- Go-Jek is raising funds as competition intensifies in Asia
- Round marks the largest investment for an Indonesian startup
Go-Jek has secured more than $550 million in a new round of funding led by KKR & Co. and Warburg Pincus LLC, the largest ever for an Indonesian technology startup as investors pour capital into the region’s burgeoning ride-hailing industry.
Go-Jek, which provides motorcycle rides on demand, will use the funds to compete with Uber Technologies Inc. and Grab, two private car-hailing startups now beginning to offer two-wheeled services on its home turf. Farallon Capital Management and Capital Group Private Markets, plus existing shareholders and other international investors, also participated in the round.
The company’s funding was announced days after Didi Chuxing agreed to acquire Uber’s Chinese operations, shaking up the region’s ride-hailing industry and allowing the U.S. company to focus on other promising markets. Southeast Asia’s ride-hailing market is forecast to grow more than five times to $13.1 billion by 2025, according to a report by Google Inc. and Temasek Holdings Pte.
On-demand car services are taking off around the world as smartphone usage expands and riders seek simpler or quicker transport alternatives. But the process of signing up drivers and attracting customers is a costly one, requiring big subsidies on rides and therefore plenty of funding. Didi and SoftBank Group Corp. are said to be backing a round of funding for Go-Jek’s local rival, Grab, that could exceed $600 million and close as early as this week.
“The mobile-enabled transport services sector is attracting global attention,” said Shane Chesson, a partner at NSI Ventures, Go-Jek’s first institutional investor. “Go-Jek’s fund-raise stacks up well relative to what we have seen in broader multi-market opportunities.”
Founded by Harvard grad Nadiem Makarim, Go-Jek started out offering motorcycle rides and has become one of the most popular ways to get around in Indonesia, especially in traffic-snarled cities like Jakarta. Its name is a play on ojek, the local word for the motorbike taxis that crisscross Southeast Asia’s most populous nation. Consumers in Indonesia also use its app -- downloaded more than 20 million times since its debut in early 2015-- to get food and groceries delivered. Go-Jek’s earlier backers include NSI Ventures, an arm of private equity firm Northstar Group, Sequoia Capital and Yuri Milner’s DST Global.
New York-based KKR, which is making its investment in Go-Jek through its Asian Fund II, began investing in Southeast Asia in 2005. It’s since invested more than $2 billion across the region, including more than $350 million in Masan Consumer Corp. -- Vietnam’s largest private equity investment.
“Go-Jek is unique in its ability to be the number-one service provider across almost all key categories,” Terence Lee, a director at KKR Asia, said in a joint statement with other investors. “The company has a real opportunity to strengthen its position as a leading mobile platform in Indonesia.”