Indonesia sees sound VC interest in nascent podcast industry as players tune up business model

A commuter uses a mobile phone while wearing headphones at Central Station in Sydney, Australia, on Tuesday, June 9, 2015. Photographer: Brendon Thorne/Bloomberg

Podcast-related companies have for the first time, in recent months, snagged venture capital funding in Indonesia in an emerging trend that could spell increased deal flow in the industry despite looming questions surrounding the sector’s business feasibility.

Podcast platform Noice late last year raised an undisclosed funding round from a host of investors including local VC firms Alpha JWC and Kinesys Group, as well as angel investor and Kopi Kenangan co-founder-slash-CEO Edward Tirtanata. Also at the tail-end of last year, podcast network Podkesmas Asia Network (PAN) secured an unspecified amount of seed funding from early-stage VC firm Absolute Confidence. 

Meanwhile, talent network company Box2Box has been in talks with VC firms for potential investment, and broadcasting platform Svara, which has also rolled a podcast platform, is in the market to raise new funding after bagging investment from VC firm UMG Idealab last year. 

Indonesia is not the only Southeast Asian market to see VC interest in the podcast industry. Vietnam saw two of its podcast platforms Waves and Voiz FM raise seed funding last year, though the former subsequently shut down and returned its funding to its investors including Indonesian VC Skystar Capital. Meanwhile, the Philippines-based network agency Podcast Network Asia bagged $750,000 seed funding from local VC firm Foxmont Capital and another Indonesian VC Venturra Discovery.

The deal traction in Indonesia is largely riding on the growing popularity of podcasts. According to audio streaming provider Spotify, the most commonly used platform for Indonesians to broadcast and listen to podcasts, around 20% of the app’s subscribers in the country listened to podcasts, which counts as the highest proportion globally.

The easy-to-produce and easy-to-consume nature of podcast have lent to the buzz around the industry from both the demand and the supply side, with numerous new podcasters emerging across the country.

“People are always into entertainment, particularly during the pandemic. Unlike video, audio content can be consumed while simultaneously engaging in other activities like cooking, working out, looking after children and is actually more undisrupted. We believe that this is here to stay, just as entertainment will not go away,” Kinesys founding partner Yansen Kamto, adding that the hype around the audio-chat app Clubhouse has validated the thesis of the rise of audio media. 

Expand Table

YearCompany (country)DesscriptionInvestment Stage (Amount)Investors
2020Voiz FM (Vietnam)Podcast and audiobook platformSeed (undisclosed)500 Startups Vietnam
2020Waves (Vietnam)Podcast and audio content platformSeed ($1.2 million)Insignia Ventures Partners, Hustle Fund, Skystar Capital
2020Podcast Network Asia (The Philippines)Podcast network agencySeed ($750,000)Foxmont Capital, Venturra Discovery, Lisa Gokongwei, Kumu
2020Svara (Indonesia)Radio, music, podcast platformPre-Series A (undisclosed)UMG Idealab
2020Podkesmas Asia Network (Indonesia)Podcast network agencySeedAbsolute Confidence
2020Noice (Indonesia)Radio, music, podcast platformUnspecifiedAlpha JWC, Kinesys Group, Edward Tirtanata, others

Platform play

KBR Prime, one of the few local platforms hosting podcast shows, says it has seen up to four times growth in the number of listeners since 2019. The platform, which is part of KBR Radio – backed by a diversified conglomerate and renowned tech LP Gunung Sewu, has also added over 20 more podcast shows to tap the growing listener base.

Other podcast platforms in Indonesia include Svara, which raised A pre-Series A funding from UMG Idealab last year and Roov, backed by media giant MNC – all of them still pretty much dwarfed by the size and appeal of global player Spotify.

However, one local player that is widely anticipated to challenge Spotify’s dominance in the country is Noice, a multiplatform app developed by listed radio firm Mahaka Radio Integra. While the app also hosts radio broadcast and music content, it is getting increasing exposure for its podcast platform, having onboarded high-profile podcasters to produce original content for its app.

“Noice is built upon Mahaka’s vast content library (radio, music, original podcasts), giving them an excellent edge. Mahaka’s decades of experience also brings local market and audience understanding not many have, which will accelerate further customer and creator,” said Jefrey Joe, co-founder and general partner of Alpha JWC, which, together with Kinesys, invested in Noice last year.

Joe, whose company is an early investor in several growth-stage companies like Kopi Kenangan, Carro and Kredivo, believes that its investment in Noice is aptly-timed as on-demand audio content has been gaining popularity.

Betting on talent network

While betting on tech platforms is the obvious play for VCs looking to invest in the podcast space, early-stage VC firm Absolute Confidence, formerly known as Grupara Ventures, believes there is also an exciting opportunity in tapping talent and content creators.

The firm, which counts online furniture retailer Fabelio and fintech startup Ayoconnect as portfolio companies, has injected capital into Podkesmas Asia Network, a podcast agency founded by four celebrities with decades of experience in television, radio, and the entertainment industry.

Absolute Confidence co-founder and partner Aryo Ariotedjo explained his decision to back PAN was spurred by his firm’s observation of the development of the US podcast market, which is expected to grow at a compound annual growth rate of 27.5% from 2020 to 2027 to reach $60.50 billion by 2027, according to Grand View Research.

“We have loved the space for many years already, initially because we have been listening to many podcasts for a while now. Then, of course, the area picked up fast, with many VCs investing in this space. Many unique podcast networks and creators worldwide popped up, and there have been several significant successes, such as Gimlet or Parcast. They have been acquired by Spotify for $230 million and $56 million, respectively,” he said.

PAN, which currently manages eight artists, grabbed attention after its flagship podcast Podkesmas last year became the most played podcast on Spotify Lite globally. Its network of artists has an audience of  1.5 million people with over 60 million plays in 2020. Currently, its podcasters occupy at least three of Spotify Indonesia’s Top 20 podcasts.

With the funding by Absolute Confidence, PAN says it is looking to acquire more artists, invest in its studio and set up a podcasting academy. 

“This year we are on track to grow our revenues by at least 5x and hope to generate 250 million combined plays throughout the network across all artists. The industry is still very young and fragmented, but we aim to increase our lead in order to be the dominant player in the industry,” PAN co-founders Ananda Omesh, Angga Nggok, Imam Darto & Surya Insomnia said in a joint statement. 

Another podcast agency network that has come under the VC radar is Box2Box, which claims to be the first of its kind in Indonesia. Having started off as a football podcast, Box2Box now runs as many as 54 different podcasts in its network, producing shows across a variety of genres including health, finance, horror and family.

Monetisation matters

For podcasters, being part of and affiliated with these networks helps them monetise their work through advertisement partnerships with brands, which would otherwise be tough for them to achieve on their own.

“The vast majority of ad revenues goes to the few big podcasters such as Podkesmas – the space is not as democratized as YouTube yet. This is a strong reason to build out an extensive network of many artists who cover different genres and audiences to provide more “real-estate” for advertisers under one company umbrella to negotiate with more power for the artists,” Ariotedjo explained.

PAN currently makes its money largely from ads through various forms such as ad-libs or full episodes and adopts a revenue-share model with all the artists it has signed. An alternative source of revenue for a handful of lucky podcasters is signing exclusive deals with streaming partners like Spotify where they would be paid to create exclusive and original content for the platforms.

Tubagus Akmal, a podcast manager at Box2Box and veteran podcaster, said brands are becoming increasingly interested in placing ads in podcasts. With new demography of listeners aged 17-22 slowly emerging to add to the typical listeners aged 23-27, businesses ranging from banks and insurance to health drinks and condoms have been keen to tap the new “ear-economy” market, he said.

However, Akmal concedes that podcast is still at a very nascent stage as an industry, with very few relying on it as their sole source of income. He estimates that over 80% of podcasters still work on their craft on a part-time basis.

“We have a podcast called Retropus, which started in 2018, and now from their podcast, they are able to sell merchandise, produce comic books, and have also expanded into Youtube. Podcast listeners are typically very loyal, so they would go and buy things from podcasters,” he said.

While VCs would typically look at positive cash flow and a clear path to profitability in their investments, in the podcast space, they might focus more on user traction driven by many a big-ticket strategic M&A deal globally.

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Notable Podcast Acquisitions Globally

Source: hotpodnews.com, DealStreetAsia
AcquirerAcquired CompanyYearDeal Value
EW ScrippsMidroll2015$50 million +
Stitcher2016$4.5 million
iHeartMediaStuff Media2018$55 million
SpotifyGimlet2019$189 million + $44m (incentive)
Anchor2019$150 million + $22m (incentive)
Parcast2019$54 million + $47m (incentive)
The Ringer2020Up to $195 million + incentive
Megaphone2020$235 million
EntercomCadence132019$50 million
Pineapple Street2019$18 million
AmazonWondery2020Undisclosed
AppleScout FM2020Undisclosed
SiriusXMStitcher (from EW Scripps)2020$325 million

The acquisition of podcast production houses like Stuff Media (by iHeartMedia for $55 million), Gimlet and Parcas (by Spotify), and Wondery (acquired by Amazon for $300 million) indicate that investors could land handsome returns from strategic M&A for companies regardless of their bottom line.

While Spotify chose the IPO route, media platforms like Tumblr (acquired by Yahoo for $1.1 billion), Yammer (acquired by Microsoft for $1.2 billion) and Vine (acquired by Twitter for $970 million) went the path of a strategic acquisition, which gave its investors and shareholders notable liquidity.  

“That has always been the play for social media like we saw with Instagram and Youtube too,” he said.

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.