Proving the Business Case for the Internet of Things

Kargo raises $31m to apply Uber model to Indonesian logistics

Steve Rogerson
April 21, 2020



Indonesian start-up Kargo Technologies, which is trying to apply the Uber model to logistics, has raised US$31m in a series A funding round led by Silicon Valley-based Tenaya Capital.
 
The start-up was co-founded by two entrepreneurs with expertise from both the logistics and technology worlds. Between 2013 and 2018, CEO Tiger Fang oversaw the international expansion of Uber and served as its general manager in western China and then in Indonesia. He also held key positions at Rocket Internet, Lazada Group and Bank of America Merrill Lynch.
 
Meanwhile, Yodi Aditya serves as Kargo’s CTO and worked previously with aircraft route optimisation, enterprise software and real-time payment technology.
 
Other participating investors include Sequoia, Intudo Ventures, Coca-Cola Amatil, Agaeti Convergence Ventures, Alter Global and Mirae Asset Venture Investment. As part of the round, Kargo also secured debt financing from some of the largest regional banks and financial institutions.
 
The funding comes roughly one year after Kargo’s $7.6m seed round was led by Sequoia. It was one of the largest recorded seed-stage deals in the region at the time and featured several other prominent global tech investors. Seed backers included Uber co-founder Travis Kalanick’s 10100 Fund, China’s Zhenfund, Indonesia-focused Intudo Ventures, ATM Capital, Innoven Capital and Agaeti Ventures, a firm led by Indonesian businessman Pandu Sjahrir. Patrick Walujo, a co-founder of the Indonesian hedge fund group Northstar, and Cardig International CEO Diono Nurjadin also made personal investments.
 
The current funding round closes as Kargo joins the battle to curb the growing Covid-19 outbreak in the world’s largest archipelago. The start-up is seeding a logistics relief fund by asking all employees to contribute a portion of their salaries to aid transporters and ensure no disruptions to essential supplies in Indonesia.
 
Kargo is also cooperating with numerous charitable organisations, such as Kita Bisa and PT Akar Indah Pratama, as their official logistics partner on delivery of meals and essential medical supplies to healthcare workers and patients at multiple Jakarta hospitals including RSPAD Gatot Subroto and RSPI Sulianti Saroso.
 
The firm is taking extra precautions to keep drivers safe. This includes ensuring that all pit stops on its routes are well stocked and properly disinfected. Kargo has also implemented an electronic proof of delivery mechanism on its platform to limit physical contact between users. The feature reduces the need to exchange paperwork in-person and thus may help curb the risk of Covid-19 infection.
 
“Kargo’s tech provides unique value in a time when logistics efficiency is paramount in Indonesia,” said Aditya. “Whether it’s keeping retail shelves stocked with minimal human contact or making ecommerce orders more fluid across the nation, our team believes we can help solve this problem.”
 
Fang added: “We have mobilised to answer this call to arms and do whatever is in our power to fight Covid-19 here in Indonesia. We’re grateful for our wonderful investors who continue to support us, even in a time of financial uncertainty. Kargo pledges to be the most reliable logistics partner to ensure no disruptions to the supply chain of essential items in Indonesia Our entire company is donating a portion of our salaries to this cause and we invite local businesses and organisations to get in touch so we can work this problem together.”
 
Kargo likes to be described as Indonesia’s Uber for logistics, as the team aims to shift all logistics transactions in the country from offline to online, thereby addressing enormous inefficiencies faced by local shippers and transporters today.
 
Efficiency in the local logistics game is hindered by a multitude of geographic obstacles, a lack of key infrastructure in remote and rural areas, and an archaic industry norm of coping with middlemen that routinely hike up prices for end-users. 
 
Because of these issues and more, local businesses, especially those in the budding ecommerce space, commonly cite logistics as one of the biggest pain points in their Indonesian operations. This, in turn, represents a huge market opportunity for innovative companies looking to solve problems by leveraging new technology.
 
Accenture managing director Mohammed Sirajuddeen recently said Indonesia had the potential to become a fully-integrated quantum commerce environment if it can solidify four key structural elements: e-marketplaces, social media platforms, e-payments platforms and logistics networks. The last element is where Indonesia has so far failed to accelerate.
 
Kargo’s core members hail from global tech juggernauts such as Uber, Amazon and Facebook and top logistics companies including DHL and APL. 
 
Using technology to connect Indonesian shippers with carriers, cutting out middlemen, providing transparency, and improving the quality of service for end-users are all parts of Kargo’s mission. The company has already amassed more than 6000 active shippers and a network of more than 50,000 lorries across the nation.