With its 10-minute sign-up process and low buy-in costs, Indonesian startup Ajaib aims to open up new investment opportunities for aspiring millennial investors.
Founded in Jakarta in 2018 and accelerated by Y Combinator the same year, the investment app recommends and lets users invest in mutual funds that correspond to their personal and financial situations.
The company’s founders are two former management consultants, Anderson Sumarli, who was at Boston Consulting Group, and Yada Piyajomkwan, from McKinsey. The pair met while completing their MBAs at Stanford University, and were named in the 2020 Forbes 30 Under 30 List in the Asia Finance and Venture Capital category.
In a clear sign of its growth ambitions, Ajaib acquired brokerage firm Primasia Securities in May 2020 for an undisclosed amount. The move enables Ajaib to expand from mutual funds investment into offering stock trading.
The idea behind the company’s founding came from the realization that Indonesia offered an “untapped potential” of curious would-be investors who were looking for the right platform to start with.
Burgeoning investors can begin with Ajaib with as little as IDR 10,000. The app offers easy-to-use risk level settings and uses an automated process to match investors to suitable portfolios. The company’s name is Indonesian for “magical,” a moniker Ajaib hopes to do justice to by giving everybody access — not just the already wealthy — to the “magic” of growing their wealth.
Ajaib wants to debunk the notion common among Indonesians that “you have to be rich to invest,” Brand Communications Manager Victoria Christa says. “We believe that beating inflation and increasing one’s own assets shouldn't be a privilege, but rather, a necessity."
Automated, bespoke investing
Ajaib’s calling card is a unique automated assignment process that pairs users to mutual funds based on their personal and financial situations, such as marital status and investing capability.
Ajaib's technology does this by using a mix of financial theories to calculate the user’s level of risk against the most appropriate cumulative returns. According to the company, some of these theories were suggested by Nobel Prize winners. Prior to user confirmation, Ajaib simulates expected returns to reassure users their money is going into the right investment.
A second option lets users choose investments according to specific criteria. These include mutual funds that focus on state-owned enterprises; those that focus on social welfare or Islamic investment; exchange traded funds; and mutual funds trading government bonds.
Ajaib offers a chat feature to connect investors to financial advisors, while the Belajar (learn) section of the Ajaib website and app provides educational materials to help users improve their understanding of finance and investments.
“We believe that every individual has a financial situation that is unique to them and sometimes mathematical theories alone are not enough. We won’t only help them with choosing the right investment product, but also in dealing with their own financial planning or problems,” the Ajaib’s spokesperson says. “We don't want them to solely invest but also to understand finances.”
Growth through acquisition
Ajaib partners with more than 20 Indonesian investment management companies which pay the company a percentage fee based on dollars managed. Responsibility for user risk and ROI falls on the investment fund.
With its takeover of Primasia Securities, the Ajaib team will double to 100.
"This acquisition is a form of our commitment in providing access to investment products that are safe, reliable and affordable to the whole Indonesian community," Sumarli said in a press statement, also singling out Primasia Securities’s long experience in brokerage as attractive.
The acquisition follows a seed round in January 2019, through which Ajaib raised $2.1m from SoftBank Ventures, Y Combinator, Alpha JWC and Insignia Ventures Partners. At the time, Sumarli said the funds would be used to improve Ajaib's engineering and production divisions.
Appealing to millennials
In its first year of operation, Ajaib’s users accounted for 25% of new Indonesian mutual fund investors. Christa says the company signed 500,000 new users last year and now has more than 1m users. Of these, 80% of users are millennials — born between 1981 and 1996 — who are drawn to Ajaib because its offer speaks to concerns that are specific to their generation, says Christa.
“Millennials [are] in a unique situation compared to their predecessors. If we were to google ‘millennial problems’, it usually revolves around financial problems. Why they can't afford homes; why they can't retire, and so forth. Investing could help them to get there and we want to help as many millennials as we can,” says Christa.
Christa says that while Ajaib's user base has grown organically through word of mouth and online reviews, the startup’s communications strategy has also been designed to target the cohort.
“We set our eyes beyond building an investment product, but also education. We do seminars, campus outreach, as well as [providing] free investment-related materials on our website,” says Christa.
Karlie Karnadi, a 29-year-old illustrator from Jakarta who has found some success online, tells CompassList Ajaib’s platform is easy to understand.
“I made some good money selling some of my work and had been thinking about investing for a while, but it always seemed too complex. [Ajaib] was easy to understand and I could try with an amount of money that still felt ’safe’ to invest for the first time,” she says.
