Xendit Raises $64.6M Series B Funding - Indonesian Payments

Digital Transformation Accelerates in Southeast Asia

The COVID-19 pandemic has spurred digital transformation globally, and Southeast Asia is experiencing this shift significantly. This trend has fueled growth for companies building essential digital infrastructure.

Xendit Secures $64.6 Million in Series B Funding

Xendit, an Indonesian startup specializing in digital payment infrastructure, has recently secured $64.6 million in a Series B funding round. This investment was spearheaded by Accel, a prominent Silicon Valley venture capital firm.

Since its founding in 2015, the Jakarta-based company has now raised a total of $88 million. Y Combinator was also a participant in this financing round.

A Pioneering Indonesian Company

Xendit holds the distinction of being the first Indonesian company to participate in Y Combinator’s accelerator program. Furthermore, it was ranked 64th on Y Combinator’s list of top 100 companies, based on valuation and successful exits, as of January 2021.

Processing Millions of Transactions

Xendit serves businesses of varying sizes, processing over 65 million transactions annually, totaling $6.5 billion in payment value. The company’s platform enables businesses to accept payments in both Indonesia and the Philippines through a single integration.

Xendit positions itself as a foundational layer for the next generation of Southeast Asian SaaS companies, aspiring to become the region’s equivalent of Stripe.

Exponential Growth and Key Customers

The company has experienced substantial growth since its inception, boasting a compound annual growth rate (CAGR) of 700%, as reported by COO and co-founder Tessa Wijaya. In 2020 alone, Xendit’s customer base expanded by 540%.

Notable customers include Traveloka, TransferWise, Wish, and Grab. While Xendit has not publicly disclosed specific revenue figures, its growth trajectory is undeniable.

Valuation and Founding Story

As of October 2019, Xendit’s valuation was estimated at a minimum of $150 million, a requirement for inclusion on the Y Combinator list where it ranked 53rd.

The company’s origins trace back to a meeting between CEO Moses Lo and his co-founders while studying at the University of California, Berkeley. Following their participation in Y Combinator, they officially launched Xendit in 2015.

Early Support from Justin Kan

Justin Kan, co-founder of Twitch, played a crucial role as an early benefactor. According to Lo, Kan’s family connections in Indonesia and Y Combinator’s growing interest in Asia contributed to this support.

Evolution from P2P to Comprehensive Payments

Initially launched as a peer-to-peer (P2P) payments platform, Xendit has evolved to offer a comprehensive suite of services. Today, the startup facilitates online payments, marketplace operations, payroll distribution, financial management, and fraud detection using machine learning.

A Vast Market Opportunity

Indonesia, with a population exceeding 270 million – including an estimated 175 million internet users – presents a significant market opportunity. The country’s digital economy is projected to reach $300 billion by 2025.

However, the region’s complexity, characterized by 17,000 islands and various regulatory and technological hurdles, adds to the challenge.

Addressing Infrastructure Gaps

“Trying to build the businesses of tomorrow on yesterday’s infrastructure is holding Southeast Asia’s businesses back,” stated Lo, highlighting the need for modern infrastructure.

Increased Demand and Expansion

The global shift towards digital transactions, accelerated by the pandemic, has increased demand for Xendit’s services. In response, the company has doubled its workforce to over 350 employees.

The pandemic initially impacted Xendit’s business, as many of its customers were in the travel sector. However, increased demand enabled the company to expand into new sectors like retail, gaming, and other digital products.

Future Plans and Regional Expansion

Xendit intends to utilize the new capital to rapidly scale its digital payments infrastructure, aiming to provide millions of small and medium-sized businesses across Southeast Asia with access to the digital economy. The company is also exploring expansion into other Southeast Asian markets, including Thailand, Vietnam, Malaysia, and Singapore.

Similarities to Finix and Regional Focus

Xendit shares similarities with Finix, a San Francisco-based company focused on enabling software companies to become payments companies. However, Xendit emphasizes its commitment to addressing the unique accessibility, security, and reliability challenges specific to Southeast Asia, leveraging its deep understanding of the region’s geographical and cultural nuances.

Accel’s Perspective

Ryan Sweeney, a partner at Accel, believes Xendit has “quietly” developed a modern digital payments infrastructure that is transforming business transactions in Southeast Asia.

“Their team’s combination of deep local expertise and global ambitions means they’re uniquely positioned to do what no other company could do in the region,” he said. “The vision of Xendit is a bold one: they are building the digital payments infrastructure for Southeast Asia, and fits squarely into Accel’s global fintech thesis.”

Accel’s previous fintech investments include Braintree/Venmo, WorldRemit, GoFundMe, Monzo, Galileo, TradeRepublic, Lydia, Public.com, and Flink.

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