- Funding led by SPH Media and Elixir-Capital
- Focus from consumer to B2B key to securing funding
COMING from the logistics industry, two things were clear to Goh Chee Hau and Nadhir Ashafiq (pic, l-r), cofounders of The Lorry Online Sdn Bhd.
The first was that the logistics industry was huge in Malaysia, worth billions of ringgit, and the second was that it was still very manual and paper-based.
That combination spelt opportunity for them, which they turned into an on-demand land cargo startup operating the portal TheLorry.
The company has just raised US$1.5 million (RM6.6 million) in Series A funding led by SPH Media Fund, with participation from Silicon Valley-based Elixir Capital. This follows an undisclosed February 2015 seed investment from Singapore-based KK Fund.
An interesting point of this Series A investment is that TheLorry will remain based in Malaysia. Typically, a Singapore-based fund will have its Malaysian investments move their regional headquarters over to the island-republic.
Elixir Capital has been active in the region since 2014 when it launched the US$50-million ECM Straits Fund, with Malaysia Venture Capital Management Bhd (Mavcap), the Malaysian Government’s venture capital arm, as lead investor.
The fact that TheLorry closed its funding round in three months – according to the cofounders, they only started looking last October, and secured it in December – shows the confidence investors have that the logistics vertical, especially in moving cargo over land, is ripe for digital disruption.
Indeed SPH Media Fund chief executive officer Chua Boon Ping believes that TheLorry’s strong execution leaves it “well positioned for exponential growth” in a market that is worth US$3.9 billion a year in Malaysia, US$5.5 billion in Singapore and US$7.3 billion in Thailand, he said in an official statement.
Equally confident is Amir Azahar, managing director of Elixir Capital, who added, “Logistics is a big part of our investment focus, and we looked at a lot of startups before picking TheLorry.
“We feel what it is doing is original, disruptive, and comes with a sound business plan,” he told Digital News Asia (DNA) by telephone.
As part of the investment announcement, TheLorry has also appointed B.K. Teoh, former group general manager of Kerry Asia Road Transport Malaysia, as a special advisor.
With over 30 years of experience with leading multinational companies in the logistics industry, he will strengthen operational capabilities, TheLorry said in its statement.
“There is much room for disruption in the South-East Asian logistics space, and TheLorry has been particularly strong in adding value to businesses with commercial cargo,” said SPH Media Fund’s Chua.
“Having done well in Malaysia also gives it an advantage in expanding to Singapore due to the high volume of cross-border logistics between the two countries,” he said in his official statement.
Indeed, funding will be used to expand into both Singapore and Thailand, with the first market expansion to happen within six months. The business will initially be local but with an eye on the cross-border movement of goods eventually.
According to Nadhir, also the executive director, with operations in Singapore, TheLorry can explore opportunities in cross-border cargo transportation linking Malaysia, Singapore and eventually Thailand, together.
B2B market boost to growth
While initially focused on moving consumer goods when it launched in September 2014, key to TheLorry’s rapid growth has been the decision in April 2015 to venture into the B2B (business-to-business) space.
Speaking to DNA in Petaling Jaya recently, Goh said over 50% of its run rate (a term similar to the gross merchandise value or GMV used by e-commerce companies) of over US$1 million in its first 12 months of operations came from the B2B sector.
The ‘asset-less’ model of TheLorry is similar to other on-demand services startups such as Uber, GrabTaxi and Airbnb, which act as intermediaries between owners of the assets and the market, with most of the sale captured going to the asset owners.
Hence the 20-person startup is still loss-making, although its cofounders are targeting breakeven by end-2016. In addition to its B2B niche, introducing new services would also be key in its drive to profitability, the cofounders said.
One new service that they are pinning their hopes on allows both individual and commercial customers to save cost by consolidating and optimising space. Similar to the shipping industry’s loose cargo, customers pay for the items transported instead of the entire lorry.
“This option opens a new dimension of cost savings and reliability for our customers,” declared Goh, who is also managing director.
TheLorry’s technology platform is key to making this happen.
“Our back-end system allows us to fully utilise capacity and optimise delivery routes of the lorries our vendors own,” said Nadhir.
“It enables customers to send anything across Peninsular Malaysia cost effectively,” he added.
TheLorry is Nadhir’s second startup. He told DNA that he and other investors lost a six-figure sum when his first startup, a social network app, did not work in early 2014.
His biggest lesson from that? “I did not validate the idea then,” he said.
He was also working in a silo, not being aware of the Lean Startup Model nor of the accelerator programmes taking place in Malaysia then.
Those painful and expensive lessons have been put to good use today with TheLorry, as Nadhir and Goh have an eye on a Series B round within 18 months, and with the pressure on.
That pressure comes both from meeting investor expectations and knowing that the valuation in the next round will depend largely on how much more market traction they get.
But after having persevered through their early days when only two of 50 lorry owners they approached agreed to work with them, the duo now dares to believe that they can indeed disrupt this market.
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