Path’s controversial new Indonesian investor could do more harm than good

Path is struggling in the US and Europe, but it is flying high in Indonesia, a country with a 250 million population. It’s aiming to cement its place there after bringing a local investor on board during its latest $25 million round of funding.

Path CEO Dave Morin previously said that the service has 3 million registered users in the Southeast Asian country — that’s nearly 15 percent of its 23 million userbase worldwide — yet Indonesia accounts for half of Path’s daily user numbers (its largest single country), and one-third of its monthly traffic (which is equal to the US.)

With that context in mind, it’s somewhat understandable to see that Path’s Series C investment round was led by an Indonesian representative — Bakrie Global Group — but it seems that the match up isn’t of the made in heaven variety, and could actually be to Path’s detriment.

That’s because Bakrie Global Group is a deeply divisive organization. As Daily Social explains, it is in hot water over a failed investment scheme, its telecom company is in debt, while oil and gas company PT Lapindo Brantas — which the group is a controlling shareholder of — is widely thought to be responsible for an ecological disaster that has affected the East Java region since 2006.

On top of that, former Chairman and prominent family member Aburizal Bakrie is a candidate for the 2014 election, which led to suggestions that the move is a political play.

All of this has got many Indonesians up in arms about the deal. (Imagine, for a second, Snapchat teaming up with Shell, for example.)

Path is a surprisingly popular smartphone app in the country — in spite of the high adoption of messaging apps in Southeast Asia, and the lack of a Path app for BlackBerry, the struggling phone maker that retains appeal in Indonesia — yet could this episode backfire on Path?

I’m sad that @path finds it fine to be affiliated with Bakrie.

— Alderina (@alderina) January 11, 2014

Whoever is running #path is making a blunder by taking in Bakrie >> pic.twitter.com/MsagIKPGhS | @sheggario

— Rene Suhardono (@ReneCC) January 11, 2014

Plenty of users have gone so far as to suggest that they may uninstall the app in protest but, with Path well-established among many circles, it remains to be seen how many will carry that through.

Certainly, the affiliation with a controversial group has at least impacted Path’s reputation in Indonesia, and it remains to be seen how that trades off against the benefits that a local partner can bring.

If half of all Indonesian Path users paid $15 for a one year subscription, Path would have had $30 million in revenue. More than enough.

— Aulia Masna (@amasna) January 11, 2014

Given its struggles in the US and elsewhere, Path certainly needs Indonesia, so it’s surprising to see it unite with a group that was guaranteed to bring negative headlines. It’s unclear whether Morin and Path were unaware of this, thought the benefits outweighed the issues, or simply needed to fill a seat on the investment table.

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