This Indonesian startup raised $14 million a year ago. It’s now in trouble: MONIIFY Scoop

Gravel was backed by the who’s who of Southeast Asia’s venture capital space. Think billionaire Weili Dai of Marvell Technology Group, Walden International Chairman Lip-Bu Tan and US-based New Enterprise Associates.

But barely a year after snagging $14 million in funding, the Indonesian construction tech startup is no longer in operation, two former employees tell MONIIFY on condition of anonymity.

The Jakarta-based company laid off its entire workforce last week after slashing 35% to 40% of staff in October, they say. Its website is gone, and it’s no longer possible for new users to register on its app.

Gravel’s co-founders Georgi Ferdwindra Putra, Fredy Yanto and Nicholas Sutardja, as well as its investors, did not respond to requests for comment.

Gravel’s not the only well-funded startup to face problems in Indonesia this year. The closures started early.

Octopus, a waste management startup funded by Openspace Ventures, shut down in January. Pitik, an agritech startup backed by Alpha JWC and MDI Ventures, reportedly closed in July and Investree, a peer-to-peer fintech company that raised over $260 million, ran into trouble in October.

Indonesia’s startup ecosystem has been on a rollercoaster ride over the past couple of years. Layoffs, pivots and even shutdowns have become daily headlines as tech companies grapple with a funding crunch and difficult business environment.  

Startups are facing more pressure to deliver profits and rapid growth so VCs can make their exits. Many are struggling to meet those expectations and losing investor confidence. And cash.

Promising start

Founded in 2019 and registered in the US state of Delaware, Gravel sought to revolutionize construction services.

Need a contractor to remodel your pad or fix that leaky roof? How about a few extra hands to meet a construction deadline? Just tap the app and help would arrive. Gravel was practical, sleek and promising.

And prominent investors were sold on the pitch. Gravel was New Enterprise Associates’ first foray in Southeast Asia, which started with an undisclosed investment in 2021.

In an investment filing exemption made with US regulators in 2021, Gravel claimed to have revenues of more than $1 million that year.

The startup also said in a December 2023 statement that it achieved 45x revenue growth between 2020 and 2022 and had 1.7 million construction workers on its platform at the time, although it isn’t known how many were ACTUALLY active. It even claimed to have massive infrastructure projects such as the Jakarta Light Rail Transit and Jakarta International Stadium tapping its platform for labor.

Crowded at the top?

Cracks started to appear this year, as internal conflict and financial troubles took their toll. Gravel’s management, or what was left of it, went straight for the nuclear option — massive layoffs.

The two company insiders say that a feud between co-founders Putra and Yanto had been brewing for a while.

Putra, who served as CEO from the company’s inception, and Yanto, who started as chief product officer, took on the role of co-CEOs in December 2023, around the same time they announced the new $14 million funding. Putra was reportedly asked by investors to step down in August, leaving Yanto in charge.

The leadership change was meant to end tensions, stabilize operations and lock in more investments from existing backers, the former employees say.

But the conflict was enough to deter existing investors from increasing their stakes. And as the funds dried up, employees weren’t paid on time, or at all.

Some wages were delayed as far back as August. One of the former employees, who was laid off at the end of October, told MONIIFY that Gravel still owes them two months’ wages.

Severances also remain unpaid, although the company has promised to settle this by the end of the year, the former employee says. Current and former employees have made similar claims on Murzfeed, an Indonesian startup community platform.

Users also took to Gravel’s Instagram page earlier this year, complaining about difficulties withdrawing funds from the app, suggesting its problems extended beyond payroll delays. The last post on the Instagram page was made on June 12.

A hard lesson

The distress at Gravel and other Indonesian startups suggests that while scaling fast is important, even the most well-funded startups can crumble without strong fiscal discipline and solid leadership.

Internal conflicts among co-founders can make or break a company, wrecking staff morale and derailing the entire direction, says former startup founder Admond Lee.

Lee, who is also the author of the Runway Ventures, a newsletter, offers some tips for founders on managing conflicts and expectations from stakeholders:

1. Founders should be transparent with investors about conflicts.
2. Investors should step in to mediate if needed.
3. Even when they disagree, founders must make decisions based on the company’s interests.

Failure to align on vision, values, skillsets and even exit strategies before building a startup “will cause many issues down the road,” says Lee, “especially during the high-growth phase when everything starts falling apart.”