Paper.id overcame Indonesia’s love of free Excel invoicing to grow 100x

Founder Bio

Name: Yosia Sugialam
Company: A one-stop B2B Payment & Invoicing platform for businesses to digitize AR / AP, create invoices, manage accounting, and inventory.
Location: Jakarta, Indonesia
Total amount raised: US$30M

How I Found Product-Market Fit

The idea for Paper.id came to co-founder Yosia Sugialam in a baking hot pickup truck in 2016. He was in his native Indonesia riding shotgun with his brother on his way to see a customer of the family’s sugar business. The client required suppliers to queue in the broiling heat with a paper invoice in order to pay them. This wasn’t unusual at the time. Almost all Indonesian small businesses worked this way.

Yosia was ideally placed to see just how ridiculous and outmoded this process was. A UCLA-trained computer scientist, he had worked for years solving tech problems for large enterprises and had previously started two companies to help small businesses streamline their operations. As he sat sweating in his brother’s pickup, he knew it should be possible to digitize this colossal headache for Indonesia’s SMEs.

If I could do it all again

• The customer will tell you if it’s the right solution. You can tell when you hit product-market fit when you pitch a certain functionality of your product and their eyes light up.
• Use your peers abroad. Fundraising can be hard if you have an unfamiliar business model but it gets easier if there are international prototypes to point to.
• Embrace the questions that investors ask. The upside of fundraising struggles is the financial discipline that serves companies well.
• Seek advice when things are going well. Leading a large team is very different from leading a small one, and leaders making the transition can benefit from talking with more experienced founders.

One of the first problems Paper.id confronted was the cost of the competition, which was zero. Most SMEs in Indonesia were run on pirated versions of Microsoft Excel that cost companies virtually nothing. Charging for their alternative would therefore be an uphill climb.

They discovered an opportunity when they dove deeper into the challenges facing their customers. The process of getting paid usually took 60 to 90 days, so much so that many businesses simply couldn’t afford to add new customers. Cashflow was a real problem for many smaller operators.

Yosia and his team realized that they could draw in customers by offering their easy-to-use invoicing platform for free, and then making money by offering financing to smooth cash flow.

Making this strategy work, however, required seeing their customers not just as sellers but also as buyers. The platform had to work for both sides of transactions and needed functionality not just for invoicing paperwork, but for facilitating the actual payments themselves.

“Around 2021, we launched a product called Paper PayOut whereby we are helping our users more from the standpoint of them as a buyer. So we digitized the payment to their supplier,” Yosia reports. When the company combined the freemium pricing model with moving payments onto the platform, something clicked. Paper.id has seen 100x growth in the last two-and-a-half years and now serves over 48,000 businesses, primarily small businesses, but also enterprise clients like J&T Cargo and Shipper.

In the early years of the business, explaining the model to investors proved difficult. “We were doing B2B before it was cool,” Yosia jokes. Investors struggled to understand their monetization strategy, questioned their niche, and worried about how they would scale. Finally, around 2019, when the likes of Bill.com became more prominent in the US, more investors got the idea.

In June, Paper.id raised a Series-B funding round. The round — the size of which Paper.id didn’t disclose – was led by Australian VC firm Square Peg, with participation from SMBC Asia Rising Fund, Argor Capital, an existing investor, and Endeavor Catalyst.

The Paper.id team is exploring moving into cross-border payments and eyeing regional expansion. Yosia believes the team has a total addressable market of $41.6B.

The Most Important Fundraising Lesson You Should Know Is…

“We were actually very disciplined in making sure every dollar that we managed to get from the investor was used to the best of its abilities. For example, if you come to our office in Indonesia, you’ll most likely get lost because we don’t want to spend the money to put the signage there, For signage in Indonesia. you have to pay taxes, so we don’t do it. That’s the kind of mentality that we have,” he says.

Paper.id’s hard-to-find offices may sound like an amusing detail, but Yosia insists that the frugality taught by his early fundraising struggles is an important part of Paper.id’s current success.

“This actually translates very well now that we’re now experiencing this more difficult time in general. We’re growing significantly and have still managed to keep our cash flow very, very low,” he observes.

What I Learned From My Mentors…

Yosia recently joined Endeavor to support him through this next phase of growth. “Understanding what actually works with our mentors in Endeavor has been super helpful,” he said.

For instance, Julianto Sidarto, who recently ended a 25-year career at Accenture and now serves as a mentor for Endeavor Indonesia, helped Yosia get his head around leading at scale, emphasizing core values over micromanagement.

“As long as decision-making is done on the correct core values framework, it should cover 80% of what we want to align,” was Yosia’s top takeaway. That leaves room for 20% to devote to creativity and implementation.

“My challenge is really to direct the company as an organization to have all of those qualities — being decisive, being customer centric — in a manner that I was not used to before because the company was like 60, 80 people,” he said. “It’s easy to say just witness and follow my example with a much smaller team. Now it cannot be done that way.”