Indonesian decacorn Gojek has already generated a unicorn – a term for an entity valued at over $1 billion in private markets – from within its super app family.
Gojek’s payment arm GoPay has achieved the haloed status, per latest corporate filings and other indicators.
GoPay has been raising funds on a standalone basis since March 2020, show its filings. Its early investors include Temasek-affiliated Gamvest, Tencent Mobility and Google Asia Pacific. In May, these investors were joined by Facebook Holdings, PayPal, Pearl Valley Investments and Altair Investments. Combined, these investors own 27.8 per cent of the fintech business, per a June 26 filing.
GoPay has so far authorised 18 million shares, of which 11.2 million are already paid-up or held by Gojek and investors. The rest are available for allocation in future financing rounds.
Based on the share value specified in the June filing of 1 million rupiah a share, its total paid-up capital stands at 11.2 trillion rupiah and total authorised capital amounts to 18 trillion rupiah or $1.2 billion.
This valuation should earn GoPay a unicorn status, but corporate filings do not always reflect an accurate value. This is a common practice typically for accounting and tax purposes.
A person close to Gojek told DealStreetAsia that GoPay should be “worth at least $4 billion pre-money” referring to the valuation before investors inject capital. This estimate makes sense considering the second most popular mobile payments firm in Indonesia, OVO, which announced its unicorn status in October, is valued at over $2.9 billion in its planned merger talks with Ant Group-backed payment service DANA.
A survey published in February by research and consulting firm Ipsos says GoPay is the most popular and the most used mobile payments app by first-time adopters among Millennials and Generation-Z.
Another indicator of GoPay’s valuation is the investment from Facebook and PayPal. Gojek announced on June 3 that the two tech giants had joined Google and Tencent in its current fundraise.
However, based on Gojek’s latest filing, dated July 14, Facebook and PayPal are not yet listed among its investors. Gojek did not respond to a DealStreetAsia query on whether the announcement was referring to GoPay’s fundraise, as opposed to its parent.
Facebook and PayPal reportedly invested a total of $300 million in Gojek, which is understood to have largely gone to GoPay. With the Facebook and PayPal investment translating into a combined 3 per cent stake in GoPay, the post-money valuation of the payment firm is likely to be higher than $4 billion.
The rapid growth of mobile payments adoption in Indonesia should provide some context for the heady valuations of GoPay and rival OVO. The total number of e-money transactions went up 10 times in the last five years to 5.2 million in 2019, while total transaction value increased more than 27 times to 145 trillion rupiah ($10.5 billion). GoPay claims it facilitated $6.3 billion worth of transactions in 2019.
The COVID-19 pandemic further accelerated the use of digital payments in the country as movement restrictions and contagion fears drove users to ditch cash. E-money transaction value in the first five months of this year grew 78 per cent year-on-year.
Despite its impressive growth and significant backing, some believe that GoPay will still need to work extra hard to win considerable market share in Indonesia, given the imminent merger between its arch-rival Grab-backed OVO and the country’s number three player, DANA, and the more recent expansion of ShopeePay, the payment arm of Singapore-based Sea Ltd, which also operates one of the largest online marketplaces in Indonesia, Shopee.
Aldi Hartanto, VP of Investments at VC firm MDI Ventures, believes that having independent funding should “allow GoPay to be more agile and self-centred” and reduce Gojek’s capital burden. This will also allow Gojek to focus on its core businesses that are already on the path to profitability, he said.
Having fundraising flexibility will not count much unless GoPay manages to onboard strategic backers that could bring new use cases. Hartanto believes GoPay will need investors that can give it “a sizable pool of users over competitors in Indonesia without significant subsidies for acquisition.”
Jianggan Li, founder and CEO of Singapore-based venture builder and investment consultant Momentum Works, says a higher level of independence with its own set of shareholders and pool of capital may put GoPay in a more favourable position to accelerate.
“Ant Group was the de facto spinoff of Alibaba and has been performing well. I think independent decision making with a close link to the parent will be beneficial to the development of GoPay,” said Li. “Without the baggage of ride-hailing and other services, it is also easier for investors who are interested in just payment plus financial services play to invest in GoPay.”
While Indonesia is by far GoPay’s largest and priority market, it is not the only one it is looking to conquer.
GoPay already has a presence in the Philippines through Coins.ph, a fintech startup acquired by Gojek in early 2019. Gojek’s ride-hailing business has not been able to launch in the Philippine market due to prolonged regulatory challenges.
GoPay has also launched an e-wallet service in Thailand in beta last year, not long after the launch of the ride-hailing business, which at the time went by the Get brand. In Vietnam, meanwhile, a local Gojek spokesperson told Vietnam Investment Review last month that the company was exploring in-app mobile payment services to enhance customer experience and will make an announcement in due course.
Li believes it will not be easy for GoPay to become an established regional player, mainly due to a lack of use cases.
“It is a tough play because Gojek’s core business is not getting much traction outside Indonesia. Hence, GoPay will not have any use case of its own to drive adoption. Just a payment service alone without a frequent use case will not stick,” he said.
Gojek, however, is adamant that it can become Southeast Asia’s leading super app. To drive this mission, the company has continued to experiment and expand services under its ecosystem. Gojek currently has as many as 18 services on its app. Two of these will be shut down on July 27, the company announced last month.
Last month, DealStreetAsia broke a story on Gojek seeking four new trademarks that could see it expand into video conferencing, financial management, corporate services and electronic repair services under new units GoFin, GoStream, GoService and GoGadget.
Backed by hundreds of millions of dollars at Gojek’s disposal—the firm has acquired over 15 startups to strengthen its existing business units or launch new ones—and an expansive ecosystem to leverage, any business born out of the decacorn would naturally gain a considerable level of traction and attraction not only from customers but also interested investors.
In fact, Gojek has already decided to allow its on-demand video platform GoPlay to run its course, as far as ownership and financing are concerned amid interest from a host of local and international investors. Last month, GoPlay closed its first independent funding round led by ZWC Partners and Golden Gate Ventures. The round, which was joined by Openspace Ventures, Ideosource Entertainment and Redbadge Pacific, is said to have raised around $15 million.
Of Gojek’s latest businesses, GoFin could theoretically be the next rising star among Gojek’s fintech offerings. It is intended to be a financial management service that allows users to purchase and administer insurance protection, invest in assets, and access financing and banking services, among others.
GoPay and GoPlay are the first two of Gojek’s business arms to have been deemed significant enough to run their course. They may not be the last.