What Indonesia's e-commerce unicorn says it's going to do with $1.1 billion in cash investment

Key Points
  • Indonesian e-commerce firm Tokopedia secured $1.1 billion dollars in investment led by SoftBank's Vision Fund and Chinese e-commerce giant Alibaba in December last year.
  • The company plans to use the funds to grow its four main businesses: fintech and payment, logistics, online-to-offline commerce, and the marketplace and digital business, according to Tokopedia's associate vice president of financial technology, Samuel Sentana.
How Tokopedia helps its merchants get loans

Indonesian e-commerce firm Tokopedia plans to use the billion-dollar investment it secured last year to grow its core businesses and make the company "stronger" and more "robust," according to its associate vice president of financial technology, Samuel Sentana.

Tokopedia secured $1.1 billion from SoftBank's Vision Fund and Chinese e-commerce giant Alibaba in December last year, raising the Indonesian unicorn's valuation to $7 billion as of January. A unicorn is a start-up valued at more than $1 billion.

Speaking to CNBC's "Street Signs Asia" at the Money 20/20 conference in Singapore on Tuesday, Sentana said the money will be used to grow its four key businesses: financial technology and payment; logistics; online-to-offline commerce; and the marketplace and digital business.

"That $1.1 billion is going to be funded into these four core business to make the ecosystem even more stronger and robust, so that everybody can start to buy and sell everything, and can discover everything," Sentana said.

The PT Tokopedia logo is displayed at the company's offices in Jakarta, Indonesia, on Friday, Feb. 19, 2016. Photographer: Dimas Ardian/Bloomberg via Getty Images
Dimas Ardian | Bloomberg | Getty Images

Financial technology — or fintech for short — can be broadly defined as any digital innovation in financial services, such as insurance or online payments.

As part of Tokopedia's effort to grow its fintech business, the firm recently worked with state-owned pawn company Pegadaian to launch an online gold trading platform, Tokopedia Emas.

"Starting from four cents to the dollar, you can start investing in gold, and that's new for Indonesians," Sentana said.

"Immediately we see a huge traction on that, and we can continuously do that by working together with our partners, even more so on the insurance lending and investments front," he added.

Indonesia's e-commerce market is forecast to grow up to eight-fold from $8 billion in 2017 to $65 billion in 2022, according to management consultancy, McKinsey and Company. That's a similar growth trajectory as China's e-commerce market between 2010 and 2015, the firm noted in an August report.