Bullish venture capitalists spot big promise in Indonesia’s trucking sector

Photo by Markus Spiske from Pexels

When Indonesia-based early-stage investor East Ventures decided to inject money into a company called Kargo in 2016, it was venturing into unknown territory.

No venture capital (VC) firm had previously placed a bet on Indonesia’s problem-ridden trucking space, despite the emergence of a few startups trying to tackle the inefficiencies in the industry. Things picked up in the following two years, but the number of deals sealed was still negligible.

Until now. The country’s trucking space has witnessed a spike in investor interest as VCs flock to invest early in a sector they hope will become the next big disruptor in Indonesia, an archipelago notorious for its logistics challenges.

This year alone, 18 VC firms have announced investments in five early-stage B2B startups in Indonesia’s burgeoning trucking space. These include prominent local firms such as Convergence Ventures and Skystar Capital as well as a handful of foreign investors such as Japan’s Genesia Ventures, China’s ZWC Ventures, and Sequoia Capital India.

The companies that have secured VC funding are trucking services platform Ritase, freight marketplace Kargo Tech, e-forwarding startup Logisly, and warehousing startup Waresix. Another player Trukita is also understood to have secured VC funding to roll out its service in the country, per an earlier report by DealStreetAsia.

Infra push

An early mover, East Ventures claims to have observed firsthand the development of the trucking sector. According to partner Melissa Irene, increased investor interest in the trucking space owes significantly to the development of infrastructure in the country, which President Joko Widodo had made a priority during his first term in office.

With an initial infrastructure budget of 155 trillion rupiah ($11.11 billion) in 2014 that went up to 410 trillion rupiah in 2018, the Indonesia government oversaw the development of 3,432 kilometres of conventional roads in the country and the construction of 941 kilometres of toll roads between 2014 and 2019.

“While land transportation is not the only mode of transportation in Indonesia’s logistics space, it makes up the majority. This expanded the industry pie for trucks and there was a new opportunity to be more efficient,” said Irene.

With logistics cost as high as 24 per cent of Indonesia’s GDP, the country’s logistics performance is among the worst in Southeast Asia. In neighbouring countries Thailand and Malaysia, the logistics cost-to-GDP ratio is 15 per cent and 13 per cent, respectively.

According to an Indonesia B2B Trucking report by Redseer, an overwhelming majority of trucks in Indonesia are owned by SMEs and mid-level businesses, with only 10 per cent owned by organized or enterprise players. This contributes to the low overall fleet utilization levels with the rate of empty backhauls reaching up to 80 per cent.

Market supply of trucks is significantly fragmented with low utilization rates.

According to Ritase co-founder and CEO Iman Kusnadi, the industry saw a host of startups setting up operations in the past but these companies struggled to gain scale.

This is where Ritase and its current peers have had better luck. On the back of a rapid rise in internet penetration and a bustling tech startup ecosystem, VC money has started flowing into the sector to facilitate the growth of emerging businesses.

“With four out of 10 unicorns in Southeast Asia being Indonesian startups, there’s much more attention from global investors into the local market,” he said.

Indian unicorns setting the trend

While a unicorn status may be a far-fetched notion in Indonesia’s B2B trucking space today, startups in the space can look towards success stories of global counterparts, particularly in India.

India has seen two logistics startups in the trucking space be crowned unicorns, with a third player on the cusp of reaching the $1-billion valuation mark.

The first of the two unicorns is SoftBank-backed Delhivery, which joined India’s unicorn club in March this year. Later in July, its competitor Rivigo is said to have crossed the $1-billion valuation mark following the close of its Series E round.

The third player is Sequoia-backed Blackbuck that saw its valuation rise to $950 million in its latest funding round in May.


Logistics players in India

Expand Table

CompanyStageLatest fundingValuation
DelhiverySeries F$413 million$1.6 billion
RivigoSeries E$65 millionnot disclosed (was valued at $900-950 million in Series D in January)
BlackBuckSeries D$150 million$950 million (reported)
Stellar Value-$125 million-
XpressBeesTill date$56 million-
ShadowFaxSeries C$22 million$97 million (reported)
Ecom Express-$30 millionundiclosed
LetsTransportSeries B$12 millionundisclosed
ShiftKarado-$697,200undisclosed

With notable similarities between the Indian and Indonesian logistics landscape, investors are hopeful Indonesian companies can achieve the heights of their Indian counterparts.

“The logistics markets in the two countries are similar in that it’s fragmented and inefficient due to highly manual processes. I think technology has a major role to play in this field and there are plentiful opportunities for Indonesia’s trucking startups,” said Genesia Ventures principal Yuto Kono, a startup executive-turned-VC.

However, the sheer size of Indonesia’s logistics market – according to Research and Markets, the Indonesian freight and logistics market is expected to be worth $383 billion by 2023 – has not been enough to attract foreign logistics giants. Some startups are willing to give it a pass too.

“I think after running a company for several years, going for a big market is good for investors and other things. But how you can win that market, what is the winning formula is different from market to market. Size is not an indicator of having the winning formula,” said GoGoVan co-founder and CEO Steven Lam.

Hong Kong-based last-mile delivery unicorn GoGoVan has so far skipped Indonesia in favour of Singapore and Vietnam as part of its Southeast Asia foray.

Mounting competition

Earlier this month, Tokyo-based Genesia Ventures announced it was topping up its investment in e-forwarding company Logisly. The Indonesian startup had previously raised seed funding from Singapore’s SeedPlus and Indonesia’s Convergence Ventures.


B2B Trucking Startups in Indonesia

Expand Table

CompanyStageTotal FundingInvestors
Kargo TechSeed$7.6 million10100 Fund, Pandu Sjahrir of Agaeti Ventures, Northstar Group co-founder Patrick Walujo, Intudo Ventures, ZhenFund, ATM Capital and InnoVen Capital
RitaseSeries A$12.5 millionGolden Gate Ventures, Jafco Asia, ZWC Ventures, Insignia Ventures, Beenext and Skystar Capital
WaresixSeries A$16.1 millionEV Growth, SMDV, Jungle Ventures
LogislySeedundisclosedSeedPlus, Convergence Ventures, Genesia Ventures
TrukitaSeedunconfirmedAstra, Everhaus (unconfirmed)

Of all the players in the tech-enabled B2B trucking solutions category, Ritase, founded in 2018, is arguably the longest-serving player in the market.

The Jakarta-based company, which last raised a Series A funding led by Golden Gate Ventures and joined by Jafco Asia, ZWC Ventures, Insignia Ventures, Beenext and Skystar Capital, claims to facilitate tens of thousands of shipments per month, with more than 7,500 trucks, 500 transporters, and 7,000 partner drivers connected to its app.

Another familiar name in the game is Kargo.id, which now goes by the name Kargo Tech, following its acquisition by former Uber Indonesia country manager Tiger Fang, who now holds the title of company co-founder and CEO.

Fang’s investment was followed by a full exit by East Ventures from the company at the start of this year. The early-stage VC firm cited “core value differences with founder” as the reason for its exit.

Born-again Kargo has since roped in a host of local and international backers to support its new venture under Fang. In a $7.5 million seed funding round led by Sequoia Capital, the company also secured investments from Uber co-founder and former CEO Travis Kalanick’s 10100 Fund, Pandu Sjahrir of Agaeti Ventures, Northstar Group co-founder Patrick Walujo, Intudo Ventures, ZhenFund, ATM Capital and InnoVen Capital.

Sequoia Capital is learnt to have been on the lookout for investment opportunities in Indonesia’s trucking sector for a while before finally choosing Kargo. This might explain why Kargo was able to raise a larger-than-usual seed round at a valuation, we have learnt, far higher than that commanded by early-stage companies in Indonesia.

While Ritase and Kargo are seen as players that have developed a relatively firm grip on the market, East Ventures’ new bet in the trucking realm is likely to mount a considerable challenge.

Starting out as a startup focused solely on providing warehouse services, Waresix, which in July raised $14.5 million in a Series A round, later added trucking-related services to its portfolio. It now claims to have over 20,000 trucks and 200 warehouse operators on its platform across the archipelago.

Newcomer Logisly says it is not deterred by more established players armed with huge financial firepower.

“In B2B, price is important but it’s not the number one factor. There are so many other things that are more important, including SLA (Service Level Agreement), operation, availability, damage and claims. If a player gets big funding, it doesn’t mean they automatically get all this right,” said Logisly co-founder Roolin Njotosetiadi, formerly of Grab-acquired Kudo.

The B2B trucking space, she adds, is still in its early days, and there is still a level playing field for all players. Furthermore, looking at the overall trucking landscape in Indonesia, she sees no reason why all the players cannot continue to co-exist and serve the market together.

“There are so many players in this industry. Over 100 3PL players and thousands of forwarding players, so the market is really fragmented with many people that are thriving despite the competition,” she said.

The road ahead

Some, however, see the industry panning out differently.

“In the same way as Grab and GOJEK dominate what they do, I believe it will come down to one or two players dominating the market,” says Joshua Agusta, chief investment officer of MDI Ventures, the VC arm of state-owned telco firm Telkom Indonesia.

In this respect, Agusta added, the industry cannot turn a blind eye to the possibility of the two ride-hailing giants joining the trucking space. With money at their disposal, the unicorns need only “snap a finger and overnight a serious B2B trucking contender can be born.”

In Indonesia, GOJEK has been providing logistics services since 2015 through GoBox. However, the service, which also operates a fleet of trucks, focuses more on last-mile deliveries. Given the increasing global interest in the B2B trucking space, however, it would not be a surprise if GOJEK adapted accordingly.

“I don’t think GoBox in its current form would be an actual contender with the B2B trucking players. It would need to transform significantly to suit the needs of a different user base. However, a potential for consolidation is imminent,” Agusta 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.