Investments into Indonesian fintech startups are set to hit a record high in 2017 at the current run rate, according to an analysis by venture intelligence platform CB Insights. It is estimated that there will be a total of about 50 deals this year alone. Indonesian startups operating in the fintech space began announcing investment rounds in 2014, which saw a total of three deals. Deals in the space rose to 11 in the following year, increasing to 21 in 2016. At the Asia PE-VC Summit 2017, our expert investor panel will discuss the potential for fintech and other internet-enabled sectors to transform Southeast Asia’s largest economy.
Indonesia has pinned hopes on fintech to become one of the key drivers in helping realise its ambition of becoming a $130-billion digital economy by 2020. It is also seen ushering in greater financial inclusion, a challenge that Indonesian banks have been struggling to resolve. A recent study revealed that 80 per cent of the Indonesian population does not have a formal bank account, with 203 million Indonesians earning less than $4.50 a day. “Bolstered by a young, more confident, and growing middle class, and rising smartphone penetration, a burgeoning crop of tech startups are now attacking both consumer and small business financial services in Indonesia,” noted the CB Insights report. Realising the opportunity in this area, traditional banks in Indonesia have been mulling either setting up their own venture capital arms to invest in fintech startups or planning to acquire VC firms. State-owned Bank Negara Indonesia (BNI) is the latest to evince interest in setting up a venture capital arm.
In January this year, private lender Bank Central Asia (BCA) launched its VC arm, Central Capital Ventura, committing Rp 200 billion ($15 million) in investments so far. Another state-owned lender Bank Rakyat Indonesia (BRI) recently announced that it was in the process of acquiring a VC firm. In this area, Bank Mandiri has a significant headstart over its peers; it launched its own VC unit in 2015. The VC arm, Mandiri Capital Indonesia (MCI), has been one of the most active investors in fintech since then, committing $15-20 million in investments per year. In Indonesia, fintech categories such as P2P lending, merchant payments, e-commerce installment lending, and financial comparison are seeing maximum traction, CB Insights noted in its report. In P2P lending, notable deals include Amartha raising $30 million in a round led by MCI in March this year. More recently, UangTeman announced a $12 million Series A round led by K2 Venture Capital with participation from Hong Kong-based STI Financial Group and American firm Draper Associates. In merchant payments, startups that provide point-of-sale software and hardware are flourishing as many of the 60 million SMEs in Indonesia still manually use pen and paper. These startups also help solve the pain-points in cash flow management, and provide apps to monitor business transactions. Moka is one of the best funded merchant payment startups in Indonesia, counting Convergence Ventures, East Ventures, Fenox VC, and Wavemaker Partners among its investors. Other active firms in this area are Pawoon, backed by Ideabox and Kejora Ventures, and Cashlez, backed by MCI and Gan Capital. In November 2016, East Ventures invested in Cicil, a financing platform targeted at college students to provide installment loans for items such as smartphones and laptops. Cicil competes with installment shopping mall platform Akulaku and Kredivo, FinAccel-owned credit for online shopping provider. As more Indonesians enter the middle class, investors have backed various financial comparison startups to help consumers become customers of financial institutions.
Venture-backed companies in this category include Cermati, a online portal for financial products including auto and personal loans and credit cards, which raised a Series A extension from Orange Growth Capital in February 2017, and C88 Group, which operates financial comparison site CekAja in Indonesia and is backed by investors including Monk’s Hill Ventures. Earlier this year, the Indonesian government released regulations for the fintech sector, especially P2P lending, in a bid to attract more investments. In addition to offering clarifications for potential investors eyeing the space, the regulations were also seen as providing flexibility and room for startups to grow. 
Another Innovation; Livestock Investment
How to Invest in Livestock
Livestock are a key source of food for the world, making them a coveted investing product for some. The term “livestock” includes domesticated animals that are raised to produce various commodities. That list includes, but its not limited to pigs, cattle, chicken, and farmed fish among many others. The futures market for livestock is primarily utilized by producers attempting to hedge their exposure but it still carries enough volume for regular traders to interact. Lean hogs and lean cattle futures are among the most popular options for investors.
Ways to Invest in Livestock
There are 3 ways to invest in Livestock: ETFs, Futures, and Stocks. Click on the tabs below to learn more about each alternative.
What are Livestock ETFs?
ETPs represent an easy and efficient way to gain exposure to livestock prices, and U.S. investors have multiple options to choose from. The iPath Dow Jones-UBS Livestock Total Reutrn ETN (COW) is the most popular option; this ETN offers exposure to an index comprised of futures on live cattle and lean hogs. The exposure offered by the E-TRACS UBS Bloomberg CMCI Livestock ETN (UBC) is substantially similar, though UBC is slightly cheaper from an expense perspective.
Investors should be aware that both UBC and COW are linked to indexes comprised of futures contracts, and as such will not necessarily replicate the performance of spot livestock prices. Moreover, both options are ETNs, meaning that investors are exposed to the credit risk of the issuing institution.
International investors seeking livestock exposure may have more options available; ETF Securities offers leveraged and inverse livestock ETPs in European markets.
What are Livestock Futures?
Livestock futures can be an effective way for more sophisticated investors to gain exposure to this corner of the commodity market. Whereas livestock ETPs offer exposure to multiple commodities, futures contracts are generally more targeted in nature.
Live cattle futures trade on the Chicago Mercantile Exchange, with each contract representing 40,000 pounds of 55% Choice / 45% Select Yield Grade 3 live steers. Priced in center per pound, contracts are available for February, April, June, August, October, and December. Live cattle futures trade under the symbol LE on the CME Globex and LC in open outcry trading.
Lean hog futures are also available on the CME, with contracts representing 40,000 pounds (18 metric tons) of hog carcasses (barrow and gilt). Contract months also include February, April, June, August, October, and December, with the last trade occurring on the 10th business day of the contract month.
Other livestock futures available include feeder cattle and frozen pork bellies.
How to Buy Livestock Stocks
For some commodities, such as precious metals, it is possible to gain indirect exposure through an investment in companies that are engaged in production or extraction. This is challenging in the case of livestock because there are few publicly traded companies engaged exclusively on growing and slaughtering cattle and hogs.
There are, however, some options available. Many agribusiness firms provide products and services to farmers, and the profitability of these companies often shows a correlation to agricultural spot prices. Some of the largest agribusiness firms include Potash (POT), Monsanto (MON), and The Mosaic Company (MOS). These stocks will seldom move in lock step with livestock prices, but may be an interesting option for certain investors.