Week in Review: Go-Jek’s US$550mil funding sparks intriguing scenarios

By Karamjit Singh August 5, 2016

Founders tried to raise US$1bil, goal to be dominant in Indonesia
Malaysia’s ambitious effort to be SEA hub for entrepreneurs

Week in Review: Go-Jek’s US$550mil funding sparks intriguing scenarios SEVEN point two trillion … let that number roll off your tongue. Because that is the amount of funding Indonesian ride-hailing-turned-on-demand startup Go-Jek has just raised.

The fact that the amount is in rupiah does nothing to diminish the achievement of cofounder and chief executive officer Nadiem Makarim in raising a staggering amount which works out to US$550 million. By the way, he was apparently trying to raise US$1 billion.

What blows me away is that the funding is going to be almost exclusively used to build, strengthen and embed Go-Jek in Indonesia.

While it is drilled into startups across Asia that they must go regional or global, when your domestic market is 230-million strong, with a rapidly growing middle-class, going local and deep also has great value in the eyes of investors.

And that is what one of the many investors in Go-Jek’s current round, Warburg Pincus, highlights as well. Its South-East Asian head Jeffrey Perlman notes: “With Indonesia’s rapidly expanding middle class, increasing urban density and young Internet-savvy population, Go-Jek is well positioned to become the ‘go-to’ platform for high frequency daily services including transport, food, logistics and payment.”

The race is definitely on for Go-Jek to now become the undisputable leader in as many on-demand services as possible, and to then perhaps become a juicy acquisition target by a global or Chinese player.

Will it possibly sell at some point? Of course it will. It may be a proud homegrown startup which Nadiem started back in 2010, but its funding and shareholders are international, and nationalistic feelings will not factor in at all if the right offer comes along.

But I am jumping ahead four or five years! Let Go-Jek continue building, in Indonesia and perhaps even the region via acquisitions. It’s not going to bother with organic regional growth – not when it has that kind of a war-chest.

And I wonder if this is game over for other South-East Asian on-demand startups with regional ambitions as well. Will they now just focus on becoming the leaders in their own markets and build value while waiting for Go-Jek to come shopping?

And of course, how will Grab, another ride-hailing service that has added on-demand services to its offerings, respond? It is already said to be raising another big round and is well positioned in the region.

Or will some global player come in and start buying out smaller on-demand players, rebrand and build a South-East Asian on-demand leader before going into Indonesia to battle Go-Jek?

Some delicious scenarios are on the table with this mega deal now. The South-East Asian startup ecosystem just gets hotter!

And before I sign off, congratulation to Singapore-based Carousell for its US$35-million Series B funding (for multiple markets rollout, not just one!), and hats off to the very ambitious effort by the Malaysian Government in wanting to be the regional hub for entrepreneurs via its just launched Global Entrepreneurship Community.

And finally, do check out my key takeaways from last week’s What’s Next 2016 conference and do read about why a world-renowned academic in the field of software testing thinks Malaysia has just put a policy in place that could possibly spark the creation a globally competitive software company.

It’s been an exciting week in South-East Asia.

Have a restful weekend and productive week ahead.

Editor’s Picks:

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Malaysia’s IVV policy to be game-changer, says global software testing expert

MaGIC announces KL-hosted global entrepreneurial initiative … in Jakarta

MaGIC’s Asean accelerator ends on a high note

Indonesian startup Go-Jek lands US$550mil funding

Digerati50: A couple that grows together …

Windows 10 Anniversary Update rolls in

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