More money from investors is pouring into the ecosystem of Indonesian startups. Today, AC Ventures, which focuses on start-ups in the country, announced it has raised $ 205 million in committed capital for its oversubscribed Fund II, more than double its original goal of $ 80 million. Investors include the World Bank’s International Finance Corporation (IFC) and Disrupt AD, the venture capital development platform of Abu Dhabi Developmental Holdings. This brings the company’s total assets under management to around $ 380 million.
AC Venture Fund III has been actively investing since its first close in March 2020, and has now made 30 of its 35 targeted investments, and says it is on track to deploy more than $ 100 million by the end of 2021. All of its investments have been in pre-series A startups. The company says many holding companies have gained ground during the COVID-19 pandemic, some like Shipper, Stockbit, Ula, Aruna , Bukuwarung and Colearn, achieving “centaur” status, or a valuation of at least $ 100 million. AC Ventures also claims that Fund III is generating strong initial returns, with a MOIC (multiple on invested capital) of 1.94 times within two years of its first closing.
In October 2020, when TechCrunch was covering the first closing of Fund III, its target was $ 80 million. This number increased, eventually reaching over $ 200 million. The typical size of Fund III checks varies considerably. Founder and Managing Partner Adrian Li told TechCrunch that having a larger fund size gives AC Ventures the flexibility to deploy the right amount of capital depending on a startup’s stage, so it does not have to worry about finding co-investors or other sources. of capital. This means that depending on traction and industry, the first Fund III checks can range from a few hundred thousand dollars to several million.
âI think with the increased portfolio pull during COVID and an increase in global interest in Asian companies, startups have grown faster than,â Li said. âThe larger fund allows us to make sure that we can keep our pro ratas and maintain ownership percentages in the best companies. “
He adds that at the start of 2021, it “became clear that tech companies were called upon more than ever to help people get on with their daily lives, whether it was shopping, paying or even getting away from it all. to entertain, and this was quickly reflected in public markets. ” He added: âI think the turning point was probably August or September of last year. From there, institutional investors and LPs began to realize that COVID would not go away in the short term. So they started looking for companies that “had huge adoption moments, new users and a new frequency of use by existing users, and Indonesia stood out.”
AC Ventures, two earlier funds, reported gross MOICs of 2.99X and 2.41X, and they include the Xendit and Carsome unicorns. The companies in the company’s portfolio have also raised a total of more than $ 500 million in follow-on funding from investors such as Sequoia, Tiger Global and Prosus.
The company started investing in 2014 under the name Convergence Ventures and in 2019 became AC Ventures through a merger with Agaeti Venture Capital. It now has a total of more than 100 companies in its portfolio, which AC Ventures says makes it one of the largest Indonesian-focused early-stage venture capitalists.
Many of AC Ventures’ partners, including Li, are former entrepreneurs who have worked in markets such as the United States, China and Indonesia. As a result, he says they are uniquely positioned to work closely with startups from initial stage to exit. For example, AC Ventures helps companies in its portfolio hire key talent, introduces them to the right business partnerships to scale, and helps them fund downstream. Having a larger fund gives AC Ventures more ability to invest in what they call their value creation team, or group of experts in areas such as data operations, growth and upgrading. ‘ladder.
âBuilding a specific team whose sole objective is to increase the value of the companies in our portfolio through their advice and interactions is something that we are really passionate about. With a small fund it is difficult to put together an operational team to help the portfolio companies, but now with the larger size of the fund we are able to invest in that, âLi said.
Working with very early start-ups, AC Ventures has developed specific strategies to decide on investments. For example, he makes decisions using comparable market and business model analysis to understand new sectors.
Li says AC Ventures invests in companies with great people and strong ideas, or in companies that have been successful in gaining customers and revenue. âThere is no hard and fast rule, but what we want to do is get into companies as early as possible, where we have built a conviction around the team and the market so that we can be a long-standing partner in their growth. “
At first, “there isn’t a lot of data you can subscribe to,” he added. Fortunately, by investing in Indonesia, we benefit from hindsight for models that have worked around the world and the ability to analyze where certain markets are in Indonesia, relative to the whole country and development. economy of the country. We can do a lot of market research and business models, etc., right off the bat. We can see if this model looks good, if it has big potential, if it is a business model that has worked well in markets like China or India.
AC Ventures also performed a quantitative and qualitative analysis of its top performing portfolio companies and targeted a set of signals that identify founding teams with the most potential. Li said this gives the company a more objective way to rank start-ups.
For example, it is important that at least one of the founders, usually the CEO, has the strong ability to convey their vision to relevant stakeholders, constituents or early users and business partnerships. When AC Ventures asks founders about their business, they also need to be able to get into the details, including all of their numbers, what’s working and what isn’t. âRunning a business, there are all these devils in the details that are very necessary, so you know what experiments to run, how to iterate your product. There is a lot to consider when starting a business, but we find it essential that the founding team is truly on top of that.
In a statement on IFC’s investment in AC Ventures’ Fund III, Azam Khan, IFC Country Director for Indonesia, Malaysia and Timor-Leste, said: âIFC’s partnership with AC Ventures underlines our long-term commitment to Indonesia’s economic development and digital transformation.