Malaysia’s youth and sports minister Syed Saddiq Syed Abdul Rahman is planning to bring Go-Jek into Malaysia.
On August 19, Syed Saddiq said he had managed to bring Go-Jek’s founder, Nadiem Makarim, whom he had previously met in July, to meet with Prime Minister Dr. Mahathir Mohamad and Transport Minister Anthony Loke.
“The presentation was accepted kindly, and we will finalize the discussion in the upcoming Cabinet meeting this Wednesday,” Syed Saddiq recounted.
The youth and sports minister mentioned that these efforts are aimed at providing more job opportunities to motorcyclists.
“Motorcyclists want jobs, not just one-off programs or race tracks,” Saddiq said his Twitter post which features a one-minute video.
Golongan mat motor mahukan pekerjaan & pembelaan,
Bukan sahaja program one-off/Litar.
Mereka wajib dibela. Jangan perlekehkan sumbangan mereka kepada negara.
— Syed Saddiq (@SyedSaddiq) August 19, 2019
In an interview, Syed Saddiq also mentions that Go-Jek has been successful in Indonesia, with an employment of over two million motorcyclists in Indonesia, and hundreds of thousands more in Thailand, Singapore, and Vietnam.
Through this proposal, Syed Saddiq believes that Go-Jek entry into Malaysia will create hundreds of thousands of job opportunities for motorcyclists, in addition to boosting the businesses of small entrepreneurs.
In a separate Twitter post on August 18, Syed Saddiq has also started a poll asking netizens to vote if they support or oppose Go-Jek e-hailing services.
Overall, the poll saw 56,000 responses with 88% agreeing to the statement.
If you are unfamiliar with the startup, Go-Jek is an Indonesian e-hailing company backed by Tencent, JD.com, Google, and Temasek Holdings.
Founded in 2011, the startup has since then moved beyond ride-hailing services, developing into a one-stop app where users can order on-demand services such as grocery delivery and beauty treatments.
In Indonesia, Gojek has expanded to offer more than 20 services, including e-payment, house cleaning, and laundry services. It is known for its very affordable pricing, which analysts say is possible because the company pays for part of the costs out of its coffers.
Go-Jek also claims to be the largest food delivery service in Southeast Asia, beating even regional competitors in India, which has a population which is more than four times that of Indonesia’s 260 million.
The startup said it currently has more than two million partner drivers and 400,000 partner merchants in Southeast Asia.
Nadiem Makarim, Go-Jek’s Founder and Group Chief Executive said: “When we first launched Go-Food in Indonesia, we became the biggest player in the food delivery service in the country within six hours.”
Anyhow, if cabinet discussions held this week are to go well and Go-Jek entry to Malaysia is successful, the ride-hailing consumers are most likely the first to benefit.
Because after Uber ended its services in Southeast Asia, Singapore-based Grab has basically become the sole player in the Malaysian ride-hailing market.
At least with Go-Jek, the two will extend the competition, giving way to a free market and bringing choice back to the ride-hailing market in Malaysia.
Then again, this matter also reminded many of the homegrown Go-Jek known as Dego Ride which similarly offers motorcycle ride-hailing services in Johor.
Dego Ride and its thousands of riders were dissolved and brought to a halt by the Barisan Nasional government last year, after saying that its service is not needed as Malaysia already provides a comprehensive public transportation system.
The service was also previously criticized by transport minister Anthony Loke Siew Fook saying that, “we will never legalize Dego Ride in Malaysia because we disagree with any types of ride-sharing services that involve motorcycles.”
“In Malaysia, there are too many accidents involving bikes that we just can’t take the risk,” he told reporters.
Then again, with narratives changing now, we just might see a revival of Doge Rides? But first and foremost, this will all rely on the cabinet discussions for Go-Jek.
Southeast Asia unicorns have emerged as the biggest drivers of exits in the region.
Just last week, Indonesian e-commerce unicorn Tokopedia bought over wedding marketplace Bridestory, as revealed in a romantic video where both parties said I do.
This was followed by Singapore unicorn Trax announcing that it had acquired US-based shopping rewards app Shopkick on June 25.
But it’s not just a surge in June. Reports show that exits have been increasing in the past 3 years.
According to the State of Southeast Asian Tech report compiled by Monk’s Hill Ventures and Singapore’s Slush, the region had seen 66 startups achieve exits as of June 2018.
While the report did not specify the profile of acquirers over the last three years, the period coincided with a rise in acquisitions by the region’s unicorns.
Unsurprisingly, a bulk of these acquisitions has been made by car-hailing giant Gojek in lieu of its plan to build a super-app.
In fact, Gojek by far has been the most active, having acquired as many as 11 startups since 2016, according to the data by Crunchbase.
The companies include local payments company MVCommerce, ticketing platform LOKET, and its most recent being Indian recruitment platform AirCTO, which are all intended to ramp up its engineering capabilities.
“The companies looking to be super apps are acquiring smaller startups because they, well, all of us, cannot be an expert in everything,” Teddy Oetomo told Nikkei Asia. “The easiest way to build a new vertical is acquiring it. In addition, acquiring is faster than developing,”
With that said, Go-Jek has been steadily adding new features and services ranging from grocery deliveries, haircuts, and even games for entertainment.
While Gojek is at the forefront of the acquisition activity so far, its competitor Grab is also on an acquisition spree, though more focused on minority stakes.
Though the Singapore ride-hailing giant has only made 2 acquisitions – iKaaz and Kudo – it holds minority stakes in multiple startups including Singapore’s Ninja Van, Vietnam’s Moca, and Indonesia’s Ovo among some.
Besides, Grab is reportedly looking for more acquisition, as it plans to raise US$2 billion more this year to fund an investment of at least six tech startups in 2019.
According to several sources, one of the companies Grab has identified as a potential acquisition target is HappyFresh, in which it already owns a minority stake.
“Whether we invest or acquire will depend on many factors, including, but not limited to, the synergies a company has with Grab’s ecosystem, the growth potential of the company, and the valuation of the company,” Nicholas Anthony, Head of M&A and Investments at Grab said.
Holding the very same concept of having everything “in one single app”, a bulk of acquisitions are made by Indonesia’s travel unicorn Traveloka.
The travel tech unicorn was reported to have acquired three online travel companies in the past year, which are: Travel Book, Mytour, and Pegipegi.
Just today, it has also lead an investment in Singapore-based event tech platform PouchNation which offers a range of solutions for event organizers.
These acquisitions and partnerships further show Traveloka’s commitment to strengthen itself within the travel vertical to grow beyond its core business of flight and hotel tickets.
Similarly, other Indonesian unicorns have also been flexing their buyout muscles.
Besides its recent acquisition Bridestory, Alibaba-backed ecommerce unicorn Tokopedia is also currently in talks to acquire multiple startups including Sayurbox. While Bukalapak in 2018 has also sealed a deal with second-hand marketplace Prelo to acquihire their talent and technology.
Singapore startups have not been far behind, with NYSE-listed Sea buying three undisclosed companies in 2017 for US$19.875 million, according to an SEC filing.
Razer, before its IPO on the Hong Kong Exchange, has also made several acquisitions such as Nextbit Systems, THX, and Ouya to amp up their tech.
New unicorns like Singapore’s Trax has also gotten into the action, having acquired US-based Quri last year and China’s LenzTech this year, before the latest Shopkick purchase.
So far, the unicorns in Southeast Asia are responsible for close to 40 acquisitions, including both regional startups and abroad.
It’s not hard to see why. Instead of building things from scratch, it is highly attractive for these unicorns to acquire smaller startups at conservative valuations and gain access to the startup’s technology and/or talent.
Regional unicorns such as Grab and Gojek are even launching their own investment vehicles to become both a source of funding and potential exit point for early-stage startups.
Moving forward, it’s most likely that we will continue to see an uprise trend in these unicorns creating more exits for startups.
After a decade of disruption in urban transportation, Uber has finally gone public.
The company has been the highest valued tech IPO since Alibaba and Facebook, and is one of the main highlights among the wave of Silicon Valley unicorns going public this year.
But in the end, Uber’s IPO was a bumpy ride.
As its public offering closed in, the ride-hailing startup’s valuation began to slip, finally settling on US$45 per share, the lower end of the expected range between US$44 to US$50.
This puts its valuation at about US$75.46 billion, which is a 38% drop from its initial US$120 billion valuation late last year.
Uber’s low valuation comes as it met with setbacks of data scandals, the fatal car crash in Arizona, as well as Uber driver demonstrations 2 days before their IPO.
Besides, Uber’s competitor Lyft market debut in March has not been smooth. The shares tumbled over 20% since its debut and plunged to US$56.11 on April 15, 35% below its first trading day highs and 22% below its IPO price.
That’s not all. Lyft has also reported a loss of US$1.14 billion for the first quarter, a sharp increase from the loss of US$234.3 million in 2018.
Similarly, it also hasn’t been very good for Uber.
If you look closely at the financial structure of Uber, while the company’s income indeed rose 43% to reach US$11.3 billion in 2018, it has never recorded a net profit.
“To be absolutely practical, a lot of these startups are not going to start making money within a 10-year period,” said Sze-Hui Goh, a partner at Evershed Harry Elias to BusinessTimes.
These companies need a longer run, and more than ever a solid business model if they want to display a positive company performance in the future.
You see, this situation in Amazon which while going public, still recorded losses. However, its growth was high and now the ecommerce company has exceeded a US$1 trillion market cap.
But still, investors have to remain cautious and attentive when it comes to ride-hailing. Because, in terms of fundamentals, these companies are still handing in a red report card.
The same goes for China’s Didi Chuxing, Southeast Asia’s Grab and Go-Jek, India’s Ola, the Middle East’s Careem and Russia’s Yandex have been burning cash at an impressive rate while showing little or even negative operating leverage.
A decade after ride-hailing services were first launched, they makeup just 0.4% of total vehicle miles traveled in the US and indeed much lower elsewhere.
The Atlantic magazine noted in a recent opinion piece that, “Uber almost doesn’t feel like a business, but rather some essential service that investors believe should exist, so they have kept injecting money into it.”
Well, it is a reality check for the Southeast Asian unicorns when it comes to their turn to follow Uber and Lyft steps to becoming public companies.
With the conservative pricing in the initial public offering for Uber, on top of the lackluster stock market performance for Lyft – this could encourage venture funds to rethink their investments in the future.
“In general, startup valuations have been stretched especially at an early stage. This is a good reflection on how valuations normalize as money becomes more scarce,” Rachel Lau, the managing partner at Malaysian investment firm RHL Ventures told BusinessTimes.
“What people will be more concerned about is startups’ performance versus valuation; and whether their performance is consistent… There is likely to be a pullback once the market becomes fatigued with companies without strong profit fundamentals,” she added.
Startups simply have to find a way to make money before going public, especially amidst the public capital market being skeptical of the profitability of ride-hailing companies.
But profits aside, publicity is also equally important. These companies also have to take the right business strategy and signal to investors of a positive clean image.
But for now, it looks like both startups are more focused on stepping up competition with each other for market share rather than considering IPO.
So far, Grab CEO and Co-founder Anthony Tan said that Grab is not going to be listed anytime soon, even though the startup is already a decacorn with a valuation above US$10 billion.
“We will continue exploring potential strategic partners to invest further into Grab. IPOs are not needed in the near future,” Anthony Tan said in Jakarta on March 6.
Go-Jek also stands in line with Grab as it mentioned that IPO is not a top priority for the startup at the moment. The company instead, is more focused on strengthening its application and services in Indonesia and other targeted countries for expansion.
One point that makes a difference between these Southeast Asian ride-hailing apps is their movement towards becoming a superapp.
Unlike Uber which focuses solely on ride-hailing, Grab and Go-Jek have expanded beyond ride-hailing and are trying to create a comprehensive superapp that offers customers everything from food delivery to financial services.
However, when you have the same or similar cars and mostly the same drivers, riders will use whichever service that is cheapest. Almost everyone will have both apps on their phones, and when it comes to choosing, the decision is often made based on which is the cheapest or offers the most discounts.
There’s no brand distinction between Grab and Go-Jek, and things such as loyalty card points are definitely not enough to differentiate one ride-hailing service from another, they need to bring it out from the battle of prices.
In the end, coming to IPO. It is ultimately not just for branding or more capital, rather it is an objective market test for a startup’s true valuation and potential.
So let’s look forward to the development of these ride-hailing unicorns and see which company is going to be the first in figuring out that successful business model.
Hurun Research Institute, the firm which creates China’s wealthiest individual lists has released its country-wide unicorn index for the first quarter of 2019 on May 7.
The new report titled “Hurun Greater China Unicorn Index 2019 Q1” mentions that China added 21 new unicorns in the first quarter, that is twice as many unicorns as in Q4 2018.
Among these 21 new unicorns, fashion clothing ecommerce Shein, apartment management platform Danke Apartment, IoT solutions provider Tuya Smart, autonomous driving startup Pony.ai, and media company XinChao are leading with over US$10 billion valuations.
The report also notes that the unicorns mostly derived from both AI and logistics fields, such as autonomous driving startup Pony.ai and B2B logistics startup Lalamove.
Hurun, the Chairman and Chief Investigator of the institution noted that “the number of unicorns in China has surprising exceeded 200, which is almost ten times that of India. At this time, China should be the first place in the world in terms of the number of unicorns.”
Of course, this wouldn’t have been so successful without capital funding from investors. In terms of unicorns breeders, Sequoia Capital has been the most successful with 53 unicorns in its portfolio. This is followed by Tencent and IDG, with each having invested in 31 and 25 unicorns respectively.
In terms of exits, the Hong Kong Stock Exchange and Nasdaq board have also witnessed the most listings of China’s unicorns in the first quarter of this year.
A total of five unicorns listed successfully on the list, including Maoyan Entertainment, Futu Securities, CStone Pharmaceuticals, Tiger Broker, and Weimob.
The biggest news after all, is that China now has a total of 202 unicorns. Among the startups, the total valuation of internet services companies topped the list with over 1.6 trillion yuan (about US$232 billion).
From the 202 Chinese unicorns, 42 are involved in the internet services sector, including ecommerce giant Alibaba’s Ant Financial with a US$1+ trillion valuation, Bytendance with a US$500+ billion valuation, and Didi with US$300+ billion valuation.
But aside from the Unicorn Index, the startup has also published its first Hurun China Future Unicorns 2019 Q1 listing another 70 high-growth enterprises from emerging industries.
These seventy potential unicorns are most likely to be valued at US$1 billion in the next three years, with 66 percent of the startups coming from Beijing and Shanghai.
In 2018, Hurun reported that a new unicorn was minted approximately every 3.8 days in China, making for a total of 97 new startups worth US$1 billion.
Though everything is looking to be on a good start with the results from the Q1 2019 report, Hurun said not to be overly optimistic as he estimates that 20% of current unicorns could eventually fail.
Also, Hurun’s methods of calculating unicorns aren’t exactly undisputed. By contrast, China Money Network’s calculations noted the number of new unicorns in 2018 at just 25.
A March Credit Suisse report also warned that despite the prominence of tech unicorns in China, the percent of firms in advanced fields including AI, big data, and robotics still well lagged behind US figures.
The venture ecosystem in India is off to a great start in 2019.
It’s not even mid-way into the year, and the country has already seen the addition of two internet startups achieving the much-coveted unicorn status, with another reportedly close to the billion dollar valuation milestone.
Just this Monday, BigBasket has secured a US$150 million Series F financing round led by Mirae Asset-Naver Asia Growth Fund, CDC Group, and Alibaba.
Chinese giant Alibaba is an existing backer, which had also led the Series E round in BigBasket last year. It remains the largest investor in the company, owning up to 30 percent stake.
Meanwhile, April also saw India’s first gaming unicorn Dream11. The startup reached a valuation exceeding US$1 billion, after a secondary investment by London and Hong Kong-based asset manager Steadview Capital.
“These developments proof that investment activity and the pace of growth has picked up in the Indian startup space,” said the vice president of consultancy Everest Group Yugal Joshi to Quartz India.
The rise of BigBasket and Dream11 are the continuous reflection of evolution in Indian internet business, following the footsteps of existing Indian unicorns like Flipkart and Ola.
“The companies that we are talking about, be it BigBasket or Dream 11, are not overnight stars,” said Sanchit Vir Gogia, the founder and CEO of Greyhound research.
These startups have been working their way up quietly for some time. Eight-year-old BigBasket, for example, has been investing in the supply chain, logistics and technology for long to reach where it is now.
The online grocer sells more than 20,000 products ranging from groceries and pet foods, operating in 25 Indian cities.
“BigBasket offers a transformational and convenient experience to its consumers, which makes it a preferred grocery platform,” said Ashish Dave, the head of India Investments for Mirae Asset Global Investments.
Meanwhile, Dream11 which was co-founded by University of Pennsylvania alumni Harsh Jain and his friend Bhavit Sheth in 2008 has also been experimenting with the product-market fit before it found success.
The startup adopts a data-driven culture and strategy to reach its current 50 million registered users, which it claims is the tip of the iceberg in a market with more than 850 million cricket viewers on television.
Their success with cracking their segments was what boost global investors confidence, enough to give birth to both success stories… and the trend is likely to continue.
Investors see India, now at a US$2000 gross domestic product per thousand people, set for consumer-spending led acceleration in the online economy.
The country offers large opportunities for startups and ventures that bridge offline needs with online access-based supply chains.
Startups like BigBasket is answering exactly this, as it is reengineering the supply chain to allow for faster delivery to resellers and to reduce the time from farm to customers.
With its new funding, the company is ready to contend with competitors on multiple fronts, from the micro-delivery ventures like dairy-focused Milkbasket to food delivery venture Swiggy.
It will also be looking to expand its operations and scaling up its supply chain capabilities, against bigger competitors like Amazon and Walmart which is expanding in India.
“We have a unique opportunity to build one of the largest grocery businesses in the country in the country and we expect the capital raised in this round to continue to enable us to do just that,” VS Sudhakar, co-founder of BigBasket said.
According to analytics firm Tracxn, India’s retail market is valued at more than US$900 billion and is increasingly attracting the attention of VC funds and more than 882 operational players since 2014.
2018 was an eventful year for the India startups ecosystem. India added eight unicorns in 2018 alone, as compared with the nine unicorns in a span of 6 years from 2011 to 2017.
It is most likely 2019 will follow suit, as we begin seeing the host of promising startups crossing the US$1 billion valuation mark. Besides Dream11 and BigMarket, some of the investors’ top pick according to Fortune India include:
However, most likely it’s not going to be a joyride for these startups. Because with the gigantic successes in India, internet ventures today may be pressed for profits more than earlier years.