Chicken, ice cream, and travel gear: new bets from SEA VCs

Crispy chicken meals aren’t the usual draw for tech investors, but Har Har Chicken has proven otherwise. Last month, the establishment pulled in funding from seasoned VC firm East Ventures.

Indeed, consumer brands are seeing a surge in popularity among Southeast Asia’s VC firms amid this funding winter, and – it seems – for good reason.

Image credit: Timmy Loen

Rexi Christopher, partner at Indonesian VC firm Init 6, cites the rise of the middle-class segment – which is expected to account for 65% of the region’s population by 2030 – as the main reason why investing in retail firms now makes sense. 

Init 6 recently added travel gear brand Torch to its portfolio, and before that, it had also backed Gently, a local retailer of mom and babycare products. 

“This demographic is increasingly seeking more premium products that offer a middle ground between low-end and luxury options, which these brands are positioning themselves,” Christopher tells Tech in Asia.

The question is will this momentum last? 

Traditional and predictable

Christopher argues that investors “can’t afford to wait and see” in uncertain times. That’s why some, he reasons, choose to back retail brands whose demand can weather economic storms. 

He believes consumer businesses often provide a more predictable path to profitability by tapping into existing market needs, giving them a clearer shot at generating revenue from the start.

Torch store in Makassar, Indonesia / Photo credit: Torch

Torch claims to have been profitable since 2018. Last year, it reported close to US$10 million in revenue, with a gross margin exceeding 70%, according to its co-founder and CEO Ben Wirawan.

Sameer Mehta, managing director of consumer-focused VC firm DSG Consumer Partners, notes that when consumer brands maintain “a hyper focus on building robust unit economics from day one, they can achieve breakeven at a lower scale” compared to most tech startups. 

Unfortunately, we’ve nurtured and trained tech companies to do growth first and sustainability second.

Scaling limits 

Worthy bet?