- Indonesia’s eduloan startups struggle with profitability and regulatory challenges.
- Low borrower numbers and revenue hamper growth.
- Pivoting and expanding into new sectors may be necessary for survival.
Peer-to-peer lending startups focused on the education sector in Indonesia are facing tough challenges and struggling to achieve profitability.
Those who remain solely focused on the sector are unlikely to survive. Some players, such as Koinworks and Pintek, have already decided to either close down their operations or pivot to other businesses.
Double trouble for eduloan startups
The Indonesian government is planning to provide its own student loans, calling into question the prospects of private-sector players.
Additionally, the startups’ practice of collaborating with universities to promote their products has sparked controversy, with critics alleging that this encourages students to incur debt.
The three main eduloan platforms – Danacita, Edufund, and DanaBagus – incurred losses due to difficulties in significantly increasing their revenue to cover expenses.
One reason for the low levels of revenue is the small number of borrowers, with Edufund having only 8,857 active borrowers and Danacita having 13,754 as of June 2024.
Survival strategies for the startups
Experts suggest that eduloan platforms consider alternative options to improve their financial performance, such as expanding into other products or pivoting to different sectors.
The most promising loan turnover is in the consumption sector, which accounted for 66% of total P2P lending financing as of March 2024.
For now, the remaining players are likely to continue partnering with more universities or schools, hoping to increase demand for loans on their platforms.
To read the original article: https://www.techinasia.com/indonesias-eduloan-startups-face-bleak-future-losses-regulatory-threats
