Indonesia investment: Venture rising

It wasn't until a few years ago that venture capital became an important part of the Southeast Asian investment landscape. Sure, there were a few deals here and there in Singapore, and maybe Kuala Lumpur or Jakarta as well, but nothing more than a blip compared to the interest in buyouts and growth capital in the private equity space. It is a very different story today, with venture capital taking off in Southeast Asia in a big way. New VC firms and start-ups are proliferating.

For most readers, the emergence of VC comes as no surprise. Southeast Asia’s demographics – 600 million people, rising incomes, growth in mobile adaption – are attractive enough that even Chinese investors are now looking for deals. Importantly, Southeast Asia is now home to a handful of formidable technology companies, from Garena in gaming and e-commerce to Go-Jek in ride hailing and delivery. They have proved not only that ASEAN can be a hotbed for new technologies, but also that it is possible to nurture a generation of entrepreneurs with the creativity to adapt business models to local markets.

As the major metropolitan hub in Southeast Asia’s largest market, Jakarta is arguably the beating heart of this new ecosystem. Start-ups, particularly in e-commerce and online-to-offline services, require high frequency of use and ease of delivery as they scale up. Densely populated urban centers are logical target markets, and Jakarta can serve as a platform for addressing other Indonesian cities. The society is also entrepreneurial by nature and land and labor is relatively cheap, which can help slow burn rates.

This sea change in venture capital has been reflected in the evolution of the program for the AVCJ Indonesia Forum over the years. The 2017 event, which takes place in Jakarta on April 27, represents quite a departure from our first, in 2012. Back then, the only technology-relevant content was a panel on the country’s mobile consumer market (at the time, Indonesia was BlackBerry’s second largest market globally); actual VC investing was not listed in the program discussion points, although it may well have been raised during some sessions.

This year’s event not only features multiple technology-focused panel discussions and addresses, but it is also sponsored and supported by some of the leading venture capital investment firms in Southeast Asia. There are numerous reasons for this, but it is worth noting that – across Asia – larger private equity investors are becoming more important as a source of financing and exits for venture capital firms.

The AVCJ Indonesia Forum has grown with the market and brings together investors (LPs as well as GPs) from different disciplines and of different sizes to look at the key factors driving or holding back the country’s development as a market for private investments. While Indonesia has been always been, and will likely remain, a difficult place for the uninitiated to do deals, continued communication involving all stakeholders gives the market a better chance of fulfilling its potential – for venture capital and private equity.

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• Topics
• Southeast Asia
• Venture
• Early-stage
• Technology
• Indonesia
• TMT