Startups spot big promise in Indonesia’s health food space, VCs show interest too

Melissa Hendriana, a 29-year-old PR executive in Jakarta started eating healthy when she was diagnosed with breast tumors a few years ago. That was rather a rude wake-up call for her, she reminisces. Hendriana decided to incorporate more juices and vegetables in her daily diet thereon.

“I avoid eating fried foods, store healthy snacks like protein bars and Lemonilo [healthy instant noodle] at office and home,” she told DealStreetAsia.

Hendriana is not the only one. Dwita Melati, a 30-year-old resident of Jakarta said she often eats out and opts for salads and juice bars instead of indulging in dishes that are high on calories.

With the millennial population increasingly showing a penchant for healthy, organic food, business propositions have opened up across the startup ecosystem in the archipelago.

A slew of startups has mushroomed in the country over the past few years setting up catering platforms, healthy/organic outlets or even introducing offline juice-bars.

These include LiMa Ventura-backed Gorry Gourmet (that provides tailored recommendations to its users), Slim Gourmet (a premium catering service catering to the healthy taste buds), and Lemonilo (a health-focused consumer tech company), among others.

“We believe this space has a huge potential, yet plenty of problems in this sector are left unsolved. Among those problems, is [how to influence people to choose a] healthy lifestyle,” said Lemonilo CEO Shinta Nurfauzia. “When we started Lemonilo, we were looking for the impact potential. We believe that if we can dominate this space, we can build a sustainable business that can help a lot of people,” she added.

Lemonilo, earlier known as Konsula, was established in 2015 by Shinta Nurfauzia, Johannes Ardiant, and Ronald Wijaya. It raised an undisclosed seed round from early-stage venture capitalist East Ventures and also raised funding from Alpha JWC Ventures and Unifam Capital last year.

The startup’s flagship product is its instant noodle, made from cassava flour and spinach puree.

Jakarta-based Fit Company, which secured an undisclosed amount of funding from East Ventures in January this year, operates Fit Gourmet (a catering and offline outlets focusing on healthy food), and Fitmee (earlier called Fit Lokal that claims to make instant-noodle from a type of plant called Konjac).

Fit Company currently operates five outlets of Fit Gourmet in South Jakarta and South Tangerang areas where most affluent Jakartans live. The company enables mobile apps to allow users to order healthy food from a host of its catering outlets.

The startup also operates Kredoaum (a fitness tech distributor), 20Fit (a microgym), Fitstop (a gym). It made headlines in July when it acquired three healthy-focused startups Slim Gourmet, Wellnez Indonesia, and FITCO.

According to Indonesia’s Ministry of Health data, Jakarta ranked first among all provinces in the archipelago for the highest obesity ratio. The capital city had the highest obesity rate at 39.7 per cent in 2016. The figure is 2.5 times higher than that of East Nusa Tenggara, the province with the lowest obesity rate (at 15.2 per cent).

FIT Company CEO Jeff Budiman said in an earlier release that he created his business model when he realized that a majority of Indonesians have poor eating habits, over-consumed carbohydrates, salty foods, sweet drinks, and greasy dishes.

“It is not surprising that many people now suffer from health problems such as digestive disorders, obesity, and diabetes,” he said, adding he wanted to set up grab-and-go restaurants where people can purchase healthy-nutritious versions of their favourite street food that cater to the Indonesian palate.

Indonesia ranks sixth globally for the total number of people with diabetes, with 10.3 million people aged 20 to 79, or 6.3 per cent of the adult population, diagnosed as in 2017, according to the International Diabetes Federation.

Growing VC interest

Risk capital investors such as East Ventures, Angin and Alpha JWC are spotting big promise in the country’s nascent sector.

Early-stage venture capitalist East Ventures partner Melisa Irene says she sees strong potential in the sector with room for growth as access to health currently is not sufficient and not evenly available among different income levels and cities in Indonesia. The firm has an investment in Fit Company and Lemonilo, among others.

Meanwhile, according to the Indonesian angel investment network (Angin) managing director David Soukhasing, health food players can support the diversification of the portfolio for investors, especially VCs.

“A lot to these models are usually slightly more offline and more playing the long term run in watching out their bottom line, in other words being profitable. This might be a good bet in the portfolio to balance the investees pursuing top-line or market share and bleeding cash,” Soukhasing said.

Angin invested an undisclosed amount in Burgreens, Jakarta’s first organic healthy plant-based eatery three years ago. At that time, Burgreens was present in only two locations.

Subsequently, Angin made another round of undisclosed investment in Burgreens in 2018 and brought in new investors – some who were also Angin’s members such as publicly-listed taxi provider Bluebird Group president director Noni Purnomo, and Indonesian actor Arifin Putra.

Currently, the company has nine outlets across the greater Jakarta area and is looking to raise an undisclosed amount in its third funding round to expand within Indonesia and internationally.

Soukhasing had said several years ago, no VC or big impact investors would be interested [to do the round] for Burgreens because the industry was niche and the business was too small.

However, things have changed now. “People are interested. Currently, it has nine locations, profitable, growing well, equipped with the changing market. And, people are now are more into healthy lifestyle,” Soukhasing said.

He said with the growing health-focused startups, there is an opportunity to build a “new scalable model” within these healthy food players. “For instance, it could be a traditional retail eatery business moving up the value chain to develop food technologies or to integrate an online component to their business model.”

Meanwhile, Burgreens co-founder Helga Angelina said the proposed corpus from the third round will be used to spruce up product development and develop a wellness app.

East Ventures’ Irene also said more players are expected to emerge next year to cater to the changing consumer needs.

“There are dozens in India and in China. As people earn more; they start to care about the quality of life. They consume things they did not before; and health-related products/brands/services emerge as new consumption, especially for preventive health (food, exercise/activities) among the younger population,” she added.

According to the Euromonitor data in 2017, health and wellness trends in Indonesia are expected to grow 5.4 per cent on average every year.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.