Dagangan, a social e-commerce platform based in Indonesia, has raised US$6.6 million in a pre-series B round led by BTPN Syariah Ventura, the VC arm of a local lender.
Aside from Dagangan’s existing backers, Hendra Kwik, co-founder and CEO of fintech startup Payfazz, also joined the fundraiser. The new injection of the capital comes after Dagangan’s two funding rounds in 2021, which helped the startup finance its white-label strategy and add more product features.
The proceeds of the latest round, meanwhile, will be used to expand its presence in more rural areas across Java and boost its product development.
“We have realized that in rural areas the opportunity is not just around physical goods, but also digital and financial products,” Dagangan co-founder CEO Ryan Manafe tells Tech in Asia. “We want our users to have a seamless experience to access products from BTPN Syariah, Payfazz, and other partners in the future.”
Founded in 2019, Dagangan is an e-commerce platform that provides same- and next-day delivery for a wide variety of household needs, including necessities, fresh and frozen food, apparel, and more. It uses a tech-enabled hub-and-spoke model, leveraging the roles of key opinion leaders (KOLs) such as village chiefs, microentrepreneurs, or community heads in rural areas.
Dagangan works with supply chain drivers, including producers and wholesalers of fast-moving consumer goods, to deliver the group orders generated by KOLs to consumers within 24 hours. The company says it has recorded 5x business growth since securing US$11.5 million via its last funding round in September 2021.
Dagangan has more than 40 hubs across Central Java, West Java, and the special region of Yogyakarta to distribute its products and services across 15,000 villages in 40 districts.
Competition and validation
In trying to solve the problems of commerce and distribution for Indonesia’s Tier 3 and Tier 4 markets, Dagangan sees itself operating in a space also occupied by several other startups that claim to serve Indonesia’s rural residents, which make up around 80% of the country’s population.
These include e-commerce giants like Bukalapak and Tokopedia and well-funded B2B commerce startups like Ula. Meanwhile, Super – a company that runs a business model similar to Dagangan – recently raised a US$70 million round backed by NEA, SoftBank Ventures Asia, DST Global Partners, B Capital, and Insignia Ventures Partners.
While Manafe declined to comment on competition, the CEO cites how the investment of strategic partners like BTPN Syariah and Payfazz (through its CEO) – companies that have been serving the rural market far longer than many startups – serves as a validation of Dagangan’s “real presence and impact on the ground” in rural areas.
Dagangan’s impact is also reflected by the profile of producers and principals that have publicly announced their partnership and support for the company, Manafe said. One of them is Sinarmas Agribusiness and Food, which told Tech in Asia that it has achieved 3x growth since partnering with Dagangan.
In its next round of funding, which is expected to be closed by the end of 2022, Dagangan will be looking to onboard more strategic investors onto its capitalization table. This would serve as further validation of the company’s business, Manafe says.
It would also help Dagangan move further along in its path to profitability, veering away from the kinds of capital that are causing the so-called startup bubble.
“That’s why at a time when people are talking about the bubble bursting, we can still be consistent in our fundraising. This raise is not merely a runway. Our commitment is that we want to be profitable in the next five to six years, and then IPO like a normal company,” Manafe explains.
ARTICLE WRITTEN BY: Ardi Wirdana
Dagangan is one of our portfolio startups in Plug and Play APAC.
As an in-house venture capital, our goal is to fund the teams that are building the defensible businesses of the future. By leveraging our capital, our network of VCs, and our corporate partners, we give our portfolio companies an added advantage. Join our platform today!
Click here to view the original source of the article.