This is how Indonesia’s Kargo will spend its $31m series A money

Indonesia-based freight logistics startup Kargo Technologies recently announced the close of its US$31 million series A funding round, bringing the company’s total capital raised to US$38.6 million.

The investment comes as the world contends with the Covid-19 pandemic, and Indonesia is struggling as hundreds of new cases are logged each day. Like many other startups, Kargo had to switch gears and make adjustments to its operations. The company originally planned to use its new funds to double down on promotions during Ramadan, the busiest time of the year for retailers in Indonesia. Now, however, Kargo is in survival mode.

Kargo co-founder and CEO Tiger Fang (left) and co-founder and chief technology officer Yodi Aditya / Photo credit: Kargo

“We were going to do tons of marketing and invest more in branding to build our presence, but all of that is out the window now. For us, today, it’s how do we make sure that the company survives and truckers on our platform stay busy,” Kargo CEO Tiger Fang told KrAsia in a recent interview.

Ramadan starts this month and will end in late May. It will be followed by the Islamic holiday Eid al-Fitr. Kargo was anticipating a threefold jump as Indonesia’s shipping volume usually swells significantly during these holidays.

However, because the government instructed people in Indonesia to remain in their residences, the company adjusted its expectations. “Many of our trucking partners are small companies, so our biggest focus is to make sure that everyone survives. That is why we are seeding a US$1 million relief fund to support our truckers,” Fang said.

The other major challenge for logistics companies during the pandemic, according to the entrepreneur, is that there will likely be a nosedive in demand for freight transportation. Firms that handle cargo for import and export deliveries or work with hotels and restaurants may see fewer shipments, which could lead to truck drivers being out of jobs. Therefore, Kargo’s relief fund and similar initiatives will be crucial to ensure that essential supplies will reach their destinations during this critical time.

All of Kargo’s employees are contributing a portion of their salaries to the relief fund. Some senior staff are taking pay cuts of up to 75%, while Fang himself is donating his entire salary for the next 12 months. Kargo also welcomes all organizations in need of a logistics partner to get in touch via its relief fund portal.

Looking inward, Kargo has slashed perks at the workplace to make sure their expenditure is as lean as possible. “We are very lucky because we now have over US$30 million in our bank account, but we don’t want to take this crisis lightly and we need to save up,” Fang said.

Dream big

Kargo was founded in 2018 by Fang and Yodi Aditya, who serves as the company’s chief technology officer. By then, the pair had already cut their teeth within the spheres of Southeast Asia’s tech scene. Aditya had previously established another logistics tech startup, while Fang was one of Uber’s earliest employees in Southeast Asia, launching its operations in Indonesia, Malaysia, and Thailand. Before Uber, Fang worked at Lazada as the company’s managing director, leading the firm’s commercial developments in Thailand and Vietnam.

Photo credit: Kargo

When Fang was involved in Uber’s delivery service experiment in Surabaya, he realized that there is a massive demand for digitized trucking and logistics services.

Indonesia’s trucking industry is worth about US$250 billion, and logistics costs count for around 25% of Indonesia’s GDP. The sector is in need of streamlining, and Kargo is doing just that by providing a platform that enables shippers, transporters, and truckers to connect, transact, and track shipments. The central idea is to create a transparent and accountable supply chain.