Excerpt: rightly so

Every startup founder we encounter has a dream: building their startup into a unicorn (exit seems to be more prosaic, it seems).

However, unless you are in China or US, unicorns are currently, and rightly, quite rare.

An image of Pixiu, a Chinese unicorn, in our Momentum Works office

Since 2012 and up until now, Southeast Asia has produced 10 unicorns.

The combined market value of the 10 unicorns in SEA is up to US$ 34 Billion, which is dominated by the region’s biggest market, Indonesia.

The 10 startups include 6 outside Indonesia: Lazada (Singapore), Revolution Precrafted (a peculiar one, based out of the Philippines), Grab (Malaysia-born, and Singapore-based), SEA(Singapore), Razer (Singapore), and the latest addition from Vietnam: VNG Corporation.

The rest are from Indonesia, producing the most number of unicorns, including: Go-Jek, Tokopedia, Traveloka, and Bukalapak.

Wait a minute, you might say, Singapore has four as well. Well, the truth is, Razer is pretty much a US based company (although founded by a Singaporean and with a decent presence in Singapore). Besides, both Razer and SEA are now listed companies, therefore not exactly fitting one criterion of being unicorn (which is privately held).

Let’s take a look at each of the Indonesian unicorns and see what they are doing differently this year to keep themselves competitive.

1. Go-Jek is the lead unicorn and is one of the most talked-about startups in Southeast Asia. In October this year, they received a corporate round funding US$ 1.2 billion by Tencent, Google, and JD.com. They are also closing a new round in the next two to three weeks which could value Go-Jek as much at about US$ 7-8 billion. As of 2018, GoJek operates in 50 cities in Indonesia and they have also launched in Vietnam (GoViet). Currently they are preparing for their expansion to other countries in Southeast Asia.

What are they doing differently: GoJek just released a new feature where users can top up their GoPay amount directly from the GoJek application by connecting their GoJek account with BCA (private bank in Indonesia) mobile banking. This is a feature that hasn’t been implemented by any other application in Indonesia.

GoPay new features partnering with BCA

2. Tokopedia with their Alibaba backing (they got funding from Alibaba in 2017) just got a fresh round of series G funding worth US$ 1 billion from Softbank Vision Fund in November 2018. Post this, the unicorn became the country’s most valuable startup (which they can hold until next month, when GoJek closes its next round). The estimated market valuation for Tokopedia has reached around US$ 7 billion.

What are they doing differently: Their market strategy is different from its rival unicorn Bukalapak. While Bukalapak targets SME, Tokopedia targets individual sellers and official stores to sell their items in a wider range. It has been able to triple its GMV this year.

This year they also launched an app Mitra Tokopedia to enter the Online-to-Offline (O2O) space. This app allows individuals and kiosk owners to sell digital products on Tokopedia platform, such as mobile phone credits, game vouchers, and pre-paid electricity tokens to offline consumers. This will help push their growth to those who are yet to be connected to the digital world.

Tokopedia partnering with offline store

3. Travelog an online platform for travel booking services was founded in 2012. This unicorn got its funding from Expedia worth US$ 350 million. Their estimated market valuation is over US$ 2 billion.

What are they doing differently: Currently they’re not only offering travel booking services but they also provide other booking services for entertainment and utilities and they have also introduced Traveloka pay. They aim to raise new rounds of funding and enter other spaces such as amusement parks and concerts.

Pay later options from Traveloka

4. Bukalapak the C2C marketplace for buying and selling items is the youngest unicorn in Indonesia, having joined the club in January 2018. Their strategy is to connect all the small SMEs in Indonesia and provide a wide service for them. Frankly, a quite tiring exercise but potentially a high barrier for competitors.

What are they doing differently: To give a tough competition to more established players like Tokopedia, JD.id and Lazada, Bukalapak has carved out a unique strategy. They have been reaching out to small kiosk owners by procuring and distributing products directly from consumer goods companies like Unilever. This removes the middlemen, keeps prices competitive and helps them reach out to millions of customers and merchants in neighbourhoods outside urban cities.

It’s a battlefield, but prizes still to be won

Indonesia is very likely to see more unicorns in the next couple of years and the most promising sectors are expected to be educational, healthcare, and fintech.

And frankly, we think the ecommerce space is not fully exploited, with total GMV being less than 2% of that of total retail in the country.

However, with the landscape in Indonesia constantly evolving, companies and investors need to constantly keep themselves updated to stay competitive and seize opportunities at the right time.

Fortunately, Momentum Works has a solid network of practitioners on the ground, giving us access to first-hand information about emerging markets, such as Indonesia. With these in-house experts, we have come up with our very own Emerging Markets Tech Investment Index Reports (EMTII Reports) as a part of Emerging Markets Tech Investment Index (EMTII) series (read more here). The major areas analysed are infrastructure readiness, timing (macro and micro), availability of funding, performance of major companies in the sector, as well as key relevant risk factors (political, regulatory,operational).

Exciting times ahead!

Momentum Works just released Indonesia Ecommerce Report and Indonesia Fintech Report.

Click the images below to know more details about the report. More reports will be made available progressively. For any further queries, you are welcome to email us insights@mworks.asia

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at hello@mworks.asia.

 

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