Gobi Partners, a venture capital firm headquartered in Shanghai has sold its portfolio company online beauty e-commerce site Hermo to Tokyo-listed firm istyle.
This is Gobi’s first exit for the year and was driven by istyle’s strategic positioning in the North Asian market and its ability to build succssful international companies. The market design firm, founded almost two decades ago, is best known as the operator of the Japanese cosmetics e-commerce site Cosme.com.
“We have been in discussion with i-style for a follow-on investment in Hermo since last year, and as the conversation deepened, it turned out that an acquisition made more sense as it came across as the most effective way to work on achieving our common vision. Hermo’s strong presence in Malaysia was also a major contributing factor,” explained Kay-Mok Ku, a partner at Gobi.
The financial terms of the agreement were undisclosed but the internal rate of return (IRR) for Gobi Partners was 91 percent.
Gobi invested in Hermo in October 2015 as the sole Series A investor and provided a total capital of US$2 million, in addition to connecting the founders with experts and professionals in their line of business.
Since then, Hermo grew to achieve a 300 percent year-on-year growth in 2016, landing the startup’s co-founder Ian Chua on the Forbes’ 30 Under 30 Asia feature in 2016.
Chua commented on Gobi’s role saying, “At the time, there weren’t a lot of funding options for Malaysian startups, especially those that were based outside the Klang Valley. I made the decision to have my company based in Johor Bahru, and I feel fortunate to have captured Gobi’s attention. Their assistance is making our platform an established e-commerce site, as well as a household name, was tremendously valuable.”
Other angel investors in Hermo prior to the Series A round were Crystal Horse Investments Pte Ltd and Tan Swee Yeong.
Founded by Ian Chua and PS Chong, Hermo claims to be Malaysia’s top online beauty e-commerce site that allows users to discover beauty products from acclaimed international brands as well as offering fashion insights and beauty tips.
It made a name for itself as having top brands from Korea and Japan as the company partners directly with brand owners and distributors, making flagship brand stores available on their platform.
Established in 2002, Gobi Partners focuses on early-stage investments in digital media, IT and TMT companies. The firm has raised eight funds to date and has invested in more than 170 portfolio companies across China and ASEAN.
Gobi’s Malaysian VC partner MAVCAP’s CEO Jamaludin Bujang said the acquisition shows another avenue for local companies trying to internationalize their brand.
“Our local companies can go international, if they are as understanding, hardworking and firm about providing good service to their customers as the Hermo team is. Deals like this show the world that Malaysian entrepreneurs are ready to take on the challenge of entering global markets,” he said.