Jakarta-based venture capital firm Indogen Capital is preparing to raise a USD 50 million fund for investments in sectors like e-commerce, lifestyle, and fintech, the firm’s managing partner Chandra Firmanto said to KrASIA.
The first round is expected to be completed in the first quarter of this year, valued at USD 10 million, while the second round will be finalized by the beginning of 2021. The firm will invest in seven to ten companies this year, targeting deals with a ticket size of USD 1–2 million, said Firmanto.
Indogen Capital wants to become “the best partner for the Indonesian market,” Firmanto added, saying that the company is ready to help foreign firms and investors to explore opportunities in Indonesia, Southeast Asia’s largest economy.
“Lots of foreign companies want to enter Indonesia but they are facing obstacles, one of which is the lack of information and local network. This can be problematic, because Indonesia offers huge opportunities beyond Java Island, like in Sumatra, Sulawesi, Papua, and so on. The investment will boost the economics of these regions to benefit both investors and the locals,” Firmanto said.
Unlike its first fund of USD 10 million in late 2016, with participation from investors exclusively from Indonesia, Indogen’s second fund will involve foreign investors from Hong Kong, Taiwan, South Korea, and Japan. “These foreign companies who are investing in our second fund want to partner with local companies, and they are even interested in acquiring local companies that share the same business vision with them,” he said.
In some cases, acquisitions can help founders gain quick profits and boost their business. “Acquisition creates new millionaires quickly. It also opens new jobs, because companies coming into Indonesia definitely want to expand their businesses, and therefore need more local talents,” said Firmanto.
Besides capital funding, the firm also offers a vast professional network under its portfolio. “One example is Singapore’s co-working space operator SpaceMob. Before being acquired by WeWork, we helped them expand into Indonesia and channeled them with building operators for their co-working space locations,” said Firmanto. The firm applies similar strategies to local startups that need new partners as they expand, he added.
The firm invests in post-seed stage startups up to Series A companies. It has provided capital to 18 companies across Southeast Asia so far, among them Indonesia’s accommodation-sharing platform Travelio, co-working space operator GoWork, and Malaysian used-car marketplace Carsome.
Firmanto says Indogen is an industry-agnostic firm. However, it usually invests in hot sectors like e-commerce, lifestyle, and fintech, as these industries have great demand in Indonesia. Since it was founded, Indogen Capital has consistently exceeded its target of a 30% year-on-year investment return, according to Firmanto.
He remains bullish about investment opportunities in Indonesia, although the region experienced a decline in tech investment in 2019, and there are concerns about a “capital winter” blowing into Southeast Asia this year.
“Indonesia is a very attractive market for investors due to its rising middle class and high consumption rate. However, investors will certainly be more selective in choosing startups. Many say that startups need to prioritize profits and avoid money-burning strategies now. But I think this [money-burning] strategy is a necessary investment to quickly boost a company’s growth,” he said.
“Growth should be boosted until a company generates profit and eventually becomes sustainable,” Firmanto added.