in Southeast Asia. Jakarta-based Xendit, primarily recognized for its digital payment infrastructure, but also involved in a range of financial services, has announced a $150 million Series C funding round. This investment elevates the company’s valuation to $1 billion.

Investment Details and Background

Tiger Global Management spearheaded the funding round, with contributions from existing investors including Accel, Amasia, and Goat Capital. Notably, Goat Capital was co-founded by Justin Kan, a former Y Combinator partner. Xendit was the first Indonesian startup to participate in the Y Combinator accelerator program back in 2015.

Just six months prior, Accel led Xendit’s $64.6 million Series B funding. This latest round brings the company’s total funding to $238 million. Xendit was established in 2015 by Moses Lo, the current chief executive officer, and Tessa Wijaya, the chief operating officer.

Expansion and Market Presence

At the close of the previous year, Xendit broadened its operations into the Philippines. The company now holds a significant position as a leading payment provider within the country.

In July, a strategic investment was made in Dragonpay, a well-established online payments platform.

Future Plans and Growth Strategy

Wijaya explained to TechCrunch that the new capital will be allocated towards expanding into additional countries and enhancing the company’s product offerings in existing and new markets.

Xendit intends to introduce supplementary value-added services to its portfolio.

Financial Performance

The company has reported a year-over-year increase of over 200% in total payments volume. Currently, Xendit processes an annual total payment volume (TPV) of $9 billion.

Adapting to Market Changes

Prior to the COVID-19 pandemic, a substantial portion of Xendit’s clientele operated within the travel sector, experiencing significant disruption as a result. However, the company has successfully diversified its customer base.

“A key segment is comprised of SMEs. We saw 10,000 SME sign-ups on our platform by August alone. We’re also seeing growth with fintech companies, particularly accounting platforms in Indonesia. Furthermore, we’ve extended our reach to traditional enterprises, such as telecom companies with retail outlets, who have adapted to the closure of shopping malls and are now utilizing our services.”

Client Base and Market Landscape

Xendit serves a diverse range of clients, from small and medium-sized enterprises (SMEs) to major regional tech companies, including Traveloka, Wise, Wish, and Grab.

Digital payments across most Southeast Asian nations are highly fragmented, with consumers utilizing a variety of methods, including digital wallets, buy now, pay later options, virtual accounts, and traditional credit and debit cards.

Payment Solutions Offered

Xendit provides businesses with the ability to accept payments through multiple methods via three integration options. These include direct payment URLs, web and mobile checkouts compatible with e-commerce platforms, and application programming interfaces (APIs).

Beyond Payment Infrastructure

While primarily known as a payment infrastructure provider, often described as “a Stripe alternative built for Indonesia and Southeast Asia,” Xendit is also developing other services.

“In Southeast Asia, a singular focus isn’t sufficient; concentrating solely on payments is not enough,” Wijaya stated. “The goal is to become the all-encompassing platform for merchants to onboard and remain within the digital transaction ecosystem.”

Exploring New Financial Services

Xendit is currently piloting working capital loans for merchants and investigating the possibility of issuing credit cards in partnership with other companies, given the limited credit card penetration in Indonesia and the Philippines.

“Merchants transitioning online require more than just payment solutions; they need access to services like subscriptions to Shopify or Google Suite to fully embrace a digital-first approach.”

Localized Expansion Strategy

Xendit’s expansion into new markets, such as Malaysia and Vietnam, will be guided by addressing the specific challenges of each region.

For instance, disbursements, including marketplace refunds, presented difficulties in Indonesia, prompting Xendit to prioritize resolving this issue. In the Philippines, the primary challenge was accepting payments, leading to the development of direct debit with Grab.

Local Expertise as a Key to Success

“The strategy we employed in the Philippines – hiring a substantial number of local experts who understand the market, rather than dictating solutions – has proven highly effective, and will continue to shape our expansion plans,” she explained.

Competitive Landscape

Xendit’s competitors in its current markets include Midtrans in Indonesia, which was acquired by Gojek in 2017, and PayMongo in the Philippines, backed by Stripe.

Differentiation Through Localization

Wijaya emphasized that Xendit’s competitive advantage lies in its combination of a global perspective with a strong commitment to localization.

“An investor survey revealed that potential customers appreciate Xendit’s unwavering dedication to on-the-ground presence. We differ from competitors whose expansion involves merely establishing a sales team. When we expand, we commit to building a complete team, including partnership and customer success personnel.”

Industry Recognition

Alex Cook, a partner at Tiger Global Management, stated in a press release, “Xendit’s digital payments infrastructure, specifically designed for Southeast Asia, is rapidly becoming the standard for financial operations in the region. By providing a reliable and secure payment gateway, Xendit has created an entry point to the digital economy for businesses throughout the region.”