Three Indonesian startup founders explain how they weathered the pandemic storm

(Clockwise from top left): Rachel Phua, writer at DealStreetAsia; Tiger Fang, co-founder and chief executive of Kargo Technologies; Brian Marshal, founder and chief executive of Sirclo; Philip Thomas, co-founder and chief data and product officer of Bonza.

What was the toughest part about running a business during the COVID-19 pandemic? How do you address employees’ mental health concerns? Is there such a thing as raising too much money, given the current environment of ample liquidity?

These were some of the questions addressed by founders of some of the fastest-growing startups in Indonesia during a session titled ‘AMA Founder Edition: Staying agile and chartering high-growth markets’ on Oct.1 at the Asia PE-VC Summit organised by DealStreetAsia.

The speakers included Philip Thomas, the co-founder & chief product and data officer of Bonza, a big data analytics platform that most recently raised seed funding in May. Thomas led the development of Bonza’s Rt modelling that is being used extensively by many organisations to track the spread of COVID-19 in Indonesia. Before co-founding Bonza, Philip was a data scientist lead in several technology companies in SE Asia.

The second panelist was Tiger Fang, the co-founder and CEO of logistics provider Kargo Technologies, which raised $31 million last year in a Series A funding round led by Silicon Valley-based Tenaya Capital. Tiger Fang describes Kargo Technologies as the “Uber for logistics”. Prior to Kargo, Tiger Fang had served at various technology companies including as general manager at Uber Indonesia and China, and managing director at Lazada Thailand. Fang is also known to be an active angel investor. The Indonesia-based freight logistics marketplace also counts Sequoia India and SE Asia, Intudo Ventures, and Mirae Asset Venture Investment among its investors.

Brian Marshal, who was the third panelist, is the founder and chief executive of e-commerce enabler Sirclo that helps brands sell online. Sirclo had raised $36 million in September led by East Ventures (Growth Fund) and PT Saratoga Investama.

The founders described how they navigated the myriad challenges posed by the COVID-19 crisis, ensuring, among other things, the mental well-being of their employees and the expectations of their investors.

They also touched upon the growing interest of global investors in SE Asia. “It’s about damn time [foreign investors take interest in the region]. Where were they five, or 10 years ago? I would say their returns would have been much better had they looked earlier,” said Fang.

Edited excerpts from the chat with the three founders:

What were some of the biggest issues you faced during the pandemic?

Philip Thomas: We [Bonza] started in 2020. We never planned to be a remote team, but we had to be one. In Indonesia, a remote-first company is not common. That means we have to instil trust within the company and make sure that everyone is working autonomously.

Our biggest challenge was definitely on the talent side — hiring and onboarding. For hiring, there are two sides. You can basically acquire talent from anywhere, but we would also like to contribute to developing talent in Indonesia. 

Brian Marshal: Apart from the fact that we had to work from home, for Sirclo, we still had some people that had to work on the frontlines. For example, we are managing a couple of fulfilment centres. We cannot stop operations, but how do I try to mitigate the situation?

Tiger Fang: We [logistics provider Kargo Technologies] are also a deeply operationalist company. We have to talk to drivers, we have to invoice, we have to go to the warehouses, there’s a lot of operational parts of the business that never took off. And the truck drivers themselves can never take off during this time.

We’ve also hired many different people from all over the world. I’ve been really spending a lot of time thinking about how far we can get back to work in hybrid mode. That’s been really tough. A lot of my employees have lost loved ones. How do you strike that balance with coming back to work safely in an office.

The pandemic has shored up mental health concerns too. How have you handled that among your team members?

Marshal: It’s become more important throughout the pandemic that we have a structure within the company [to manage mental health]. For example, we have activities that make employees feel they are not alone, they have each other’s backs, they can talk about their personal problems as well. I think that is really important because in our business, once we make ourselves strong, then we can help others to grow. 

Our business, as an e-commerce enabler, is about helping other businesses. They are also hit by the pandemic, so they are asking us, ‘hey Brian, what should we do? My offline shops are closed down. I’m thinking of layoffs. How can e-commerce help?’.

Managing employees is only one aspect of the business. How do you prioritise demands from other stakeholders like investors and clients?

Fang: I think they are important stakeholders in our company, and we have to prioritise them as well. During the early days of the pandemic, in March 2020, when everything was drying up, investors were pulling out, and businesses were going into emergency mode. We were lucky to have raised our Series A, but we went into defence — cut all of our marketing budget, most of our executive team members took a huge pay cut, and we also disengaged with clients where we thought it wasn’t the right time.

How do you strike a balance between raising as much money as you can, and raising enough money to meet current expectations? 

Marshal: It goes back to whether you have a plan, or why raise money at all? At Sirclo, we didn’t raise a mega-round. We raised quite a reasonable amount, even though in some rounds we got more interest than what was needed. Like in our latest round [$36 million in September], we initially wanted to raise a smaller amount, but we got more interest, until we said $36 million is our maximum based on the plan we have at this point.

There is no free money. When you raise more, it means you dilute more. When you raise more, of course you can get a higher valuation, but when you dilute more, you will have to be cautious about the dynamics. 

Thomas: Some entrepreneurs may want to raise a war chest because they predict the pandemic will disrupt a lot of their business. There’s nothing wrong with that. But if you want to be picky about your investor and pricing and keep dilution very small, there’s also nothing wrong about it. 

If you don’t have a plan — how you plan to use the money for expansion, for your future products, for hiring — you’re just asking for trouble.

Is the growing interest from global investors, like Tiger Global and a16z, in Southeast Asia affecting you?

Marshal: Typically, US money is a bit more mature. I think if a business is in the late stage, they need that global connection because they are intending to go global or public in a foreign country, then it might be a good idea to take money from them.

During our Series B, we raised a lot from local conglomerates and businesses, especially since we were expanding our offerings, not only to SMEs but also to multinational companies. 

Fang: It’s about damn time [they take interest in the region]. Where were they five, 10 years ago? I would say their returns would have been much better had they looked earlier. I think it’s great for the ecosystem [that they are looking]. I think more capital means that founders like us can be more ambitious. I think it’ll be great for our early-stage investors who can exit and invest in more entrepreneurs.

As our companies mature and as these first-generation startups — the Grabs and Gojeks, the Tokopedias and Bukalapaks — go public, we’re going to attract a lot of entrepreneurs to come back.

Were there any burning questions you got from your investors during COVID-19?

Fang: How much cash do you have left in the bank? We took a hard look at our profitability, unit economics, and tried to cut as much out of the system. 

Marshal: Since e-commerce was at the top of everyone’s mind, the second question was how we could help other businesses, including small ones, even individuals who lost their jobs. The right question to ask is whether our company is a beneficiary during the pandemic. 

Thomas: Our investors also asked us how we could help. We do data analytics, so we helped the government track the severity of COVID-19.

How were supply chains affected during COVID-19 and the growth of e-commerce?

Fang: At the start of the pandemic, global trade was just at a standstill, so a lot of our trailers and trucks were just not moving. As COVID-19 affected manufacturing capacity, that disrupted our inventory planning as well. There was an oversupply — we had added more trucks in that first one or two quarters in 2020 than we did in all of 2019. 

What really picked up for us was toward the end of 2020, beginning of 2021 the growth of e-commerce, and a lot of direct-to-consumer goods demand, so we shifted our capacity to helping platforms and third-party logistics providers. 

The biggest challenge over the past year has been this shift in consumer behaviour. A lot of our smaller trucks are now going from fulfilment centres to smaller delivery stations, and these riders then deliver the packages to consumers. That’s been a super exciting part of our business. 

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.