Profile: Venturra’s John Riady

The origin story for the first generation of Indonesian GPs was Adaro Energy. Between 2001 and 2005, Saratoga Capital and Quvat Management both joined the cap table, while Patrick Walujo, now of Northstar Group but then an M&A advisor, brought in several investors. All did well when the coal producer went public in 2008, which gave impetus to future fundraising efforts.

At the time, the country’s commodities market was in full bloom. Adaro was the post-Asian financial crisis payoff they’d been waiting for – that they came home for. Saratoga’s Sandiaga Uno and Quvat’s Tom Lembong returned in 1997 at the height of the crisis, while Walujo relocated in 2002 as the restructuring opportunity began to materialise.

At least a decade younger than that cohort, John Riady’s opportunity set was shaped by different forces. A scion of the founding family of Lippo Group, a local conglomerate, his mid to late-2000s were bookended by undergraduate and postgraduate education in the US with a bit of Indonesia in between.

Returning in 2011, the landscape was already shifting. Within two years, the commodities boom had ended, exports had slumped, the current account deficit was soaring, and the rupiah was in freefall. Meanwhile, the start-ups that would become Indonesia’s first unicorns were getting early traction. Backing them seemed a sound bet.

“If I had returned for good in 2006 when everyone was trying to get a coal concession, maybe things would have turned out differently. Sometimes, what you do is a function of being at a certain place at a certain time – doors open and off you go,” said Riady, now a managing partner at Venturra Capital, a VC firm established in 2013 as a formalisation of Lippo Group’s early-stage investment activities.

“When I was at business school, a bunch of friends went to Silicon Valley, and I couldn’t understand why. I thought the real guys went to Wall Street and the weird guys went to the valley. We stayed in touch, but it wasn’t until 2011 that I connected the dots and realised – belatedly – what the opportunity was.”

Just within Indonesia’s private investment landscape, the change has been dramatic. That first generation of GPs no longer represents the industry’s vanguard. Quvat has been disbanded, while Saratoga no longer raises institutional capital. Northstar has evolved its strategy to prioritise consumer and financial services, with a strong technology overlay, and the firm is currently raising a VC fund.

Most of the capital – human and financial – entering the ecosystem in recent years has focused on tech. Indonesia sits at the heart of a vibrant Southeast Asian digital economy, targeted not only by a clutch of independent and captive local VC firms but also by a growing network of regional and global players.

Between 2014 and 2018, USD 13.8bn was committed to buyout and growth funds in Southeast Asia, twice the amount raised by VC managers. For 2019 to date, they are level-pegged at USD 11.4bn. Over the past 10 years, the region’s unicorns have swollen in number to more than a dozen and venture capital investment has risen from negligible to USD 2.3bn in 2022.

Confirmation of the transformation came in 2021 when e-commerce platform Bukalapak's IDR 21.9trn (USD 1.5bn) IPO supplanted Adaro as the largest-ever PE-backed offering in Indonesia.

Early movements

Riady’s first forays into early-stage investment were largely exploratory. “I was really dabbling, doing that and a bunch of other things, including teaching at a private university. I was trying to figure out what I wanted to do in Indonesia,” he recalled. “I never planned to become a venture capitalist.”

This initial activity was channelled through Lippo Digital Ventures (LDV). Technology application in the start-up community lacked depth; most companies were essentially consumer-oriented businesses that achieved greater efficiency through technology. Riady wryly observed that founders would do meetings in the hope of securing a USD 20,000 cheque; today, the legal fees for a deal might be USD 20,000.

One early bet that paid off was Tokopedia, an e-commerce marketplace founded as early as 2009. It went on to raise more than USD 2.5bn in private funding before merging with ride-hailing platform-turned-super app Gojek in 2021 and completing a IDR 15.8bn domestic IPO the following year.

Around the same time, plenty of start-ups were feted but ultimately failed to deliver on their potential – such as Kaskus, an online forum that was touted as an e-commerce and payments proposition.

“Today, Tokopedia is a household name, so in that sense William [Tanuwijaya, the company’s founder] is a legend,” said Riady. “Back then, the ecosystem was emerging, but venture wasn’t really an asset class. There was one deal here, one deal there, and many of them just withered away.”

LDV morphed into Venturra when Riady decided he wanted to invest full-time and persuaded Rudy Ramawy, a friend and then the country head of Google Indonesia, to join him. The third of Venturra’s three original managing partners was Stefan Jung, who was previously part of Berlin-based start-up incubator Rocket Internet’s push into Southeast Asia.

“People forget about Rocket Internet, but it deserves a lot of credit for stimulating the entire ecosystem [through Lazada and Zalora],” Riady adds. “Today, people leave corporates for start-ups all the time. Rocket was really the first to disrupt Indonesia’s corporates, inspiring a generation of Nadiems [Nadiem Makarim, founder of Gojek] to leave their jobs. Nadiem inspired another 200 founders, and so on.”

Investments and exits

Venturra Capital Fund I closed on USD 85m in 2015. The firm took on the existing LDV portfolio and Lippo Group was the largest investor in the fund. Most of the other LPs were family offices and high net worth individuals. The mandate was strictly early-stage, often investing as the first equity cheque.

According to Riady, more than 90% of the positions in Fund I have been exited and distributions to paid-in (DPI) are top decile for the vintage. Notable exits include e-wallet Ovo, super app Grab, cosmetics e-commerce platform Sociolla, online education start-up Ruangguru, retail rewards business Shopback, and fashion e-commerce platform Zilingo.

Most exits have been through growth-stage rounds – and Riady is thankful this business was largely completed prior to the slump in investor appetite last year. Growth-stage investment in Southeast Asia’s technology sector fell 60% year-on-year to USD 4.1bn in 2022. He is dubious about the prospects of a near-term rebound, while flagging concerns about the region’s paucity of exit options.

“One of the challenges of investing in Southeast Asia is liquidity. In the last cycle, a lot of our exits were to large technology companies that were flush with cash or to pools of private capital from China, including funds and family offices that looked to Southeast Asia and saw the next China,” he said.

“Going forward, that will change, and we must roll with the punches. I hope in 10 years the public markets in Southeast Asia will be more developed. Right now, we don’t know whether there is enough risk capital to be able to fully exit the market beyond what amounts to a technical listing.”

There is certainly demand for public equities. Indonesia has emerged as an IPO powerhouse in 2023, with USD 2.3bn raised through 44 offerings in the first six months of the year. Most of the big IPOs were commodities-related, including producers of nickel, cobalt, and copper, which are key components in electric vehicle (EV) batteries and the broader EV supply chain.

Other resources companies are lurking in the IPO pipeline, including two state-owned giants: palm oil producer PalmCo and the upstream unit of oil and gas giant Pertamina.

Meanwhile, Bukalapak and GoTo still trade at discounts to their IPO prices. Rather than suggest a lack of depth in the market, Riady believes this disconnect is a consequence of investor discomfort with elevated valuations for companies that have yet to deliver strong financial performance.

Venturra is preparing to launch its second fund. Given the first began investing in 2013, the vintages will be 10 years apart – unthinkable for a traditional VC firm with one eye on assets under management and team retention, but apparently workable for an organisation with ties to a family conglomerate. Venturra’s hesitancy to return to market was driven by rising valuations in recent years.

“We were tempted a couple of times, and for a year or two we thought we were wrong. Sometimes when it is easy to raise capital, it is the worst time to be investing. And then when it’s the best time to invest, it is hard to raise capital,” said Riady. “We want to be contrarian. And we don’t have to look at things on a fund-by-fund basis, although that is important.”

The next chapter

Nevertheless, Venturra is positioning itself to appeal to a different kind of LP. Since Fund I, Jung has moved on and Riady has assumed additional responsibilities within Lippo Group, now serving as CEO of Indonesia operations. Ramawy died last year, aged 50.

The next fund will be led by Riady and five other partners: Raditya Pramana, another managing partner at Venturra, Frank Botman and Charles Coker of Netherlands-based investment group Dasym, Todd Meister of US-based deep-tech investor First Spark Ventures, and Surya Tatang, an Indonesian corporate veteran who joins from locally listed Lippo Karawaci.

Dasym went through the transition from family office to independent manager more than a decade ago. Botman and Coker’s involvement in Fund II is part of a tie-up between the two firms that will see Dasym support the institutionalisation of the Venturra platform – across fundraising, evaluating investments and portfolio management, and exits. The European firm will also make introductions to its own LPs.

Nearly all Indonesian VC firms established pre-2015 relied on some kind of corporate or family sponsorship, in part because there were few other sources of capital. Those relationships have evolved over time, with most managers looking to assert their independence and diversify their LP bases.

Riady claims that emphasizing Ventura’s autonomy was always a priority, so much so that he deliberately chose a name that has nothing to do with Lippo Group. The Dasym partnership is intended to help Venturra “take it further in the same direction.”

There will be one strategic tweak in the new fund, with the firm having scope to selectively pursue opportunities outside of Indonesia. Beyond that, Venturra will continue to do what it has always done: seed, Series A, and Series B rounds for consumer technology start-ups.

This consistency implies that Indonesia’s fundamentals – attractive demographics, a rising middle class, increasing smart phone penetration – are largely unchanged in nature; they’ve just become larger in size and more addressable in terms of modes of monetisation. The shift in the country’s private investment landscape, towards technology and towards venture, is essentially a response to that phenomenon.

“Ten years ago, the world was going through a technology boom and Indonesia had an ecosystem that could benefit from it. It was a bit like what had happened in China over 20 years but compressed. Rudy was running Google Indonesia, he could see which companies were buying AdWords, so he knew how the market was growing. We discussed it, we wanted to do venture capital,” Riady said.

“When we started there was no word in Bahasa for venture capital, but over the last 10 years, the industry has exploded. The boom and subsequent bust have been healthy – an educational process for the industry.”

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• Topics
• Southeast Asia
• GPs
• Technology
• Indonesia
• Venturra Partners
• TMT