GoTo is Indonesia's largest IPO project so far in 2022 and the fifth largest in the world.
Wen 丨 Ma Mujie
Source 丨Tou China Network
On April 11, 2022, GoTo, Indonesia's largest Internet technology company, was listed on the Indonesian Stock Exchange under the ticker symbol "GOTO". In the current market environment, GoTo's closing stock price on the first day of listing rose by 13.2% against the trend, and its market value exceeded $30 billion.
GoTo has also become Indonesia's largest IPO project since 2022 and the fifth largest in the world.
GoTo was formed in 2021 by the merger of Tokopedia, Indonesia's largest integrated e-commerce platform, and Gojek, Indonesia's largest mobile life service platform (travel, takeaway, payment), and this transaction is also the largest merger in Indonesia's history. GoTo has also become Indonesia's largest digital technology platform, combining e-commerce, on-demand services and financial services to create Southeast Asia's first platform that integrates three basic applications to an ecosystem.
With extensive and rapid service coverage capabilities and deep penetration of the Indonesian market, the various services provided by GoTo have become an indispensable part of the daily life of local users in Indonesia.
With the increasing popularity of Internet technology applications in Southeast Asia, consumer demand for Internet platform services continues to grow. According to GoTo-related financial data, as of September 2021, the total transaction volume of the GoTo platform reached 28.8 billion US dollars, and it has become a one-stop integrated Internet service platform serving more than 270 million people in the Indonesian market.
As the largest unicorn technology company in Indonesia, GoTo has also received support from many investment institutions along the way. Among them, as an early investment institution of Tokopedia, the predecessor of GoTo, Zhongwei Capital has participated in many rounds of financing for the company, accompanying and witnessing the development of GoTo's growth into a Southeast Asian technology giant.
Zhongwei Capital has long been concerned about innovation opportunities in emerging markets in Asia, and is a dual-currency fund platform focusing on growth-stage investment, with AUM scale equivalent to more than 10 billion yuan. In the early days of its establishment, Zhongwei Capital continued to pay attention to the high-growth emerging markets in Asia, provided capital and value-added services for innovative enterprises in China and Southeast Asia, and invested in more than 15 unicorn companies such as GoTo, Boss Direct, Xiaopeng Motors, Fourth Paradigm and Horizon.
The successful listing of GoTo is also the best verification of Zhongwei Capital's investment strategy in the Southeast Asian market. On the occasion of the listing of GoTo, we had in-depth exchanges with Xu Wei, partner of Zhongwei Capital, about the investment logic of Zhongwei Capital to GoTo and the investment methodology of the entire Southeast Asian market.
Systematic research, decisive entry before the outbreak of inflection point, multiple rounds of continuous betting
Why did you choose to invest in Tokopedia, the predecessor of GoTo, in 2017? And multiple rounds in a row?
Wei Xu: Zhongwei Capital's fund positioning is to focus on investment opportunities in high-growth markets in Asia. As early as 2016, we began to systematically study the Southeast Asian market, and set up offices in Singapore and Jakarta and set up local teams to track and analyze the macroeconomics, demographics, user research and other aspects of the Southeast Asian market. Through our research, we are aware that the Internet, mobile payment and logistics facilities in the region are gradually developing, users' online shopping habits are gradually forming, e-commerce-related data continues to grow, and the key indicators of the Internet economy are close to the inflection point of rapid development. As a result, Zhongwei has more firmly taken the Southeast Asian market as one of the positions of investment layout.
Among them, Indonesia, as the world's fourth most populous country, has a population of more than 270 million, and the median age is only 29 years old, the population structure is very young, and it is also the largest economy in Southeast Asia, with the fundamentals of accelerated growth of Internet business. Coupled with the popularity of infrastructure such as smart phones, the Internet penetration rate in Indonesia continues to increase, especially in second- and third-tier cities, users directly enter the mobile Internet era by leaping across the PC era with mobile phones, and e-commerce has ushered in a stage of rapid development. At the same time, Indonesia's national political and monetary policies are relatively stable in Southeast Asia, and macro policies, especially support for the field of science and technology, are also tending to be favorable.
We believe that as an emerging market country, Indonesia has the potential to breed super unicorns in the e-commerce space. We have studied the existing e-commerce platform Lazada, Tokopedia, Bukalapak and so on in the regional market at that time, after systematic analysis, we are more inclined to the CtoC model, in the small and medium-sized selling of home scenes can more aggregate a large number of social resources, while Indonesia is a special country of a thousand islands, compared to logistics, payment and other infrastructure requirements of higher self-operated model, Tokopedia's CtoC model is more suitable for the Indonesian e-commerce market at that time.
In addition, we chose Tokopedia in part based on the fact that Indonesia is a high-growth market with a strong local cultural heritage. Experience tells us that deep localization and focused operations are the key to winning the competition of Internet companies in a single emerging market. Tokopedia's team is not only open and enterprising, but also very down-to-earth, with a deep understanding of the local user market, rich operational experience and learning capabilities, and an international perspective. What impressed us at that time was their focus on the Indonesian market, and in the early stages, they did not choose to blindly expand, but solidly laid out their own basics. We also felt that the Indonesian market was large enough to focus our energy and resources on Indonesia at that time, and we also had a good chance to get ahead.
Tokopedia was founded in 2009, eight years of development, along with Indonesia's smartphone penetration rate and Internet penetration are increasing; in addition, it is very important to note that based on the experience of China and other emerging markets, we judge that the per capita GDP of Indonesia will usher in the $2,000 mark, and the e-commerce model is about to usher in the inflection point of rapid growth, so we are decisive. Coupled with our firm belief in Tokopedia's C-to-C model, it turns out that Tokopedia's operating data in 2017 outperforms other rivals. Investing at this inflection point and multiple rounds of blessings is the best time to seize it.
How do you see the subsequent merger between Tokopedia and Gojek?
Xu Wei: We think that the merger of Tokopedia and Gojek is an important milestone that can produce a 1+1 greater than 2 effect. Both unicorns, Tokopedia and Gojek, have large base user groups, and there is a certain degree of overlap between the two groups, so some people think that the merger does not have a great synergy, but we have different views. Tokopedia has a user's trading scenario, which generates high ARPU values; Gojek's user scenario generates ultra-high frequency reach. The merged GoTo covers various life services such as mobile travel, takeaway, e-wallet, and drug delivery, and the combination of the two brings greater user frequency and forms a stronger positive business closed loop.
Most of the e-commerce development paths in emerging markets are from the first line to the sinking, and Gojek's motorcycle travel services and e-wallets are directly cut into the users of indonesia's sinking market. An interesting phenomenon is that more than 15% of Indonesia's population may not have a traditional bank account, but they are already gradually learning to use Gojek's Gopay e-wallet. The deep synergy between the various businesses after the merger is not easy for the outside world to perceive.
In fact, against China, any Internet business with a big business model is controlled by giants. After the listing of goTo, the synergy between various business forms will increase, the penetration rate of paying users and the ARPU of individual customers will increase, and GoTo has become a one-stop integrated life service platform serving more than 270 million people in Indonesia.
Zhongzhong.com: Curious, why did the GoTo team choose Zhongwei as one of the investors? What attracted the founding team?
Xu Wei: First of all, Zhongwei impressed the founding team for the systematic research on the development of Internet technology in Southeast Asia, and before the investment, took the initiative to invest in the front, and shared the experience of China's Internet technology development and cross-regional talent resources with the GoTo team to provide differentiated help and support. Fortunately, the Tokopedia team is an open and international team, a mature team with strong learning ability, and we are also recognized for the support we can provide.
At the same time, Zhongwei began to pay attention to the Southeast Asian venture capital market very early, through the establishment of Southeast Asian entrepreneurship camps, territorial offices, recruitment team residents and other forms, down-to-earth to find excellent entrepreneurs in the region, slowly in Southeast Asian entrepreneurs also have a certain word of mouth effect, in the process also produced more interaction.
Including after investing in GoTo, we will also communicate with the management on a regular basis, share the development trends of e-commerce, and conduct in-depth communication on e-commerce business and organizational manpower. Zhongwei is also a team with an international vision, we will share the trends that are happening and about to happen in the international market, especially the experience of China's e-commerce for many years, the ecological layout of e-commerce giants, whether successful or unsuccessful, are worthy of reference and reference by the GoTo team. The diversity of cross-regional perspectives has also made the chemistry between us and the two goTo teams better and better.
Long-term focus on innovation opportunities in emerging markets in Asia, including Southeast Asia
Zhongzhong Network: How does Zhongwei think about the overall investment strategy of the Southeast Asian market?
Xu Wei: Southeast Asia has a large population, a young population structure, a huge market, and a rapid development of the Internet economy. Technological and industrial innovation is in the early stage of explosion. But in fact, when we look at opportunities in Southeast Asia, we always remind ourselves that the business model of focusing on enterprises must not be just a simple and crude model copy.
To put it simply, when we choose the target, we will focus on "one core" and "two directions". One core refers to the "quality" and localization competitiveness of the entrepreneurial team, and we choose a market leader with the potential to become a high-growth and highly moat competitive.
Two directions refer to: first, based on the mature experience of Countries such as China and the United States, the company's business and technology model has been recognized in other markets, and it also needs to be localized and optimized; second, to see whether the timing of development is appropriate, sufficient macro and micro research is very important for the localization process of business.
In particular, it should be noted that some of the models sought after by China or the West may not be able to "transplant and graft" smoothly for the Southeast Asian market, and we hope that mature business and technology models can blossom in emerging markets, but we also know that timely localization adjustment can bring long-term roots to the project.
At present, the Zhongwei Capital team is distributed in Southeast Asia and China, whether physically or businessly, hoping to be a bridge between China and Southeast Asia, so that the invested enterprises can establish efficient communication and collaboration between China and Southeast Asia.
China Investment Network: How to understand what you said about being a bridge between China and Southeast Asia? How did this "vision" land?
Xu Wei: We don't want Zhongwei Capital to be just a "pure investor", but to be able to provide more value-added services to startups based on the entrepreneurial genes of the Zhongwei team. The key goal of the UWS Southeast Asia team is to take more effective approaches to helping Southeast Asian startups grow.
In terms of market liquidity, there is a lot of quality capital in the market. The most important added value we can provide is to connect the three aspects of Chinese experience, cooperation between potential resource parties and talent exchange with entrepreneurs in the Southeast Asian market.
In the Chinese market, Zhongwei has built a unique ecological platform of "investment + industrial resource empowerment" to gather and link many outstanding entrepreneurs and start-ups. In the Southeast Asian market, we set up the Southeast Asia Startup Camp Zynergy in 2019, hoping to tap more local outstanding entrepreneurs and startups. To introduce, Zynergy is an accelerated entrepreneurship camp plan initiated by us, the purpose is to promote cross-regional collaboration between Southeast Asia and China, connect the outstanding talents and innovative ideas of the two places, help entrepreneurs seize the market opportunities in Southeast Asia, and achieve the rapid growth of innovative enterprises in the local market, such as the southeast Asian region's member enterprises artificial intelligence company WIZ.AI, digital media network Target Media, Internet social platform Omi and other innovative companies are currently developing very well.
China Investment Network: Next, what kind of opportunities are Zhongwei mainly focusing on in the Southeast Asian market?
Xu Wei: After e-commerce, Zhongwei Capital has also successively laid out entrepreneurial projects in the direction of logistics, content services, social networking and artificial intelligence. Overall, it is more concerned about the investment opportunities derived from the mobile Internet in Southeast Asia. At the same time, we are also paying attention to the new opportunities in Southeast Asia in the direction of supply chain going to sea and corporate services.