Beauty startup Sociolla joined a modest list of Indonesian startups to have raised growth-stage funding when it closed a $12-million Series B+ round in May.
Its co-founder Chrisanti Indiana puts its fundraising success down to having a solid company vision.
“I don’t know how hard it is for other startups, but I think the key is to have a clear vision,” she said.
The startup is the first publicly announced portfolio company of EV Growth, a new fund established by East Ventures, Sinar Mas Digital Ventures and Yahoo Japan’s YJ Capital. Its business is built on the three pillars: content, commerce and community.
Having already developed its commerce and media (content) platforms, Indiana said the company, which is also backed by Japanese beauty website operator istyle, will use most of the proceeds from the latest funding to invest in its newly launched community platform, Soco.
In order to further extend its presence in the beauty industry, Sociolla recently also started a B2B business and has become the authorized distributor of leading beauty brands from Asia and Australia looking to enter the Indonesian market.
“But the thing is from the beginning, our vision and mission have not changed. It’s just the products have changed in order to adapt to the changing needs of the people,” she said.
In an exclusive interview with DEALSTREETASIA, Indiana gave her views and insights on a range of subjects including competition, regulation and the VC ecosystem.
Can you tell us a little bit about the new platform Soco?
Soco is our newest product. We have Sociolla, which is an e-commerce platform and BeautyJournal, a media platform. So now we have three. Our company is based on three pillars: Content, commerce, community. Soco is the community platform. It is the connector of all of our other platforms. It’s like a hybrid social media. When you log in, it will ask you to fill in a beauty profile so you will get content that is in accordance to your beauty needs. You can also write articles there, make videos and even carry out polls.
It was launched early this year and now has over 500,000 registered users. We target 1 million active users by the end of this year.
Tell me the thinking behind expanding from e-commerce to media.
We understood that beauty is not as simple as it seems. There needs to be an education platform. Initially, BeautyJournal was more like an education platform about products and how to use it. We had around 50 brands with lots of SKUs, so we realized that people are not sure which products to buy, so BeautyJournal gave them more information about this. As time went by, this media grew well, it had its own audience, which is different from that of Sociolla. So we saw that this could be something else. So we added more features like video, more content from our in-house editorial team, and product reviews.
Soco basically came because we understand the needs of the users. It just makes sense that we have something to group it in one place. We realize that there has to be one channel that everyone will come together and can be served. I don’t know of any product like this at the moment.
How big is the size and potential of the beauty market in Indonesia?
Indonesia has a population of around 260 million, and half of them are women – that’s 130 million. And then we reduce the babies and the elderly – that leaves us with around 90 million. In 2017, we had almost 13 million users on our platform. So that’s like one in seven or eight women have visited Sociolla. We think there is a lot of room to grow and all the young women in that 90 million need beauty and personal care products – whether it’s products or content. So we are working on that market.
How has growth been since your last funding?
We have grown 50-100 per cent month on month. There are now over 170 people in our team. We have two warehouses. One for B2C, another for B2B. Now we also have a B2B business. So we import products and distribute them to offline and online stores. We started this at the end of last year. We hold a lot of licenses for beauty products. So we try to really create a beauty ecosystem.
Who do you consider close competition? And what are you doing to keep an edge over them?
If you look at us as a whole, there is no one similar. But every aspect of our business, of course, has competitors. For example, Sociolla is commerce so of course, the competitors are other e-commerce firms that sell beauty products. In terms of media, there is a lot of beauty-related media in Indonesia. So if you’re talking about competitors, we have so many competitors in the market. But we look at it as an ecosystem. We can’t really grow without them, because they are also helping the market to grow. The industry has been growing like crazy. While the other industries are slowing down, beauty has seen a surge and we are happy about that.
What are the challenges in the beauty industry?
First of all, it is regulation though it is getting better. The first time we launched Sociolla was because there was no trusted beauty platform. There were a lot of online sellers selling in grey market, which is really illegal. As a woman, it is really hard to fina d trusted platform that can supply good products. Well, it’s not a problem for Jakarta, but for other cities, it is. As time went on, we realized that it’s a bit complicated to register a product. It’s not impossible, but it just seems that the government and the public are not connected in this matter. So no one bothered registering products. They prefer sneaking in imports illegally, instead of legally investing in brands. It’s getting better but right now there are still a lot of direct imports. We see foreign products being sold on Instagram at a really low price. So it becomes hard for us to educate the market to encourage them to buy from authorized sellers and support the ecosystem. So the challenge is mostly the regulation and education.
But people outside of Jakarta are learning so fast. We can see this from the growth. Jakarta now accounts for less than 30 per cent of customers. The vision is to give equal access to all women across Indonesia to beauty products and beauty content.
How was the most recent funding process? Was it hard to find investors for a post-Series B round?
We are very lucky to have very supportive investors who trust us. Along the way, most of them have stayed. With East Ventures, we have worked previously. They’ve been supporting us since the early days. So I think they have their reasons and we have changed along the way and grown a lot. I don’t know how hard it is for other startups, but I think the key is to have a clear vision. Finding the right investor that understands the vision and mission is not easy. There are some VCs and investors that have a different way of looking at businesses or different thinking and beliefs. We are fairly active in our conversations with the investors. There are a lot of discussions. But the thing is from the beginning, our vision and mission have not changed. It’s just the products have changed in order to adapt to the changing needs of the people.
Where is most of the investment going?
On the Soco platform. And the tech talent for Soco.
How hard is it to find tech talent here?
It’s hard. It’s very scarce and the regeneration is slower than the startup growth in Indonesia. But from our experience, you cannot find good talent that can hit the ground running. The best tech talent that we have are those that are suited to the company and have grown with the company. We are also looking overseas for talent.
Will the latest funding also be used to invest in your B2B business? If so, how much?
Today we have up to 8 exclusive brands in our B2B business. We are aiming to bring more brands to Indonesia in Q4 and 2019. In terms of how much we invest, it will depend on how many brands we will carry, but the bigger portion of focus and investment would definitely go to the tech platform Soco.
Tell us more about the partnership with istyle? How have you benefited from their involvement?
Istyle are a very influential in the Asian market. The most obvious partnership we do with them is for content. They are big in media. They have millions of product reviews.
Given the opportunity in the market and the considerable competition, do you foresee consolidation in the beauty space?
It’s too early to see anything like that. Of course, anything is possible. But for us, we are still in a very early stage. We are still growing the platform.
Any plans to expand into markets outside of Indonesia?
We have dreams to expand, but not in the near future, because we have not even covered Indonesia well. We have always had that idea but not for now. But even when we do, we will be working with local partners to do it. Our model can be replicated, so we do not need to bring our brand there.
What about venturing out into other verticals or sectors?
We will definitely still stick to beauty and lifestyle. It is possible that we may expand to other verticals in the existing market. It could be anything related to lifestyle.
Having successfully raised multiple venture rounds, what is your take on the current startup-VC ecosystem in Indonesia?
Looking at EV Growth, we have a very positive future. It makes us also excited.
I think we need better communities for VC and startups to meet, because the relationship is more of partnership. The aim is not only to raise funds but also [to deepen] the relationship. So when you first start a startup, it’s really hard to find the investors that suit you — not only the ones that are ready to give you funds, but to be with you for the future, because funding is not a one-off thing. So there needs to be more places for VC and startups to meet so there can be better matchmaking.