#Asia Zilingo scores $17m series B for brand building and Indonesia growth


Zilingo’s co-founders – CEO Ankiti Bose (L) and CTO Dhruv Kapoor (R). Photo credit: Zilingo.

Singapore-based online fashion marketplace Zilingo has raised US$17 million in a series B funding round co-led by Sequoia Capital India and Burda Principal Investments, the venture capital arm of German publisher Hubert Burda Media.

Existing investors Beenext, Susquehanna International Group (SIG), Venturra Capital, and Wavemaker Partners participated in the round. Two high-profile angels also joined in: Draper Fisher Jurvetson founder Tim Draper, and Manik Arora, founder of IDG Ventures India. The round represents Arora’s first investment in Southeast Asia.

In markets like Indonesia and Thailand, offline media and out-of-home advertising is still a huge part of how you speak to your customer.

Zilingo co-founder and CEO Ankiti Bose tells Tech in Asia that the company – which provides an online marketplace for offline vendors of clothes, jewelry, and related beauty and lifestyle products – will be using some of the funding to double-down on the highly promising Indonesian market, where it launched four months ago. “For us, Indonesia has just started exploding – we really think there’s a lot of supply, a lot of merchants in Indonesia that can benefit [from our platform],” she says. “So the main intention behind raising this round was to consolidate what we’ve done so far, and keep growing.”


Beyond this, the capital will also be invested in brand-building, especially via more traditional marketing efforts rather than simply through online channels. “Especially in markets like Indonesia and Thailand, offline media and out-of-home advertising is still a huge part of how you speak to your customer,” Bose explains. Every single marketing dollar Zilingo has spent so far has gone towards digital marketing such as online ads and social media campaigns – and moving the message to billboards and the sides of buses is not going to be cheap.

Photo credit: Zilingo.

Bose is well aware of this, but the potential growth opportunities opened up by pursuing such a strategy make it worthwhile. “I think there’s a minimum threshold you have to cross in terms of spending,” she says. “But it’s really effective at reaching the not-so-low hanging fruit – the guys who are not on Facebook and Instagram.” In developing economies, you still have to rely on traditional media if you want to go big, she says. “That’s a lot more expensive, but if you do it right what you’re hoping is that a guy sees us on a billboard while he’s driving, so that next time he’s online and sees our name, he clicks on it.”

In vogue

Zilingo isn’t alone in this space. Southeast Asia has spawned its fair share of online fashion startups, several of which have enjoyed significant growth and funding to match. Rocket Internet-affiliated Zalora has been through a few ups-and-downs, but remains a widely recognised player. Indonesia’s Sale Stock last month raised US$27 million from Gobi Partners and Golden Equator in a “series B+” round.

And beyond the fashion segment, there is competition from more broadly focused ecommerce sites such as Lazada, Blibli, Bukalapak, and Tokopedia, which last month raised US$1.1 billion in an Alibaba-led funding round.

Zilingo team photo

The Zilingo team. Photo credit: Zilingo.

However, Bose claims that Zilingo is unique in what it provides to vendors – the majority of which are smaller merchants, such as independent designers – above and beyond simply hosting them on its platform. In addition to analytics tools, it helps sellers out with cataloguing, photography, video production, packaging, warehousing, and even working capital loans, all at discounted rates.

“If you’re a small brand working at low volumes, you get tools to digitize your inventory and sell online,” says Bose. “We are leveraging supply that already exists in the offline world, and making it easier to sell that online.”

Minding the gap

Investors and startups have often suggested that there is a gap in growth-stage funding in Southeast Asia – particularly when it comes to series B rounds. Gobi Partners founder Thomas Tsao described the situation as a “funding barbell” at the launch of his firm’s new growth-stage fund last month, with venture capital seeming to flow more willingly either to seed rounds, or those beyond series C.

Speaking at Tech in Asia’s Tokyo conference one year ago, executives from Rocket Internet, Venturra, and 500 Startups all highlighted the apparent lack of available series B investment in the region. As they pointed out, series B is often considered to be one of the hardest rounds to raise anywhere in the world – but considering how much money had gone to Southeast Asian series A raises in the preceding few years, one would’ve expected more series B funding based on the maturation of the startups involved.

We’ve been focused on strong unit economics since the very beginning – not just on crazy GMV growth.

But it may be the case that regional investors are beginning to focus more closely on the mid-growth stages. Zilingo’s US$17 million is a significant series B round by Southeast Asian standards, and comes just a day after Singaporean ecommerce startup Red Dot Payment landed its own US$5 million series B injection.

Bose thinks that investors may be shifting their mindset away from betting on promising, but higher risk, seed and series A-stage startups to back slightly more mature companies that have proven their business models in the marketplace and can already demonstrate significant traction.

The Zilingo mobile app

Photo credit: Zilingo.

The promise of more sustainable growth is what got Zilingo’s series B backers on board, she says. “I think Southeast Asia is just at the cusp of where really large companies can be built. And fashion and lifestyle is one such vertical.”

For Bose, it is Zilingo’s meticulous attention to its unit economics – looking at the direct revenues and costs associated with its business model on a per unit basis, rather than a gross merchandise value (GMV) approach that simply looks at how much the company has sold – that has helped to attract new investors, and ensure that existing shareholders upped their stakes.

“What makes it easier for us is that we’ve been focused on strong unit economics since the very beginning – not just on crazy GMV growth,” she suggests. “That has inculcated a discipline in our team, where we want very healthy numbers each month.”

Tenfold revenue growth

The series B investment brings Zilingo’s total disclosed funding to date to US$27 million. The company raised US$8 million in its September 2016 series A round which was led by Sequoia India, Hong Kong-based SIG, and Indonesia’s Venturra. Singapore-based Wavemaker and Beenext, as well as Japan’s Digital Garage, also participated in that fundraise.

Prior to that, Zilingo had secured US$1.9 million in seed capital from Sequoia, Beenext founder Teruhide Sato, and FreeCharge co-founders Kunal Shah and Sandeep Tandon.

Since closing its series A round one year ago, Zilingo has seen its revenue grow tenfold and has added over 5,000 merchants on its platform. Recently it has added new vendors from Cambodia, China, Korea, and Vietnam, and currently ships goods to eight countries throughout Asia-Pacific.

This post Zilingo scores $17m series B for brand building and Indonesia growth appeared first on Tech in Asia.

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