a
d

WE ARE BRUNN

Let’s Work Together

profitable-startups-southeast-asia

3 Southeast Asian startups that exceeded growth targets and reached profitability in 2023

Published on March 1, 2024

profitable-startups-southeast-asia

The Indonesia Venture Capital Report 2023 by AC Ventures and Bain & Company shows that the local tech and venture capital landscape is undergoing a shift in investment trends and expectations.

Industry stakeholders assert that the ecosystem is maturing, particularly on the investment front. Despite prioritizing aggressive growth in previous years, VCs and LPs are now increasingly prioritizing companies that can show strong unit economics and clear paths to profitability.

Investors in markets like Indonesia are looking for rational business models and sound corporate governance. This shift mirrors a global trend where the excitement over novel tech is being tempered by a demand for sustainable financial performance. As a result, tech-enabled businesses are now under pressure not just to innovate, but also to demonstrate how they will achieve and sustain profitability.

Several local startups have managed to exceed growth targets, achieve meaningful scale in the market, and even reach profitability. Here are three case studies from ACV’s portfolio. 

Simplus

Jack-Zhang-Simplus-1

Simplus, a small home appliances brand in Southeast Asia, has emerged as a top profitable contender in the region’s vibrant new retail sector. The company’s co-founder and CEO Jack Zhang is an e-commerce veteran in the region, having previously served as CEO of Lazada Thailand from 2019 to 2021.   

Simplus achieved tremendous growth over the past year with sales tripling while maintaining profitability in 2023. During the ‘Double 11’ shopping festival in 2023, Simplus ranked number one on TikTok and number two behind Philips on Shopee’s top brands in small home appliances, showing that it is already one of the more popular brands among Southeast Asia’s online shoppers. It achieved a record-breaking US$1 million in sales in a single day.

With increased urbanization and a rising middle class, the Southeast Asian consumer market is ripe for affordable brands that fit their local needs. The company’s strategy focuses on discovering the unfulfilled needs of young consumers and providing well-designed and value-for-money products.

One notable example is its high-speed hair dryer, designed to offer a fast drying experience with maximal hair protection. Simplus also offers essential household products such as air fryers, high-quality vacuums, mops, and more. The brand’s high-quality products combined with competitive prices (ranging from US$15 to US$50 per item) have helped Simplus build a compelling value proposition in the small home appliance space.

In the past 12 months, Simplus has introduced several new products and it now covers multiple categories including beauty and kitchen as well as home and living appliances, potentially making it the next “Philips of Southeast Asia.” 

JULO

Julo-adrianus-1

JULO, a leading digital financial services platform dedicated to financial inclusion for the underbanked in Indonesia, recently achieved a remarkable annual recurring revenue of over US$120 million, with its total loan disbursement experiencing a 50% growth in 2023. The milestone comes alongside the company reporting operating profit breakeven in December 2023, underscoring its sustainable business model and operational efficiency.

JULO was founded to democratize financial services in Indonesia. It pioneered a unique consumer financing product that leverages holistic behavioral data for innovative credit underwriting. This approach has allowed JULO to successfully launch and manage virtual credit card products tailored to the needs of Indonesia’s middle-income segment, providing first-time credit access to millions and fostering economic empowerment across the country.

The company’s latest growth achievements also include a 73% increase in revenue in 2023. JULO disbursed more than US$454 million in loans in 2023, bringing its total disbursements since 2016 to approximately US$1 billion. The firm reports a remarkable 70%+ retention rate per cohort, which reduces loan acquisition costs and enhances operational efficiency.  

JULO’s growth is bolstered by partnerships with leading financial institutions, including global firms like Credit Saison and local giants like Bank Sampoerna and Superbank, to empower disbursements to the middle-income segment in Indonesia.

JULO Group President Ankur Mehrotra explained, “Our key financial goal is to generate sustainable profitability for our shareholders and provide a liquidity event such as an IPO down the road. We believe that we are on the right track as we optimize our core product, manage our risk efficiently through continued investment and attention to risk management, and further diversify our product portfolio, ultimately becoming a fully integrated financial service platform.” 

Rosé All Day Cosmetics

RADC-profitability-1

Indonesian challenger brand Rosé All Day Cosmetics (RADC) saw a 4x revenue growth in 2022 and more than 6x growth in 2023, reporting profitability the same year. 

The company went to market in 2017 on a bootstrapped budget of US$10,000. Following a strong performance against incumbents in the market, the startup recently raised a US$5.41 million series A funding round led by SWC Global, with participation from DSG Consumer Partners. 

The strategic investment will propel the brand’s expansion in the Indonesian market and further develop its omnichannel presence. The deal also aligns with RADC’s vision of one day delivering world-class cosmetics from Indonesia to the global market. 

RADC will use the fresh capital to broaden its nationwide distribution, expand its market reach into other ASEAN countries, and enhance its products.

In recent years, Indonesia’s cosmetics and skincare markets were valued at US$800 million and US$2.4 billion, respectively, with projected annual growth between 14-16% and 10-15% through 2026. RADC’s expansion will be propelled by a strong millennial and Gen Z base of 145 million consumers, seeking premium products amidst a rising GDP per capita, set to hit US$7,000 by 2026.