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Startups

Indonesia's Gojek bags investment from Facebook, PayPal

Improving payment and financial services seen as key in battle with rival Grab

Indonesian ride-hailing and payments operator Gojek has announced investment from global tech giants Facebook and PayPal as competition heats up with rival Grab.(Source photo by Reuters) 

JAKARTA -- Indonesian ride-hailing and payments operator Gojek has secured additional funding from global tech giants Facebook and PayPal, the company announced on Wednesday.

The investment by the social media company and payments giant was made as part of Gojek's ongoing Series F funding round, in which Indonesia-based Gojek had already raised just under $3 billion. The value was not disclosed, but a source familiar with the matter said that with the two new investors, Gojek has now raised over $3 billion, giving it further ammunition in its ongoing battle with Singapore-based rival Grab.

The company valuation of "just north of $10 billion" remains unchanged, said the source.

Facebook and PayPal join a long list of global tech giants investing in the Indonesian startup, with existing investors including the likes of Google and Chinese internet giant Tencent. The just announced investment is Facebook's first in an Indonesian company.

Since the new coronavirus made landfall in Indonesia, investment has been scarce for the country's startups, with some forced to take drastic measures to weather the storm. Traveloka, another local unicorn -- private companies valued at over $1 billion -- was forced to lay off around 10% of its staff in April.

Gojek's operations have not gone untouched by the new coronavirus pandemic, either. While its food delivery service has been resilient amid large-scale social restrictions, demand for ride hailing has plummeted. However, investment from the two U.S. tech giants show global investors remain keen to invest in the company to enlarge their footprints in Indonesia, the biggest market in Southeast Asia and the world's fourth most populous country.

The archipelago's internet economy was worth $40 billion in 2019, the biggest in the region, and is slated to rise to $133 billion in 2025, according to a report by Singapore state investment company Temasek and Google.

Gojek, which started off as a call center for bike taxis in Indonesia, has now become a digital platform covering a range of services from payments to house cleaning. It has hundreds and thousands of partner merchants and, like Grab, is aiming to become Southeast Asia's dominant all-purpose super app.

"This is great validation that the world's most innovative tech companies recognize the positive impact Gojek is making in Indonesia and the whole of Southeast Asia," Andre Soelistyo, co-CEO of Gojek, said in a statement. "By working together, we have the opportunity to achieve something truly unique as we aim to help more businesses to digitize and ensure that many millions more consumers are enjoying the benefits that the digital economy can bring."

The investment was made "with a focus on supporting payments and financial services in the region" according to the company statement. PayPal's services will be integrated into Gojek's while users of GoPay, Gojek's digital wallet, will gain access to PayPal's global network of merchants.

For Facebook, which is already a major social platform in the archipelago alongside its subsidiary WhatsApp, which is popular in Indonesia, investment into the Indonesian decacorn -- private companies worth over $10 billion -- offers it an opportunity to tap into the millions of partner merchants that Gojek has enrolled, in a similar vein to its investment in India's top telecom operator Reliance Jio.

"The majority of small businesses in Indonesia rely on cash to operate due to the country's large unbanked population... digital payments help more people participate in the economy and give businesses access to credit which is crucial for business growth," Matt Idema, COO of WhatsApp, said in a blog post.

"This investment will support Facebook and Gojek's shared goal of empowering businesses and driving financial inclusion across the archipelago," Idema said.

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