Gojek CEO’s departure may disrupt fundraising plans

The jump by the Indonesian ride-hailing unicorn’s co-founder and CEO into politics may upset investors. Nadiem Makarim's timing is inopportune given that Gojek is mid-fundraise for its domestic and international operations.

In a surprise move, Nadiem Makarim has resigned from his position as chief executive officer of Gojek to launch his political career, a decision that could dent investors’ support for the Indonesian ride-hailing unicorn.

Makarim has accepted a ministerial post in Indonesian president Joko Widodo’s government, Gojek said on Monday. Widodo is pulling together a cabinet for his second term in government.

Gojek is a $10 billion leviathan gearing up for the largest initial public offering of shares that Indonesia has seen in at least a decade, maybe ever. Now a household name, the firm has grown into the country’s largest private sector employer and government officials consider it something of a national champion.

Gojek said that it contributes $658 million to the national economy annually but, more than that, it is a poster child for a legion of small startups keen to take part in the digital revolution sweeping through Indonesia.

Gojek has grown by raising capital from private investors who generally don’t like to see a change in the management team that they are backing. The Jakarta-based company already counts Tencent, JD.com and Google among its backers.

“I certainly would not like to see the chief executive of one of my portfolio companies go off to join the world of politics, it could be very disruptive,” said one venture capital investor based in Singapore.

Gojek is currently fundraising about $1 billion to help finance its domestic business and another $1 billion to fund its overseas expansion, according to people familiar with the matter.

The firm is locking horns with Singapore-based rival Grab in a fierce competition for drivers and users of their ride-hailing application. Grab has backing from deep-pocketed investor Softbank, which has promised its protégé “unlimited” support.

Launched in 2011, Gojek is an Uber, PayPal, Ticketmaster, Homejoy and Instacart all rolled into one. It has ridden the wave of digitisation that is spreading across the archipelago by enabling motorbike drivers, known locally as ojek, to fill orders placed on smartphones for services ranging from food delivery, parcel couriers, cleaners, massages and pharmacy deliveries.

While rumours of Makarim’s political ambitions have circulated among investors in recent months, the timing of his departure surprised some. “I would have thought he would wait until after Gojek’s IPO,” said one.

Nadiem’s departure will see Gojek group president Andre Soelistyo and Gojek co-founder Kevin Aluwi, share responsibility as co-CEOs, said a Gojek spokesperson.

While having dual chief executives can muddy messages to market, both executives are well-known to investors. Soelistyo is a particularly familiar figure as he has led the firm’s fundraising efforts and is seen as well-versed on the company’s financials.

“We have planned for this possibility and there will be no disruption to our business. We will make an announcement on what this news means for Gojek within the next few days,” the spokesperson added.

While the resignation of a shareholder could spell a lack of confidence in the company’s future it is also true that management’s ownership has shrunk dramatically over the years. Gojek has conducted 12 rounds of fundraising which has diluted the founders’ shareholdings. Makarim’s stake is down to about 3% said one of the people familiar with the matter.

Gojek has declined to reveal the exact size of management’s remaining stakes.
Indonesian media outlets have suggested that Makarim could take on a role in a new digital economy ministry or in education.

“We respect the process set out by the president and will not make a further comment until there is an official announcement from the palace," Gojek’s spokesperson said.

¬ Haymarket Media Limited. All rights reserved.
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