The founders in Seattle recently lamented the lack of capital and support compared to Silicon Valley. What about new construction companies in more remote markets?
Kargo, a company that takes the spirit of Uber and into the disorganized world of transportation, has raised a SG $ 800,000 (US $ 580,000) funding round, giving TechCrunch an excuse to delve deeper into the world of startup development in Myanmar, one of the most curious countries in the world.
Abandoned from the world until its first free general election in 2015, Myanmar, formerly known as Burma, has seen the world’s most radical digitization. Ruled by the military from 1962 to 2011, the price of a SIM card in the country was $ 250 in 2013 (a big jump in $ 3,000 in the early 2000s) but everything changes around the 2015 elections, when the country was opened. Its doors to foreign investment and global companies. Telecommunications companies were quick to slash the price of a SIM card to mere dollars, in US terms, and gave those who bought them gigabits of data to use each month.
That rush saw services like Facebook Go from the non-existent to the key digital space overnight when Myanmar’s 55 million people took to the web – America’s social network has been unable to cope with such wild growth. Today, an estimated 46 million people are online in the country, with mobile as the dominant platform and Facebook as the best browser. Yes, the social network is that big.
Myanmar is getting its first 4G launches and the seeds have been sown for internet companies and startups.
Kargo, not to be confused by the Indonesian company of the same name that is backed by Uber co-founder Travis Kalanick, was started in 2016 by Alexander Wicks, an Australian expat who had previously run digital marketing businesses.
The young company initially joined Phandeeyar, a technology accelerator in the big city of Yangon, before pulling out due to a disagreement on terms, CEO and founder Wicks said. He told TechCrunch He valued the organization but decided to “fly solo” with the business.
That’s a gamble that seemed to pay off, at least so far. Kargo won a grant from the GSM Association’s Ecosystem Accelerator Fund, a unit associated with the GSMA, and represented Myanmar at last year’s World Seed Summit. Now, it has secured this new financing led by Singapore-based early stage specialist Cocoon Capital.
Wicks said the round is a pre-Series A deal and he hopes Kargo can scale up Series A to fuel growth abroad within the next year or 18 months.
Kargo works with multinational companies, including Coke and Nestlé, To help them navigate the complicated world of logistics in Myanmar. By adding multiple fleets through its platform, Kargo becomes a single point of contact for companies moving products, thus greatly simplifying the process. In the past, they dealt with a large number of intermediaries, who teamed up with truck fleets to add unnecessary levels of complications and costs.
“The market is very large, it is a fundamental part of how the whole country works,” he explained, adding that Myanmar’s freight forwarding industry is expected to triple in the coming years.
Wicks said Kargo works with more than 2,000 drivers, mostly through fleet owners, who typically operate 5 to 50 trucks through their businesses. Disintermediates the brokers and intermediaries mentioned above, to help drivers and fleet owners regain a top of each order and gain access to potential new customers. A partnership with Yoma Bank will also give the startup company an SMB loan that will allow it to make daily payments to drivers who need more immediate cash flow than their regular weekly deposits.
Kargo is currently close to $ 200,000 in monthly order volume, growing 20 to 30 percent month-over-month during 2019, Wicks shared.
Now he is exploring his first steps outside of Myanmar by covering the “logistics corridors” in Thailand. Wicks said the company has seen a high level of requests to move abroad from existing clients, and intends to use those relationships to begin tentatively entering new markets, starting with Thailand.
The new funding will also go towards the development of the new Kargo app, and in particular improving the web app used by drivers, as well as further education and training for truck operators and drivers.
“It is very much a product for Myanmar,” Wicks said in an interview. “It is an old industry that is being built with a new mindset.”
Finally, recruitment is also a key focus for the capital.
Kargo currently has a team of 32, most of whom are in Yangon, and the number of employees is projected to rise to 60 this year. Business development, fleet management and operations are the core areas where the startup plans to hire, and that will include reinforcing its new office in Mandalay.
Building a startup in Myanmar
When asked what is the hardest part of operating a startup in Myanmar, Wicks claimed that dealing with the government is just ahead of raising money for investment.
“The bureaucracy … there are no statistics or systems here,” he said. “We have a lot of government issues to deal with.”
However, he said, the arrival of Uber and its regional competitor Grab, which eventually acquired the US firm’s regional business, in Myanmar in 2017, gave Kargo and other startups in demand in the country a real foothold for work with governments by educating them on new business models.
“They made it clear what a platform is for the government,” Wicks said.
He believes that its arrival, along with the increasing use of the Internet and the increased speed, have also helped investors feel comfortable with the idea of investing in technology in Myanmar, although he insisted that they still need to be “patient” about the growth. .
“It’s certainly a much more positive outlook for the founders today,” Wicks said. “That confidence has changed for investors, some of us are building companies across the country.”
That’s certainly true for Cocoon Capital, which is currently raising funds for a $ 20 million fund that completed the first closing last year.
Managing partner Michael Blakey told TechCrunch that Kargo is the firm’s second investment with that new fund. He is equally optimistic that Kargo is in a good position to take advantage of both digital growth and logistics development as Myanmar continues to appeal to foreign companies.
“Myanmar is the fastest growing economy in Southeast Asia and logistics is a key industry to support this growth,” Blakey said in a statement. “We believe that the Kargo platform has the potential to disrupt the transportation industry, not only in Myanmar, but in the region.”
If ‘Myanmar 1.0’ was the establishment of credible startups, then the second chapter will be the cream of that overseas cultivation. Kargo is one of the first contenders to try to make that move.