Indonesian startups wanting to expand in the region would need to establish a solid foothold in the local market first and then ensure that their products are customised to the needs of the different markets, according to panelists at the recent Indonesia PE-VC Summit in Jakarta.
“We should get to profitability here in Indonesia before looking elsewhere,” said Jeffrey Yuwono, co-founder and CEO of Indonesian Gobi Partners-backed fashion e-commerce startup Sorabel.
Sorabel is gearing up for a possible regional expansion by 2021 as the company is on the verge of profitability with an ongoing funding round.
Sorabel is raising fresh capital in its ongoing new funding round following its Series B+ funding mid-2017, wherein it had raised $27 million co-led by Singapore-based Golden Equator Capital and Gobi Partners, and joined by SMDV, Alpha JWC, Convergence Ventures, Korea Investment Partners, MNC Media and OpenSpace Ventures.
Yuwono and three other panelists in the session “Staying local or going regional – the road ahead for Indonesia Startups” – Hendrik Susanto, Chief Investment Officer, Traveloka; Winston Utomo, Founder & CEO, IDN Media, and Ashish Saboo, Managing Director and Head of Indonesia, General Atlantic – agreed that one of the most important prerequisites for startups to expand overseas would be to establish a solid foothold in the Indonesian market first.
While scaling up and then expanding in different markets across Southeast Asia may be a compelling target for Indonesian startups, establishing a strong position in the home country makes a lot of sense, according to Traveloka’s Susanto.
“We started here so it is important for us to be dominant in our own country… it makes a lot of sense for us to then having established a strong position in our home country and seeing the travel behaviour of our customers to be able to capitalise on these strengths and expand regionally,” Susanto added.
There is no guarantee, however, that a successful startup in Indonesia will also reap success in other markets in the region, according to Saboo of General Atlantic. The key, he said, is customisation.
“Your product, your service will need to be customised to the different needs of different markets. Even if you have a successful product in your home market, you need to customise,” he said.
IDN Media’s approach, however, is going hyperlocal instead of looking at regional expansion. After closing its Series C funding round early last year, the digital media startup said it has started to explore opportunities for further expansion locally.
Last year, the media startup launched 10 hyperlocal offices to create relevant and highly-local content to readers in Jakarta and in other Indonesian provinces, said its founder and CEO Winston Utomo.
Meanwhile, Yuwono disclosed that the fashion e-commerce startup is already conducting experiments in the Philippines, Malaysia, and Vietnam to test the market and gauge customer response before actually hitting the road.
“All of these experiments will get us ready for that launch in, hopefully, next year,” Yuwono said, adding that Sorabel is also looking at testing the markets of Taiwan, Australia, and the Middle East.
“We want to figure out which market should we choose and focus on and what is the right way, how can we learn enough that when we scale, we are pretty sure it will work,” Yuwono added.
As a fashion e-commerce company, Sorabel faces competition from heavily-backed marketplaces like Tokopedia, Shopee, and Lazada, which also sell fashion items on their platforms. However, in terms of its fashion products, it is pitted against the female fashion stores like Berrybenka and Zalora.