In Indonesia, a golden age of VC-backed consumer brands may be imminent

In 2019, Jakarta-based Haus was a brand in demand.

After just a year of operation, Haus’ made-to-order drinks were among the most wanted products on Gojek’s food delivery platform. It subsequently earned GoFood’s “most inspirational merchant” award that year.

Interestingly, the feat coincided with a newfound fondness among venture capital firms towards direct-to-consumer (D2C) brands and businesses. Thus, it did not take long before VC firms came knocking on Haus’ door, and in numbers.

Photo credit: Haus

“There were quite a few that approached us. We never pitched to these investors. I guess because our numbers and growth were good on [GrabFood and GoFood], we were courted by them,” said Haus co-founder and CEO Gufron Syarif.

In the end, Syarif and his three co-founders sealed a deal with BRI Ventures, the VC arm of state-owned lender BRI, with whom they had “the smoothest due diligence process and communication.”

The financing round, which was announced at the tail-end of 2020, counts as one of the latest venture capital investments made into consumer brands over the past year.

Since the 2018 seed round raised by coffee brand Kopi Kenangan, whose valuation has jumped to over US$400 million in just two years, the market has seen VCs making bets on a host of other Indonesian food and beverage brands including Goola, Mangkokku, and WanFan. Other D2C categories such as beauty (Social Bella, Syca, Base), footwear (Brodo, Amazara), glasses (Saturdays), and even teeth aligners (Rata, Klar), have also enjoyed drips of VC money.

See also: Southeast Asia’s direct-to-consumer revolution may be underway

Despite the Covid-19 pandemic, 14 consumer brands in Indonesia raised VC money last year, doubling the tally of the previous year. In the first half of 2021 alone, as many as 17 VC firms have poured capital into consumer brands. This trend is expected to continue as the ecosystem keeps pushing consumer brands to the fore.

Case in point: Xcelerate, Gojek’s accelerator program,  opened a special D2C batch last year. Meanwhile, BRI Ventures is preparing to launch its second early-stage fund, the firm tells Tech in Asia. Called Sembrani 2, the fund will focus on supporting D2C brands in Indonesia.

As scalable as tech?

For many VCs whose expertise is in evaluating and backing tech companies, investing in consumer brands means entering unknown territory. However, they argue that there are enough reasons to buy into the promise of consumer brands, particularly those championing the D2C model.

From a market size perspective, the bullishness is justified. Indonesia’s consumer goods and services market grew sixfold between 2015 and 2020 to US$7.9 billion, and it was projected to climb a further 40% last year, according to an Accenture white paper . The figures take into account the country’s 260-million plus population, rapid urbanization, and rising income per capita, the report explained.

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