Indonesia-based startup Dagangan, a social e-commerce platform for underserved rural communities in the country, has raised $11.5 million in Series A funding led by Monk’s Hill Ventures.

Other investors include MMS Group, K3 Ventures, Spiral Ventures, and PnP, according to a statement on Tuesday.

“Our vision is that each and every one of the 100 million individuals in the underserved rural communities in Indonesia will have easy access to basic and high-quality local daily necessities and goods at affordable prices. A typical consumer can travel on average 20 kilometers for groceries. For small producers and sellers, the barrier to grow their businesses and have a wider distribution of their products and goods will no longer be a challenge,” said Dagangan Co-Founder and Chief Executive Officer Ryan Manafe.

Dagangan supplies fast-moving consumer goods (FMCG) to underserved rural communities through its Android app and partnerships with community leaders.

The funding will be used to grow Dagangan’s house brand of white-label local products such as frozen foods, groceries, and homeware appliances, product development such as expanding digital product features including pay later, logistics pick-up and delivery, talent acquisition, and growing partnerships with community leaders, key opinion leaders (KOLs), local entrepreneurs, and village chiefs.

In addition, the company also plans to continue to expand its footprint in tier-3 cities and tier-4 villages including Java, Sumatra, and Kalimantan.

The rural communities in Indonesia which make up 80 percent of the population of Indonesia are currently underserved where the average consumer can pay up to 35 percent for everyday necessities and groceries compared to tier 1 and tier 2 cities in Indonesia.

The challenge is further exacerbated by inefficient supply chains and poor logistics networks. By building and scaling a tech-enabled community-based hub, Dagangan said it aims to boost rural economic growth, make the supply chain the most efficient and serve the underserved in these markets.

Dagangan currently uses a tech-enabled hub and spoke approach where they will reach out to KOLs in a new market e.g. village chiefs, microentrepreneurs, or community heads in key areas.

After establishing these key relationships, Dagangan will work with the supply chain which may include FMCG producers and wholesalers or warung owners (shop owners) to deliver group orders cultivated by the KOL to consumers within 24 hours. The group orders are placed on DAGANGAN’s Android app.

Dagangan also produces its private-labeled products such as groceries through its partnerships with local farmers. Dagangan also enables direct product delivery from manufacturers or farmers to users.

Its group-buying model aggregates demand based on location, enabling users to make a joint purchase with other buyers, assisted by agents who will facilitate the end-to-end user experience. Dagangan is focused on making access to daily necessities and high-quality local products in intra- and inter-rural or suburbs as easy as possible to improve and positively drive economic conditions and opportunities.

This strategy reduces the cost of the supply chain by 95 percent as compared to other supply chain suppliers throughout the country.

“Supplying basic daily necessities to rural communities in Indonesia continues to be one of the most complex problems to solve with existing inefficient supply chains and logistics networks. Dagangan’s hub-and-spoke model has shown impressive traction and an early proven track record that is impacting communities,” said Peng T. Ong, Co-Founder and Managing Partner of Monk’s Hill Ventures.

To date, Dagangan has a footprint in eight tier-3 cities and 5,000 tier-4 villages in over 50 regencies. The company has also distributed over 20 local products from smaller farmers and distributors to a wider market. It has more than 20,000 active users that manage over 3,000 SKUs.

Featured image credit: Dagangan

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