Vara Raises $4.8M to Digitize Indonesian SME Payrolls

Vara Secures Seed Funding to Digitize Staff Management for Indonesian SMEs

The Indonesian startup ecosystem continues to witness significant activity, particularly concerning the nation’s approximately 60 million small businesses. Numerous tech companies are actively targeting this sector, aiming to facilitate the digitization of their operations. Companies like BukuKas and BukuWarung have recently secured substantial funding to accelerate their efforts in this domain.

Introducing Vara and Bukugaji

Founded in November 2020, Vara concentrates on streamlining staff management processes for small businesses and their employees. The company offers Bukugaji, an application designed to replace traditional methods – such as notebooks and spreadsheets – used for payroll tracking.

Vara has announced a $4.8 million seed funding round led by Go Ventures, RTP Global, AlphaJWC, Sequoia Capital India’s Surge, FEBE Ventures, and Taurus Ventures. The company was established by Vidush Mahansaria and Abhinav Karale, who initially connected while students at the Wharton School of the University of Pennsylvania. Vara is a participant in the fifth cohort of the Surge accelerator program.

Bukugaji’s Features and Target Audience

Currently, over 100,000 small businesses are utilizing Bukugaji. The app provides functionalities for attendance tracking, salary calculation, worker loan management, and payroll disbursement.

Mahansaria explained that Bukugaji is primarily intended for businesses employing fewer than 30 individuals. These businesses are frequently found in sectors like retail, food and beverage, and labor-intensive services such as construction and transportation. The application incorporates features tailored to different employee types, including shift workers and those with fixed salaries.

From Manual Tracking to Digital Efficiency

“Prior to adopting Bukugaji, the majority of our users relied on notebooks to record attendance and manage payroll,” Mahansaria stated. “A smaller percentage utilized phone note applications or basic Excel spreadsheets.” Bukugaji is designed for independent setup and use, allowing businesses to download and begin utilizing the app without assistance.

The platform is primarily mobile-based, although a web version is also available.

Addressing Financial Inclusion Challenges

Many of the businesses served by Bukugaji employ workers who lack access to traditional banking services. Vara’s founders highlight that a significant portion of these employees operate on a paycheck-to-paycheck basis, often necessitating loans from their employers.

“Employees frequently request cash advances towards the end of the month, when financial needs are most pressing,” Mahansaria explained. “This creates two issues: it ties up the employer’s working capital, and it fosters employee dependence on the employer for emergency funds. Breaking this cycle is difficult due to limited access to formal financial infrastructure within this demographic.”

Exploring Earned Wage Access

Earned wage access (EWA) platforms aim to resolve this issue by providing employees with on-demand access to their earned wages, rather than requiring them to wait for their scheduled payday. EWA companies, including Wagely and GajiGesa in Indonesia, are gaining prominence. While Vara currently has no immediate plans to integrate an EWA feature into Bukugaji, it remains a potential future development.

Leveraging Data for Enhanced Services

“Our complete control over payroll and attendance data provides us with a unique informational advantage within this labor market,” Mahansaria noted. This data can facilitate the introduction of benefits typically unavailable to these workers and establish a digitally-verified employment record.

Future Developments for Bukugaji

Upcoming features for Bukugaji include automated allowances and overtime calculations, dashboard shortcuts, reminders, and customizable reports. The platform will also enable direct salary disbursement. Long-term plans involve offering data analytics to both companies and their employees.

For instance, employees will be able to monitor their earnings trends over time, while employers can identify patterns in attendance and salary data.

Focus on the Indonesian Market

Although Vara may eventually expand geographically, Mahansaria emphasized the company’s current “laser focus on Indonesia,” where SMEs contribute approximately 60% of the country’s gross domestic product and employ the majority of its workforce.