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Catherine Shu
Guest
More investor money is flowing into Indonesia’s startup ecosystem. Today, AC Ventures, which focuses early-stage startups in the country, announced it has raise 80 million. Investors include World Bank’s International Finance Corporation (IFC) and Disrupt AD, the venture development platform of Abu Dhabi Developmental Holdings. This brings the firm’s total assets under management to about 100 million by the end of 2021. All of its investments were in pre-Series A stage startups. The firm says many portfolio companies gained traction during the COVID-19 pandemic, with some, like Shipper, Stockbit, Ula, Aruna, Bukuwarung and Colearn, reaching “centaur” status, or a valuation of at least covered Fund III’s first close, its target was \)"> 80 million. That number increased, until finally reaching more than
AC Ventures’ founding team Adrian Li, Pandu Sjahrir and Michael Soerijadji
“I think with the increased traction of the portfolio during COVID and a step up in global interest in Asian companies, startups have raised faster than,” said Li. “The larger fund allows us to make sure we can keep our pro ratas and maintain ownership percentages in the best companies.”
He adds that at the beginning of 2021, it “became clear that technology companies were being relied on more than ever to help people continue their daily lives, whether shopping, paying or even entertainment, and that was quickly reflected in the public markets.” He added, “I think the turning point was probably August or September last year. From then, institutional investors and LPs began to realize that COVID was not going away in the short term. They therefore started looking for companies that were “having huge moments of adoption, new users and new user frequency by existing users, and Indonesia was a stand out.”
AC Ventures two earlier funds returned 2.99X and 2.41X gross MOICs, and they include unicorns Xendit and Carsome. The firm’s portfolio companies have also raised a total of more than
Li says AC Ventures invests in companies with great teams and strong ideas, or companies that have bootstrapped their way to having customers and revenue. “There isn’t a hard and fast rule, but what we want to do is come into companies as early as possible, where we have built a conviction around the team and market so we can be a longstanding partner in them as they grow.”
At early stages, “there’s not much data you can underwrite on,” he added. “Fortunately, investing in Indonesia, we have the benefit of hindsight for models that have worked around the world and the ability to analyze where certain markets are in Indonesia, relative to the total country and the economic development of the national. We can do a lot of market and business model research and so on, all up front. We can see if this model looks right, if it’s got big potential, if it’s a business model that’s worked well in markets like China or India.”
AC Ventures has also done quantitative and qualitative analysis of its most successful portfolio companies, and honed in on a set of signals that identify the founding teams with the most potential. Li said this gives the firm a more objective way of ranking early-stage startups.
For example, it’s important for at least one of the founders, usually the CEO, to have the strong capability to convey their vision to relevant stakeholders, constituents or first users and business partnerships. When AC Ventures asks founders about their business, they also need to be able to go into detail, including all their numbers, what works and what doesn’t. “Running a business, there are all these devils in the details that are very necessary, so you know what experiments to run, how to ititerate your product. There’s a lot to take in at the early stage of a business, but we find it critical that the founding team is really on top of that.”
In statement about IFC’s investment in AC Ventures’ Fund III, Azam Khan, IFC country manager for Indonesia, Malaysia and Timor-Leste said, “IFC’s partnership with AC Ventures underscores our long-term commitment to Indonesia’s economic development and digital transformation.”