BIDUK and our client Ecodoe were highlighted recently in a report designed to provide actionable insights for impact investors financing the Missing Middle in Southeast Asia. The report, Demand-led Investment: A New Perspective on Approaches to Adapting Capital and Bridging the Missing Middle in Southeast Asia, was developed through the Frontiers Lab Asia initiative, which is supported by the Australian government. It outlines market failure in meeting the financing needs of SGBs, detailing how investment approaches can be adapted to address this, and highlighting the flexible features of BIDUK’s customized loans as an example of how private capital can be deployed more effectively to scale the impact of SGBs in Southeast Asia.
BIDUK’s client Ecodoe, a women-led enterprise that supports artisanal producers, is also featured as a case study in how flexible, cash flow-based, short-term debt can successfully support SGB expansion.
So, what is the “Missing Middle?” The report states it is “a pervasive gap in the capital landscape that has been observed in emerging markets around the globe. It refers to the lack of medium to long-term risk financing in ticket sizes of US$25,000-500,000.” Because of the missing middle, many businesses are too large for micro-credit but too small for traditional lenders or venture capital funding. In Southeast Asia there are tens of millions of these businesses, struggling to secure working capital even though many are viable, dynamic companies. For business owners who happen to be women, bridging the financing gap is even more difficult.
BIDUK lends in the “Missing Middle,” supporting Indonesian businesses who have outgrown microfinance but are not yet ready for VC funding. We provide flexible, tailored, cash flow-based loans that are right-sized for SGBs who would not otherwise be able to secure financing. By building bridges for SGBs, we are delivering the financing solutions they need to grow and become businesses ready for other forms of formal capital.
BIDUK is also built with GLI and environmental sustainability in mind; our client enterprises are typically woman-owned or -run, promote sustainability, or both, and our due diligence process is designed to eliminate bias. The report states that, “despite women-led SGBs significantly outperforming peers, growing revenues 1.5 times faster and jobs twice as fast,” women-led SGBs still face a disproportionate lack of access to finance with 82% of women-led SGBs in Indonesia unable to access any form of financing.
At BIDUK, the Missing Middle refers to much more than just loan size. We partner with clients beyond capital, focusing on relationship building for mutual trust, and supporting SGBs with strategic advice to grow into healthy steady state businesses.
Ecodoe is a successful company utilizing BIDUK’s financial solutions to meet their growing business needs. Woman-owned and -operated, Ecodoe delivers unique locally sourced gift baskets for retail and corporate clients. Due to the nature of her fast-growing business, Ecodoe Founder and CEO Larasati Widyaputri helps support a wide variety of artisans and other small enterprises — over 350 at last count. BIDUK’s flexible loan structure allows Ecodoe to prioritize where and when to spend cash, which has helped the company weather COVID and the related supply issues.
The company’s founder, Widyaputri, said, “BIDUK not only provided us with the loan, they helped us to think rationally, gave us insight to create cash flow projections, even analyzing our leads pipeline, so that as a woman leader I could have more strategic decision making. BIDUK supports Ecodoe beyond money.”
While the report highlights that there is no silver bullet to closing the financing gap, it also states that approaches to impact investing such as BIDUK’s represent a great opportunity for impact and can be a driver of inclusive growth and sustainable development.