Why is Gojek Spending on Start Ups?

Gojek has been in the news way too many times in the recent past. There are too many things that this Unicorn has been doing which have become very popular in the entire market. From a little startup today Gojek has metamorphosized into the biggest kind of business here. Gojek always comes ahead with new and unique strategies to rise to the top. This is why the latest buzzer in the Gojek thought cloud is to invest in newer startups. Go-Jek has become the company that has pushed Uber and grab to the background by becoming a favorite of the masses. Gojek has recently successfully invested in three startups to advance Gojek mobile payment option.

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The Start-Up Hat Trick!

There are three firms that gojek has bought:

  • offline payment firm Kartuku,
  • payment gateway Midtrans,
  • payment and lending network Mapan.

The company essentially started out in the year 2015 providing a ride-hailing service for motorbike taxis, a mode of transport very well liked for moving about capital city Jakarta’s super choked traffic-laden streets, but it has since developed within itself four-wheeled transportation, on-demand services and payments.

It is known that Gojek boasts of having 900,000 drivers and 15 million weekly active users. To understand the magnitude of the Gojek Enterprise, one has to take into account the size of the merchants it deals with. Apart from all the ride business, the Gojek enterprise has under its wing, tie-ups with 125,000 merchants with over 100 million transactions processed on its platform per month.

Putting it together – Gojek mobile payment

The three payment gateways have been a big step in their movement towards the strengthening of mobile payments. Now, lets put G-Pay along with all the three others. The total is a figure close to $5 billion in payment across cards and digital wallets as confirmed by Gojek. The company is very close to raising over $1.2 billion in new funding, which will consist of money from Chinese companies JD.com and Tencent.

Why do they need such a large investment?

The investment is absolutely necessary at this point in time given the capitalization of Uber which is considered to be the world’s highest-backed private tech company and Grab, which has also recently filled its coffers with a huge $2 billion round. The battle in this zone is real. There are too many stakes involved for a limited market. Gojek by transcending the only taxi barrier has successfully cast a big shadow on the other two companies.

Who could have thought that a simple application like Go-Jek or Ride-sharing could have a market as big as what it is? In Southeast Asia alone, the projection till the year 2025 is estimated to be $20 billion a year. An average customer’s amount spent on taxi apps has multiplied twofold in the last two years. The result is a sharp increase in the graph for the year 2017.

What’s with the acquisition?

The goal is simple. Gojek really wants to bolster the Gojek’s payment network,  known as the Go-Pay mobile payment service.

According to the CEO of Go-Jek, Nadiem Makarim, they have plans regarding offline usage of the Go-Pay feature. They are planning to cover retail using Go-Pay even in the Offline mode apart from the online mode. The company is Grabbing (no pun intended) the opportunity with both hands. This is to ensure that they can offer a basic form of payment services. Such services will cater to the vast of the population in Indonesia who don’t have immediate access to traditional forms of banking. The percentage penetration of the market in terms of access to credit cards is less than 5 percent in the country, the world’s fourth most populous nation.

Gojek mobile payment

What they say

According to Makarim, “We are now taking Go-Jek to the next stage. Through the acquisitions announced today, we will be working hand in hand with three like-minded companies who share our vision and ethos. This marks a significant development in our position at the heart of Indonesia’s vibrant fintech industry.”

Each head (from the three acquired startups) will play a very important role now in the new shape of Gojek and hold important portfolios.

  • Kartuku CEO Thomas Husted becomes its CFO,
  • Mapan’s Aldi Haryopratomo will lead Go-Pay,
  • Ryu Suliawan of Midtrans is to head up its merchant platform.