Dropee obtains RM500k SUPERB grant
By Anushia Kandasivam December 6, 2017
- Dropee at the commercialisation stage and ready to get more retailers
- Grant funding more viable for startup to stay lean and retain equity
MALAYSIA-based technology startup Dropee on Dec 6 announced that it has received a SUPERB grant worth RM500,000 (US$123,000).
Dropee is a business-to-business marketplace that connects suppliers and retailers on a digital platform, enabling both to digitise sales orders and track inventories while providing fulfilment of goods and access to real-time data.
It launched the full release of its B2B online marketplace on Oct 25 and introduced a new web interface to streamline connections between suppliers and retailers.
The platform focuses on consumer-packaged goods; after a year in operation there are more than 200 brands on the platform, including big names such as 100Plus, Anakku, Cadbury, F&N and Red Bull.
The SUPERB (Skim Permulaan Usahawan Bumiputera) programme is offered by Teraju (Unit Peneraju Agenda Bumiputera ), a unit in Malaysia’s Prime Minister’s Department that aims to spearhead and coordinate participation of the country’s Malay and indigenous population in the national economy. The grant is managed by the National Entrepreneurs Corporation (known as PUBD).
Dropee previously secured funding amounting to RM300,000 from angel investments in January this year and received the CIP Catalyst grant worth RM150,000 in March from the Cradle Investment Programme.
According to Dropee co-founder and chief operating officer Aizat Rahim, the SUPERB grant comes at a crucial time as the startup, which started in 2016, is now at the commercialisation phase. The grant money will support Dropee’s move to grow the number of SME retailers on the platform from about 300 to at least 1,000 by the middle of next year.
Aizat says most of the funds will be allocated to marketing – both online and offline advertising – as part of the plan to acquire more retailers, with the remaining to be used to further develop Dropee’s products for scalability and automation.
Interestingly, this is Dropee’s second attempt at obtaining the SUPERB grant, having unsuccessfully competed for the grant last year. Aizat explains the reason the startup was successful this time - Dropee has pivoted since last year and the current business model has been proven despite the small amount of traction it had at the time of the second application.
“The judges saw the potential in Dropee and have appointed PUBD, who serves retailers in Malaysia, as our fund disbursement manager as part of our strategic growth,” he says.
Dropee was previously a drop-shipping marketplace that drop-shipped goods to customers of e-commerce retailers before moving away from that business model to serve offline retailers once the co-founders Aizat and Lennise Ng (also CEO) realised that drop-shipping alone was not sustainable as most B2B purchases still took place online.
Aizat says that Dropee decided to go for a grant instead of other means of funding because, having come from micro venture capital backgrounds and understanding the risks and rewards of raising venture capital, he and Ng believe that there is more commercial benefit in staying lean without further diluting company shares and not plucking a valuation out of the air.
“We strongly believe that the constant revenue stream from the new customers we will acquire through the funding will build a strong financial back for Dropee and ensure there are no down-rounds in its series A onwards,” he says.
He does, however, reveal that Dropee is preparing to raise a seed round of between US$400,00 (RM1.63 million) and US$600,000 (RM2.44 million) next year.
Dropee is also currently working on expanding further into Malaysia, aiming to be in the northern state of Penang and the southern state of Johor by the fourth quarter of next year. Aizat says that Dropee will continue to further strengthen the local market first before expanding to another country.
“While we are still studying the international market, and have identified a few countries to penetrate, we are still building our core technology to ensure that risks are reduced and the expansion costs will be fully optimised.”