Indonesia’s travel booking unicorn Traveloka’s latest funding round, in which it raised $250 million, was “the toughest” in the company’s history, said the company’s chief strategy officer at the Asia PE-VC Summit 2020 last week.
The funding, which saw backing from only one new investor — an undisclosed global financial institution that also led the round — was sealed in July, even as the company faced huge headwinds from the coronavirus outbreak.
Just months earlier, travel curbs and the consequent barrage of refund requests from travellers had forced Traveloka to cut over 100 jobs, while affiliate Airy Rooms, a budget hotel startup, shut down.
The Indonesian unicorn has 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, in recent months.
“They [investors] took their time to make sure that they are going to come into a company which, first of all, can survive the crisis, and secondly, has the management that can navigate the company back to its growth path,” said Traveloka chief strategy officer Joydeep Chakraborty at the summit organised by DealStreetAsia.
What played in the company’s favour, he explained, was the fact that the investors had been following the company for a while and had seen it “in the best of times”. Traveloka had been in discussions with the investors prior to COVID-19, which Chakraborty said helped build “chemistry and connection”.
Another factor that helped Traveloka — which counts Singapore’s sovereign wealth fund GIC and EV Growth on its cap-table — attract notable investment was the fact that some of its “blue-chip” travel counterparts had months earlier raised significant capital amid the pandemic.
US travel company Expedia raised a $3.2 billion funding round in late April, while home-stay company Airbnb raised $2 billion in a mix of equity and debt financing earlier that month.
“I think that gave us confidence, and gave the investors confidence, that if you pick the right horses that will survive this crisis, then the market will come back. We did also see that play into the investors’ psyche,” Chakraborty said in a fireside chat titled ‘Navigating the crisis and fundraising during the pandemic’.
Also participating in the chat was Andree Susanto, co-founder & CEO, Waresix.
The Indonesian logistics technology startup, which raised significant funding during COVID-19, admitted that it had also experienced unprecedented challenges in the process of securing its investment.
The company’s $100 million Series B funding round, which hit its final close in September, saw participation from a host of new investors including SoftBank Ventures Asia, EMTEK Group, Pavilion Capital, and Redbadge Pacific.
Susanto said it took some time, for new investors, in particular, to understand the company’s business given the pandemic-induced travel restrictions, which meant that a large part of the communication and due diligence had to be done online. In the end, the investors hired a third-party reviewer to carry out some stringent due-diligence work on the ground.
Susanto believes that the trust and confidence of the company’s existing investors helped convince the new backers to seal the deal. “It’s really hard to justify to new investors, but the fact that existing investors put in significant amount in cheques…it makes things more comfortable,” he said.
Ready for recovery
With substantial capital under their belt and a sufficient runway secured for the coming year, Traveloka and Waresix say they are well-positioned to fully capitalise on the market once it shows signs of recovery.
Chakraborty says he is looking forward to 2022, which he anticipates being “the year of revenge travel” when people will be out to travel at every given opportunity.
Before then, however, Traveloka will continue to invest in its core businesses which comprise overseas travel and local lifestyle activities. While the company places equal importance on both of its businesses, prolonged overseas travel restrictions may force it to focus on domestic services for the time being.
“It’s not going to be either-or, but I think given domestic travel is what has recovered faster, we do expect domestic experience or local lifestyle to be the first to come back strong,” he said.
Waresix, meanwhile, believes there will continue to be a lot of uncertainties in the logistics space. The company, which offers warehousing and trucking technology services to companies in Indonesia, says selecting the right sectors and industry to serve will be key for its growth.
Among the sectors which the company will be eyeing next year include telecommunication and commodities, while healthcare and medical equipment would also be worth keeping an eye on, given the current health crisis, Susanto said.
“What we see is that vaccines will be out hopefully, soon. Maybe early next year. So vaccine distribution is also something that will be quite interesting,” he said.