Vara raises $4.8M from investors like Go Ventures and Sequoia India’s Surge to digitize Indonesian SMEs’ payrolls

A Zoom group screenshot of Vara's team

Staff management platform Vara’s team

If you follow startup news from Indonesia, you know that the country’s estimated 60 million small businesses are a hot target for tech companies. BukuKas and BukuWarung, for example, both recently raised large rounds to fuel their race to digitize SMEs’ operations. Founded in November 2020, Vara is focused specifically on making staff management easier for small businesses and their workers, replacing the notebooks or spreadsheets many relied on to keep track of payroll with an app called Bukugaji.

The company announced today it has raised $4.8 million in seed funding from Go Ventures, RTP Global, AlphaJWC, Sequoia Capital India’s Surge, FEBE Ventures and Taurus Ventures. Founded by Vidush Mahansaria and Abhinav Karale, who met while studying at the Wharton School at the University of Pennsylvania, Vara is part of the Surge accelerator program’s fifth cohort of startups. It says more than 100,000 small businesses are already using Bukugaji.

The app has features to track attendance, calculate salaries and worker loans and disburse payroll. Mahansaria told TechCrunch that Bukugaji is aimed at companies that have less than 30 employees. Many of them are in retail, food and beverage or labor-heavy service sectors like construction and transportation. Bukugaji has features for specific employee segments, like operational staff who usually work in shifts, or permanent staff whose paychecks are fixed over a specific time period.

“Before downloading and onboarding on Bukugaji, the vast majority of our users utilized notebooks to mark attendance and track payroll,” Mahansaria said. “A small portion used the notes features on their phones or simple Excel sheets.” Bukugaji is designed to be fully self-service, so businesses can download and start using the app on their own. Its main app is mobile only, but the platform also has a web version.

The businesses Bukugaji serves often have workers who are unbanked, meaning they don’t have access to a bank account or traditional financial services. Vara’s founders say many of them live paycheck to paycheck and this means they sometimes have to take out loans from their employers.

“Employees often request cash advances from their employers toward the end of the month, when they need the money the most because sometimes they can’t make ends meet,” said Mahansaria. “This has two outcomes: first, it ties up working capital for the employer. Second, it makes the employee increasingly reliant on the employer to meet emergency needs. It’s hard to break out of this cycle given the current limited accessibility to formal financial infrastructure for this market segment.”

Earned wage access (EWA) platforms are focused on solving this problem by giving employees on-demand access to wages, instead of having to wait for their paycheck. EWA companies are gaining traction around the world, including Wagely and GajiGesa in Indonesia. Vara doesn’t have immediate plans to add an EWA feature to Bukugaji, but it is something the company is thinking about as part of the value-additive services it will build into the platform.

“Owning end-to-end payroll and attendance gives us an information edge that is unparalleled for this labor segment,” Mahansaria said, noting that the data can enable companies to add things like benefits that their employees usually don’t have access to, and in turn give workers a digitally-verified work history.

In the near future, Bukugaji will add time-saving features like automated allowances and overtime, dashboard shortcuts, reminders and customizable reports. It also plans to allow employers to disburse salaries directly through the platform. Over the longer term, Bukugaji will offer data analytics to companies and their workers. For example, employees will also be able to see how their earnings have changed over time. Employers, meanwhile can spot trends in attendance and salary.

Though Vara may eventually expand into markets, Mahansaria said it is currently “razor-focused on Indonesia,” where SMEs account for about 60% of the country’s gross domestic product and employ the vast majority of its workforce.

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