Indonesian startups focused on digitalising the country’s millions of mom-and-pop stores (warungs) and MSMEs have been on a fundraising spree since the start of the year. This momentum looks poised to continue in the coming months.
Jakarta-based GudangAda is the latest among Indonesia’s warung-focused startups to announce fundraising. The B2B marketplace said on Thursday that it has raised more than $100 million in a Series B round led by Asia Partners and Falcon Edge.
Existing investors Sequoia Capital India, Alpha JWC, and Wavemaker Partners participated in the oversubscribed round that had an initial target of $75 million.
The latest round brings the total fundraising by the company to $135 million. The company said the new capital will be deployed for team expansion across key divisions and execution capabilities, as well as building and strengthening GudangAda’s ecosystem of service offerings, including logistics, POS SaaS, marketing services, data services, and financial services.
The firm also plans to pitch its AI-based products and services to merchant customers.
DealStreetAsia had reported in April that GudangAda is in talks to secure fresh capital of $75 million, and more deals in the hot sector are in the making.
MSME bookkeeping app BukuKas closed a $50 million Series B round led by London-based investment firm Hedosophia in June. In the same month, accounting startup BukuWarung raised $60 million in a Series A round led by US-based VC firms Valar Ventures and Goodwater Capital.
BukuKas had set the ball rolling in early January when it announced a $10 million Series A round led by Sequoia Capital India. It was followed by B2B commerce company Ula, which closed a $20 million Series A round in the same month. February saw BukuWarung secure an undisclosed amount of capital from Silicon Valley-based investor Rocketship.vc.
Besides digital bookkeeping, social commerce startup, Super is understood to be raising a new round of $ 30 million. Meanwhile, the logistics that support the B2B commerce platform, Sinbad was in advanced talks to raise a new round of about $15-20 million.
These three companies operate in a space occupied by a host of venture-backed tech companies, including specialised players such as Ula and Warung Pintar. At the same time, fintech platform AwanTunai has also expanded into the supply chain game.
The COVID-19 pandemic has emphasised the importance of digital B2B solutions for both warungs and brands. A 2020 report by consulting firm Redseer showed that B2B e-commerce FMCG startups reported a moderate growth of 10% in order volumes and a 4-5% rise in average order value due to COVID-19. It notes that the rise in the frequency of orders was due to lockdown measures as warungs could not visit their offline wholesalers to procure products.
With the opportunity so big, and competition increasingly fierce, the need for larger pools of capital may be justifiable.
GudangAda’s asset-light approach
Stevensang, CEO of GudangAda said in a statement that the company is well-positioned to empower the supply chain from producers, distributors, wholesalers to retailers across Indonesia, with almost half a million users from over 500 tier-1 to tier-3 cities.
The company claims to have built a $6 billion net merchandise value in less than three years with less than $35 million of cumulative historical investment. The app is now used by over half a million businesses in Indonesia.
As part of GudangAda’s unique asset-light and capital efficient model, the company has started to collaborate with local vehicle and warehouse providers, including those owned by its partner SMEs. Since its launch in mid-2020, GudangAda’s logistics service has doubled in size every two months.
GudangAda has recently started to expand its product categories into pharmaceuticals, packaging, homeware, and stationery. This expansion is driven through E2E partnerships with principals, distributors, wholesalers, and retailers within the value chain.
It also connects the principals (FMCG producers) to enlarge the distribution coverage with SMEs across the archipelago since the end of 2020.
To date, it has established official partnership agreements with more than 65 principals, either local, national and multinational principals that operate in Indonesia, including Sido Muncul, Sasa, and Reckitt Benckiser. It continues to onboard more FMCG producers in its pipeline.