JAKARTA -- Shaken by the COVID-19 pandemic, Indonesian B2B marketplace Ralali is looking to raise $50 million in a Series D round to shore up its business.

The company, which connects suppliers and wholesalers to micro, small, and medium-size enterprises via its app and website, is in talks with potential investors, its CEO Joseph Aditya told DealStreetAsia in an exclusive interview.

"We're [working] on the fundraising and target to close it by the end of this year. We want to be profitable before ultimately going public. We need more funding for growth," Aditya said.

The company applied the brakes on its overseas operations last year. Ralali shut down its India operations and divested a part of its stake in Big Thailand -- its joint venture with Siam Cement Group in the country. "The performance of the [Thailand] business was great. However, we couldn't travel to the country [due to COVID-19 restrictions], and it was difficult for us to monitor the business. Thus, we thought it was best to divest," he said.

Ralali raised $13 million in a Series C funding round in July 2019 led by Arbor Ventures, TNB Aura and Jo Hirao, founder of life media platform ZIGExN. Existing investors AddVentures and Qualgro also participated in the round.

In 2018, the company raised $7 million in a Series B round led by Japan's SBI Group, Thailand's Addventures, and global incubator Digital Garage. Since its inception in 2013, Ralali has raised $22.5 million from investors.

The company was last valued at $98.6 million, according to DealStreetAsia Data Vantage. The biggest institutional shareholders in the company are Beenext, with a stake of more than 10%, and the SBI Group which has an 8% stake, figures from Data Vantage show.

Unlike other B2B e-commerce startups in Indonesia, such as Warung Pintar, Gudang Ada and Ula, which cater to mom-and-pop stores, Ralali is more like China's Alibaba -- a marketplace connecting suppliers, and wholesalers with buyers in many categories, including agriculture, automotive, building materials and other sectors.

Having operated as a B2B marketplace since 2013, Ralali has invaluable data that helps connect wholesalers and suppliers to buyers. The company also operates Ralali Financial and Ralali Logistics. These services offer financing and logistics solutions through partnerships with fintech companies, banks and transport specialists. Ralali has 1.5 million users at present, including suppliers, buyers and wholesalers.

Before the coronavirus outbreak, the user retention rate was about 60%, said Aditya. The pandemic has cut this by half, as many small and medium-size business clients have been hit. Ralali also has 10,000 active agents, or offline partners, who help to connect suppliers and buyers. Before the pandemic, the company had 300,000 active agents working for it. The coronavirus has changed the way Ralali does business.

The company realized that it cannot rely on the marketplace model alone. Last year, Ralali established a private label called Primero. So far, the company has launched Primero-brand masks, gloves and goods that can be used in restaurants, hotels, pharmacies and other businesses.

The idea is to target customers who are indifferent to brands, said Aditya. "The key is to make a substitute for those common products, where people don't really care [about] the brand."

Ralali hopes to tap its wide network of manufacturers and suppliers to sell the products. It also hopes to expand the product range of its Primero brand and offer more services to customers after it clinches the Series D funding.

Aditya said the company has distributed Primero products to 50,000 stores across Indonesia. By having its own label, he said the company gains more customer stickiness and makes bigger margins than in the marketplace model. It also offers a continuous revenue source.

"We know we can't always rely on investor money. Hence, we are looking for a strategy toward profitability. This is our preparation before we go for an IPO in 2023," Aditya said.

In addition to the private label, Ralali plans to launch Connecto, a Shopify model that allows merchants to set up an online store and sell their products. The service will still be within the Ralali ecosystem and will integrate merchants, digital payment providers, point of sales and Ralali's suppliers, said Aditya.

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