Month: July 2020

Source: Digital News Asia

• Strong position to help businesses go digital, Singapore expansion by end 2020
• Averages 8k to 10k monthly purchase orders from over 12k retailers on platform

You can call it the Covid effect. In early March, Lennise Ng cofounder and CEO of Macro Tech Ventures Sdn Bhd, which owns and operates Dropee, the B2B e-commerce platform provider that focuses on brands, retailers and wholesalers, told DNA that they were closing in on a US$2 million range, funding round, on the heels of their Winter 2020 chohort graduation from Y combinatory in the Silicon Valley.

And today, Dropee announced raising a US$1.3 million (RM5.5 million) funding round it describes as a “seed-extension round”. Its earlier seed round of US$350,000 (RM1.5 million) was announced in Jan 2019.

The Covid effect here is not referring to the lower amount raised as Dropee is already working on its Series A round as well. Rather it refers to how Covid-19 has accelerated the urgency for businesses to accelerate their digital adoption, which plays into the services Dropee is offering.

With lockdowns and new procedures for operating in the post-lockdown Covid era, the wholesale sector is one of the industries heavily affected by the pandemic. Couple this with changing retail customers purchasing behavior, has exposed the inefficiency of the primarily offline methods such as pen-and-paper, fax, phone calls, and WhatsApp that retailers, mom-and-pop stores and wholesalers have been using.

With customers reducing their usual purchasing amount to opting for cheaper product alternatives, without using a system, wholesalers are finding it difficult to keep updated on their customers preferences. And this is where Dropee comes in to provide a solution for these wholesale businesses that re struggling in adapting in the next normal.

According to Lennise most of the fund will be utilised to help wholesale businesses transition their trading and procurement operations online. She also tells DNA that they are also planning towards their expansion into Singapore by year end. In Malaysia, Dropee which initially focused on the Klang Valley, Johor and Penang since its 2017 launch, has now expanded to offer its services nationwide.

“With the newly injected capital, we plan to fully assist and automate the onboarding process for these wholesale businesses. Oftentimes, the largest bottleneck when going-digital is the setting up process. That’s where wholesalers and brands create their digital catalog, upload thousands of SKUs online, and have their retail customers to order from their online stores. Our team has been working hard to improve that experience, with the ultimate goal for any wholesalers to go-digital seamlessly with us,” says Lennise.

The current round of investment is participated by a mix of new and existing investors such as Y Combinator, Ondine Capital, Vynn Capital (which led the early 2019 round), Brama One Ventures, Colopl Next, John Devor (COO of Touchpoint Games), Jason Tsai (Machine Learning Lead of GooglePay), and a number of other angel investors. Colopl Next is the corporate venture capital arm of Colopl, Inc, a leading Japanese gaming company which invests globally in a variety of internet businesses with the commitment to support innovative entrepreneurs.

[Paragraph updated with inclusion of investor Colopl Next which did not have the green light to disclose its investment at the time the article was first published.]

Victor Chua, founding and managing partner of Vynn Capital, highlighted “we believe that Dropee is in a fantastic long-term position to help economies to scale and go digital, especially to traditional businesses that have been suffering due to the lack of online presence. More than just a solution, Dropee is an effective partner to businesses that are looking to digital for survival and breakthrough. This is in line with our investment thesis of being an enabler, hence, justifying our continuous support to the team. I believe the new investors also share the same grand vision that Dropee has in the team’s journey.”

As of today, Dropee has helped companies such as British American Tobacco and Petronas, where it acts as their platform to help their mainly SME suppliers and smaller distribution companies such as Worldline Distribution Sdn Bhd, VCR Cafe, and Rayaco to move their B2B procurement and trading processes online. Their typical wholesale customer serves between 100 to 300 retail customers across Malaysia.

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Source: The Initiative for Startup Ecosystem in Vietnam (ISEV)

The world is currently in an unprecedented crisis as countries are being locked down and trades are being halted due to the COVID-19 pandemic. Some countries like Vietnam has been more successful in containing the spread of the disease and some are still in the midst of the fight against it. Nevertheless, most countries have reached a stage where they realized that governments are becoming helpless with trades not happening and people preferring online over offline. For such, there have been several cases of success startup-government partnerships that is helping to address the larger problem of economic sustainability.

Malaysia as a case study

It is undeniable that Malaysia’s agribusiness industry has faced huge challenges following the outbreak of the COVID-19 epidemic, which has affected the business operations across the supply chain including the production, distribution, and retailing of agricultural products and the food industry. In response to this, the Ministry of Agriculture is partnering with Dropee, a Malaysian B2B ecommerce startup, to ensure that the distribution of food (such as rice, meat, fish, vegetables, and fruits) across Malaysia is in control and adequate throughout the COVID period.
Dropee’s B2B eCommerce marketplace allows producers across the country to continue selling their produce to wholesalers, retailers, and consumers during the COVID period. Dropee’s initiative with the Ministry of Agriculture provides an alternative sales channel for these producers and suppliers to sell their products online in bulk. Through Dropee’s platform, sellers are also able to access logistics, financing, and insurance support from Dropee key partners.

Other than just a platform to list their produce, Dropee’s team provides hands-on guidance to suppliers from setting up their online B2B store to marketing their products. Because of this, the government of Malaysia views startups as channels of empowerment to empower even the farmers to go digital and get connected with the rest of the supply chain.
Dropee hopes to help all 90,000 farmers and fishermen in Malaysia to leverage Dropee’s B2B marketplace to sell their products, manage the buying demand from their customers, and understand purchasing trends to produce more relevant products for the consumer market.

The main objective of this go-digital initiative is to help producers and suppliers maintain a stable distribution of food supplies and access to safe, quality, and affordable produce for all communities in Malaysia.

As part of the global & highly well-known Y-Combinator and Alibaba’s eFounders Fellowship Programme as well as backed by early stage venture capital firm Vynn Capital, Dropee aims to help businesses across Southeast Asia to digitally transform and adapt towards the new economy – in support of the United Nations Sustainable Development Goals (SDGs).

More than just platforms

Another case of successful startup-government partnership, also from Malaysia, is between Epost, a Borneo based ecommerce logistics platform, and the payment gateway of Sabah state of Malaysia.

Working with the state-owned payment gateway, Sabah Pay, Epost launched a new protect called Epost Protect, a digital insurance product offering Life, Motor and Pet Insurance. This allows for users, especially those who have never been able to purchase insurance products, to be able to make insurance premium payments through the Sabah Pay.

Backed by early stage venture capital firm Vynn Capital, Epost was founded in East Malaysia in 2018 as an online logistics service platform that allows businesses to connect with domestic and international customers. Its current customers include Digital China Holdings, Shopee, Yunda Express and BGO Taiwan.
With this collaboration, Epost leaps into a new industry that is parallel to the ecommerce logistics industry, at the same time, empowering the government to reach out to more citizens of the state. This is aimed at enabling the government to provide support to as many citizens as possible who are situated in the further and rural areas.

Collaboration as the future

As countries start to race to the top in the effort of emerging out of the post-COVID environment, startups become the key of success. One could argue that the success of a government could be indicated by the amount of openness as well as willingness to work with startups and venture capital firms. Firms like Vynn Capital believe that countries will be super-charged if more startups are working with them. At the same time, governments who are able to import foreign startups into the country will benefit from a knowledge transfer perspective, while enabling more local startups to work with international startups.

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