Openspace invests in Octopus - a digital circular economy platform

Ian Sikora
July 8, 2022

Octopus, Indonesia’s first circular economy digital platform for for post-consumer products, has raised $US 5 million from leading regional investors in an oversubscribed round co-led by Openspace and SOSV, who bring significant experience building Southeast Asia’s most notable tech companies from the earliest stages. There was additional participation from global and regional investors. This transaction represents one of the most unique in Indonesia, given the urgent need to solve the country’s waste and recycling crisis.

“Octopus is leading the way in using technology to create a step change in the size of the circular economy in Indonesia. Participants at all stages of this supply chain are incentivized to make this happen and most importantly, environmental imperatives need us to get this right. Openspace is proud to back the passionate Octopus team as they apply innovative business thinking and a strong developmental approach to this opportunity. We will do our best to support them after experiencing other sectors and companies in the region making a similar leap over the last decade”, said Shane Chesson, Founding Partner of Openspace.

“Octopus democratizes the process of managing household’s post consumer products, including electronic waste, in a more approachable manner by providing a seamless way for all people to build the new habit. Our methods also support FMCG brand EPR’s program through our leading data analytics platform”, said Moehammad Ichsan, Co-founder and CEO of Octopus.

Addressing Indonesia’s multi-stakeholder drive for an effective circular economy

Indonesia generates approximately 7.8 million tons of plastic waste annually, with 4.9 million tons of it being mismanaged. That includes being uncollected, disposed of in open dumpsites or leaked from improperly managed landfills. * Resultantly, Indonesia’s circular economy and waste management sector has seen significant increase in both user adoption as well investor interest. At the end of 2018, Indonesia declared its intention to implement a 3R – Reuse, Reduce, and Recycle – policy on 30% of all waste and reduce the amount of marine plastic debris to the ocean by 70%. These initiatives have been supported by the establishment of waste banks, the enforcement of an Extended Producer Responsibility (EPR) report on brands and/or producers, and the introduction of a fee on plastic bags for consumers. As of 2020, Indonesia has spent US$0.4 billion on tackling this vital issue and plans to increase the total investment spent on this sector to US$5.1 billion by 2025.

At the same time, the Government has been applying pressure for change on brands and/or producers, with a particular focus on increasing the demand for the use of recyclable resin or materials. As of now, there are over 1,600 plastic industries that can be either direct or indirect offtaker of this.

Octopus was launched in 2021 as the first platform to offer an end-to-end recyclable waste logistic platform. It is redefining the circular economy in an emerging market by transforming people’s perception and behavior towards waste management, waste collectors and by empowering relevant stakeholders.

A business model transforming the waste economy and improving the lives of Indonesia’s informal sector workers

Riding on this recent momentum, Octopus has developed a unique and innovative business model. Their end-to-end platform provides a solution for recycling industries to acquire their materials in the most efficient way by involving informal sectors. Octopus empowers them by providing access to both supply and demand and pricing transparency – with local waste collectors earning 10 times more by using their platform.. Each waste collector is equipped with a smartphone to get full transparency on supply and pricing and access to digital wallet in the application. This allows the whole collection and drop-off process to be seamless and captured digitally.

In only the last 6 months, the company has grown by over 400%, amassing users at both ends of the value chain. At one end, there are around 150,000 monthly active users and more than 60,000 waste collectors (Pelestari), over 12,000 of whom have been able to open a bank account since joining Octopus. At the other end, over 20 brands have chosen to participate, including global FMCG players who recognise the value the platform offers in addressing a key aspect of ESG compliance in a country of over 270 million consumers.

With its advanced tech-integrated and data-driven approach, Octopus is also able to utilize its sizable database on the collected post-consumer products to produce EPR for brands or manufacturers as part of their sustainability initiatives.

“Markets like Indonesia represent a huge opportunity for recycling but also a huge challenge,” said William Bao Bean, General Partner at SOSV. “Octopus brings a unique solution that benefits every stakeholder: families get rewards for doing the right thing, garbage sorters can increase their income by up to 10 times, recyclers double the amount they can process, and brands can prove how much of their packaging is recycled. It’s a win, win, win, win.”

Importantly, the involvement of different actors across the value chain ensures that Octopus is well placed to increase vital contributions to the sector from multiple stakeholders, including at the highest levels of government.

A business set for sustainable growth on the back of early success

Octopus was founded by an impressive team comprising Mohammad Ichsan, Hamish Daud, Niko Adi Nugroho, Rizki Mardian, and Dimas Ario, who have all known each other for over 10 years. Hamish is a well-known public figure with 2+ million followers, ensuring the business is getting attention from vital stakeholder bases. He was running his NGO, Indonesia Ocean Pride and environmentally-focused television programs prior to founding Octopus.

Having recently launched in the capital, in an event that involved leading government and municipal officials, Octopus is now preparing for aggressive expansion.It is currently operating 5 sorting facilities and 1700 checkpoints in 4 main cities: Jakarta, Bandung, Bali, and Makssar and handles 380 tonnes of waste, from plastic to electronic, every month. However, the business expects to amass 100,000 waste collectors by 2024 as well expand to  more cities in the near future.

“With this new funding, we plan to strengthen our ecosystem and expand our services, which includes the growing collection of electronic waste. Behavioral change has been a key component as we target to roll out in other major cities, supporting the acquisition of 1 million users”, concluded Hamish Daud, Octopus Co-founder and Chief Marketing Officer.