Wiser from the pandemic, Indonesian unicorns prepare the ground for growth in 2021

Jakarta, Indonesia. Photo by Afif Kusuma on Unsplash

Drifting into 2020, when the first signs of COVID-19 emerged, Indonesia’s unicorns had foreseen a busy year. In hindsight, “busy” was an understatement.

The past 12 months were relentless for the unicorns, who reviewed and re-calibrated their playbooks after the black swan event. Those who found themselves in a stable position during the year sought to seize newfound opportunities. As such, the experience of 2020 should put the companies in good stead for the coming years.

Arguably, the busiest of Indonesian unicorns in 2020 has been the largest of them all — ride-hailing decacorn Gojek.

Under the new leadership of co-CEOs Andre Soelistyo and Kevin Aluwi, who took charge in late 2019, Gojek’s first big bang fundraising in 2020 came in March. That month, it announced to its employees in an internal memo that it had raised $1.2 billion in fresh capital, which increased its Series F round total to just under $3 billion.

This was followed three months later by an unspecified investment from US tech strategics Facebook and PayPal as part of its Series F funding round, before securing the last of its 2020 funding in November — a $150 million deal with local telco Telkomsel.

The year 2020 also marked the first time that Gojek opened the doors for investors to its subsidiary companies. Gojek’s video streaming unit GoPlay in June bagged its first independent funding round, understood to be in the region of $15 million, led by ZWC Partners and Golden Gate Ventures.

Filings indicate that Gojek’s payments arm GoPay has also been raising funds on a standalone basis since March 2020 with Temasek-affiliated Gamvest, Tencent Mobility and Google Asia Pacific coming in as shareholders.

Meanwhile, Gojek also actively splashed out cash for its own strategic investments. The decade-old company announced its acquisition of mobile point-of-sale startup Moka in April for a reported figure of around $130 million. The company is also said to have acquired a majority stake in Vietnam-based payments startup WePay.

In its organic expansion, Gojek launched several new services including GoService (for tax payment), GoScreen (digital advertising), and GoToko (B2B supply).

While the moves mentioned above are a continuation of Gojek’s fundraising and investment patterns of previous years, the advent of COVID-19 pushed the company to take some drastic steps.

In June, Gojek announced it was laying off about 430 employees and shut down a number of its non-core services such as GoLife, which offered at-home massages, cleaning and other services, and GoFood Festivals, a physical food court concept. The move — “a long-term response to the COVID-19 pandemic” — was meant to prioritise its “high-impact core businesses” of payments, transport, and food delivery.

In November, Gojek claimed it had seen “stable topline growth” despite the COVID-19 crisis, clocking a 10 per cent year-on-year increase in gross transaction value (GTV) to $12 billion this year, with its Gojek-branded services generating positive margins on a product basis.

In an email to DealStreetAsia, Gojek said that it expects to see an acceleration in its international business in 2021. It also plans to invest in platforms and partnerships to better serve its merchants, while also enhancing its payments and financial services offering for SMEs. 

Alex Rusli, an angel investment veteran and CEO of fintech firm DigiAsia Bios, described the tough decisions made early on during the pandemic as an “opportunity well taken” by Gojek. 

“COVID is the best excuse without people questioning the condition of the company. They (the decisions) are seen as the consequence of the situation,” he said.

Having “chosen its battlegrounds” and “bitten the bullet they needed to bite,” Rusli believes Gojek is now in a much better position for its journey ahead in terms of having the right base, operational structure, and costs. 

Something to look out for next year, meanwhile, is the development surrounding Gojek’s reported merger talks with arch-rival Grab, which is understood to be inching closer towards a deal. Gojek, however, has maintained that reports of the said talks are “inaccurate.”

I think the battle is still going to continue [next year] but I don’t think it will necessarily be on price wars, but on who is able to provide better services going forward,” said Rusli.

E-commerce unicorns

In the e-commerce space, Tokopedia and Bukalapak were preoccupied with channelling their resources to meet the rising demand for marketplace services.

Tokopedia claimed in November that its food and beverage sales had grown three-fold during the pandemic, while Bukalapak said sales on its platform had increased up to 50 per cent in June.

Market research firm Redseer predicts the positive e-commerce trend to continue in 2021, which could heat up competition in the market. “The almost doubling-up of e-commerce penetration in the last 12 months (around 6 per cent in 2019 to around 11 per cent in 2020) has boosted the online customer base for all major players. Hence, most players are likely to focus on seller-buyer retention and likely to be less aggressive on acquisitions. Accordingly, we expect profitability levels to improve in 2021,” said Redseer Southeast Asia partner Roshan Raj.

The higher adoption helped them close notable funding in 2020, roping in strategic US investors. Bukalapak raised a reported $100 million from Microsoft, while Tokopedia secured a reported $350 million from Google and Singapore’s Temasek.

Capital firepower will be key for the two companies as they look to stand their ground amid the aggressive cash-burning strategy of Sea Group’s Shopee, which has catapulted it to the top of the e-commerce leaderboard in Indonesia.

“In my view, the battle is now a two-horse race between Shopee and Tokopedia. The $350 million investment raised means they have a chance to compete. However, it seems as though millennials are more inclined to use Shopee because of factors like user experience, based on our research,” said CEO of e-commerce enabler PowerCommerce Asia, Hadi Kuncoro.

While Tokopedia is at par with Shopee in terms of its logistic capabilities, not having its own payments business to match Shopee’s ShopeePay could prove to be another disadvantage for Tokopedia, said Kuncoro, a former CEO of aCommerce.

Bukalapak, meanwhile, may look to focus on its online to offline (O2O) game, in which it offers B2B commerce service to mom-and-pop shops. The company claims that its offline agents or Mitra Bukalapak have grown threefold, supported by the expansion of wholesale stock distribution coverage to more than 500 cities in Indonesia.

While Bukalapak is considered as one of the leaders in the space, it will be facing stiff competition from a bunch of new players, including Gojek’s GoToko.

Payments unicorns

Indonesia’s two newest unicorns OVO and GoPay also enjoyed rising traction in 2020 spurred by the adoption of digital services among consumers. GoPay claimed its e-money and online transactions grew 2.7 times as of October, surpassing its pre-pandemic numbers. 

OVO says that since the pandemic struck, the company’s e-commerce total payment value (TPV) grew over 110 per cent between March and September 2020, while also seeing an almost 50 per cent growth in lending disbursement, and an over 15 per cent TPV increase in food delivery transactions.

CEO Jason Thompson believes, based on a survey by his company, the uptick is not a temporary phenomenon, and will spread nationwide. “One in three people who adopted online services during COVID-19 were new to it. And based on our surveys, 93 per cent of those new users intend to continue to use the service when life normalises in Indonesia,” said Thompson.

Travel unicorn

Of all of Indonesia’s unicorns, the one most eager to see the back of the pandemic would be online travel agent Traveloka.

Operating in a sector arguably most directly impacted by the COVID-19 outbreak and the travel curbs that came with it, Traveloka received a barrage of refund requests from travellers and was later forced to cut over 100 jobs. Its hospitality affiliate Airy Rooms, meanwhile, was shut down.  

Prior to that, the Indonesian unicorn also witnessed the departure of several executives, including chief technology officer Benjamin Mann, chief investment officer Hendrik Susanto, and Singapore and Malaysia head Halif Hamzah.

Despite the early battering, the company launched several initiatives to cater to shifting users’ demands and claimed to have seen “encouraging recovery” after experiencing its “lowest business rate” since inception. It then managed to close a $250 million funding round in July led by an undisclosed global financial institution.

According to Willson Cuaca, managing partner of Traveloka investors East Ventures and EV Growth, Traveloka’s response to the crisis has given its investors confidence that it can weather the storm and emerge stronger because of it. The company has strengthened its balance sheet, Cuaca claims, which puts it in a better position to reap the rewards in the coming year.

“They have proven that they are agile enough, so 2021 will be interesting if they can execute as they did this year,” he said.

The venture capitalist, who is also a shareholder in unicorns Tokopedia, Gojek and Grab, believes 2021 will see a widening of the gap between growth- and early-stage companies. Growth stage startups, he predicts, will see out the crisis given their superior capabilities and better runway, while early-stage startups will also survive as long as they had been financially prudent before the pandemic.

“The ones that could be in trouble are the middle-stage companies that have been buying growth at all costs, invested beyond their capacity (because of the 2019 bubble) or been too bullish on a V-shaped recovery,” 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.