Roll-ups square up to VCs in race to land top D2C deals in SEA

Over the past couple of years, VCs have made no secret of their appetite for Southeast Asia’s consumer brands. In the first half of 2021 alone, as many as 17 VCs poured capital into such companies.

But a group of challengers is on the rise. Brand aggregators, which are often called ecommerce roll-ups, have been on the prowl for promising brands to acquire and then scale.

With new capital at their disposal, these companies often present brand owners with more enticing offers.

A Hypefast offline store in Jakarta / Photo credit: Hypefast

Apart from making “majority investments,” ecommerce roll-ups “help the brand grow by providing operational assistance [via] the experts in their team,” says Denny Santoso, founder of Bonnels, an Indonesia-based maker of essential oils.

After three years of building Bonnels into a profitable company, Santoso sold majority ownership last year to brand aggregator Hypefast. With the Hypefast team now in charge, Santoso says he can spend more time working on his other businesses while still being involved in Bonnels.

This freedom to decide on his focus was one of the reasons why dealing with an ecommerce roll-up instead of a VC firm was more appealing.

“Yes, we would have given up less ownership to a VC, but they would want us to focus on it full time. VCs would never have us doing other things,” says Santoso, who also runs a new tech startup called Tribelio, among other businesses.

Quick cash and carry

Hypefast has sealed deals with around 25 brands over the past year, fueled by the US$22 million funding it raised from investors like Monk’s Hill Ventures, Jungle Ventures, and Strive.

The Indonesian brand aggregator is not the only one busy making deals. Singapore-based counterparts Rainforest and Una Brands have also been raising and deploying capital for acquisitions. Jakarta-based peer Open Labs recently has also joined the mix, after announcing a fund of US$100 million in early November.

These companies are not only vying to land deals with the region’s up-and-coming brands but also with VC firms.

“We’ve come across one or two instances where the brand is talking to both us and a VC,” says Una Brands founder and CEO Kiren Tanna. In the end, “it depends a lot on the brand owners and what they want to do.”

Una Brands co-founders (from left) Tobias Heusch, Kiren Tanna, and Kushal Patel / Photo credit: Una Brands

Same sector, different targets