N

early six years into its existence, Indonesian start-up darling and online transportation app Go-Jek has secured the largest ever amount of funding invested into an Indonesian technology startup firm, a figure of US$550 million.

As competition in the ride-hailing app industry grows and takes on a tougher shape in Indonesia, Go-Jek’s recent injection of funds from equity firms KKR & Co. and Warburg Pincus LLC will help the company compete with Uber Technologies Inc. and Grab, two car-hailing startups that have also been offering two-wheeled services in Southeast Asia’s largest market.

This newest funding round follows previous foreign investments into Go-Jek by venture capital firms such as Northstar Group, DST Global and Sequoia India, whose funds have kept the company afloat and able to keep providing its popular and famously subsidized pricing to its customers.

“Go-Jek is unique in its ability to be the number one service provider across almost all key categories. The company has a real opportunity to strengthen its position as a leading mobile platform in Indonesia,” Terence Lee, a director at KKR Asia, said as quoted by Bloomberg on Friday.

Go-Jek did not reply to The Jakarta Post’s request for a comment.

Go-Jek was born in 2010 from Harvard Business School graduate Nadiem Makarim, whose story went that he first got the idea after his experiences talking to ojek drivers on his way to work.

Before its miracle mobile app, the company used to rely on call centers to direct customers to individual ojek drivers, thus essentially having a middleman within the transaction.

The app, which was released in January 2015, has been downloaded 20 million times across the country and its services are active in 10 cities including Jakarta, Denpasar, Bandung, Semarang, Surabaya, Yogyakarta, Medan, Makassar, Balikpapan and Palembang.

Over 200,000 motorcycle drivers are registered with the service and on average eight orders are made per second.

Go-Jek has since become a popular app and has entered the local lexicon. One can say “let’s Go-Jek it” if one feels one needs something delivered, or if one wants to go from one place to another quickly. The company’s ubiquitous green helmets and jackets have now become an ordinary sight on Jakarta’s streets.

Its primary competitors, Malaysia-based Grab and US-born Uber, have both since introduced motorcycle taxi services, along with their original car-hailing services, to compete with Go-Jek on Indonesia’s lucrative roads.

This fact prompted Go-Jek to further expand its business beyond ride-hailing and more toward on-demand delivery services. To compete with its two biggest rivals, Go-Jek also launched Go-Car, a car-hailing service, earlier this year. According to KKR, the investment will help improve the functionality, capacity, scale and platform of Go-Jek’s services.

Go-Jek’s investment jackpot comes after a similar move made this week in China by Chinese transportation app Didi Chuxing, buying out its competitor Uber’s China operations for US$600 million.

The investment comes six years after Go-Jek was first thought of, going from a largely unknown call-based transportation service to a success story many Indonesian entrepreneurs either envy or try to emulate.

University of Indonesia economist Fithra Faisal Hastiadi said the new funding would definitely step up the competition among startups within the transportation app industry.

“So far there hasn’t been any new innovations from Go-Jek. With the new round of funds, I think some new things might soon come up,” he said.
_________________________________________

The rise of Go-Jek

August 2010

Nadiem Makarim begins operation of Go-Jek, a social enterprise that brings together ojek (motorcycle taxi) drivers to deliver a one-stop convenience service in Jakarta.

February 2011

Go-Jek is formally launched

January 2015

Go-Jek introduces its mobile application on Android and iOS, with backing from private equity investor Northstar Group. Earlier, Nadim decides to leave his full time job in another company to focus on developing Go-Jek.

March 17, 2015

Transportation Ministry bans ride-hailing applications from operating in Indonesia claiming they violate the 2009 Law on land transportation.

March 2016

Go-Jek’s app is downloaded more than 11 million times. The company claims to have more than 200,000 motorbikes in a number of major cities in Indonesia

Aug. 4, 2016

Go-Jek secures US$550 million in a new round of funding led by KKR & Co. and Warburg Pincus LLC