The Indonesian Venture Capital landscape has evolved dramatically in the past ten years, creating enormous opportunities. In a podcast with IndoTekno’s Alan Hellawell  I shared 15 years of my experience in technology entrepreneurship and venture investment from China and Indonesia’s markets.

So much has changed in the Indonesian VC ecosystem since I first started working on a fund in 2014. From an investor’s perspective, among the most apparent challenges previously was finding entrepreneurial talent and significant downstream funding risk.

But back then we were pioneering and starting venture capital as an asset class in Indonesia along with several other players in the market.

However, entrepreneurs faced bigger challenges than just securing funding. The entire market for the online space, payment and logistics infrastructure was still very nascent. Smartphone capabilities were also far from where they are now, and of course, without the penetration of Gojek, Grab, and Shopee, consumer confidence was much lower.

Just seven years on, things have entirely changed. The majority of consumers do not think twice about buying online given the prevalence of online shopping apps.

In addition, the hardware used in smartphones is far better, including all the supporting infrastructure for e-commerce, payments, and logistics.

When it comes to the talent ecosystem, we’ve also seen extensive recycling of talent, not just promising returnees; but also early team members who have graduated from Tokopedia, Gojek, Grab, Shopee and decided to start their own businesses. And this has fuelled the growth of new companies in the ecosystem.

Also Read: India’s first accelerator and VC fund gears up for its maiden demo day series

Now, while Indonesia still is some ways away from receiving the capital attention that a market like India has received; nonetheless, we’ve seen multiple funds raised, successive funds, as well as top-tier global investors plugging this gap in both Series B and Series C and onwards.

So, the environment and ecosystem investing in venture businesses are far more mature than several years ago.

Focus on growth over monetisation

When looking at Indonesia, VC cites many superlatives about how significant Indonesia’s potential is as the fourth most populous country in the world.

However, the question that then arises is whether this large market can be monetised?

For me, it’s important to understand that while tech companies often take time to monetise, they are often disrupting traditional incumbents through their better and more efficient models. So, the potential revenue cake or monetisation potential can sometimes be seen in their conventional counterparts.

If you want to understand in the future how big that pie is and how big these technology companies can become, you can look at some of the traditional incumbents they are seeking to disrupt.

For example in the banking industry, BCA is one of the most valuable businesses in Indonesia and Southeast Asia. Meanwhile, if we look at the consumer category (FMCG), there are companies such as Indofood or Gudang Garam. These companies are among the largest publicly listed companies worth multibillion dollars.

And so we can see from the traditional counterparts, whether we’re tackling fintech or e-commerce, that it is possible to build companies of this size.

Also Read: BRI Agro CEO Kaspar Situmorang: Why tapping into the ecosystem is key to a digital bank’s success

However, like China, and many other markets, at the early stages of many technology-enabled businesses, their focus is on adoption and growth instead of monetisation.

Most companies, certainly prior to Series C businesses, are much more focused on their growth trajectory than monetisation.

The most promising investment opportunities

One sector that we have a vast amount of confidence in is MSMEs or micro, small and medium enterprises. However, it’s pretty hard to drive meaningful subscription revenue from these small-medium enterprises on a SaaS (software-as-a-service) basis from what we’ve seen so far.

And because of their small size, they also have a low willingness to pay for software or tools that they may be using. So this is one area that’s yet to see some solid monetisation.

If we talk about how big this market is based on reports, there are over 63M MSMEs in Indonesia that employ over 97 per cent of working adults.

Clearly, there is a massive market here as well as multiple ways of monetising in the future, in particular through the quality collection of data to provide financial services to the unbanked and underbanked.

Comparison between Indonesia and China

There are several similarities when talking about the Indonesian and Chinese markets. For example, China is a large, homogeneous market enabling massive scaling of technology-enabled businesses. This is the reason why we focus on Indonesia, not ASEAN or SEA.

We believe that founders in this region should start through building in the single largest market in SEA and not think regionally too early. Almost all of Indonesia’s billion dollar tech companies focus exclusively on the Indonesian market.

Also Read: Philippines, Malaysia, Indonesia, Vietnam have a huge potential in APAC for neobank growth

The second thing, as we’ve seen in China, there’s themassive importance of localisation. Even though we’re identifying disruptive; proven disruptive business models that we see in markets, such as India or China; it’s not a simple copy-paste.

On the other hand, there are some clear differences. For example, in China, certain industries are highly regulated such as search and social media. Hence in China can see the emergence of companies such as Baidu and Tencent.

But in Indonesia, this is not possible because of the open market. So you’ve seen the dominance of Facebook, TikTok, and global players take dominant market share in these areas.

The second thing is the role of government. The Indonesian government has worked in a very inclusive and proactive manner to support the growth of the digital economy.

We can see this very clearly in terms of how the Indonesian government has approached regulation in fintech compared to how it happened in China.

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Singapore-based Nium, which offers cross-border payment services in multiple countries around the world, has secured US$78 million in a new round of funding, says a DealStreetAsia report, citing a filing with the Accounting and Corporate and Regulatory Authority (ACRA) of Singapore.

Investors in the round include existing backer Vertex Growth Fund and several others.

e27 has reached out to Nium for a comment.

This funding round comes close on the heels of Nium’s announcement of acquiring Wirecard Forex India, a foreign currency exchange, pre-paid card, and remittance services provider, last week. Wirecard Forex India is a unit of German fintech giant Wirecard Sales International Holding, which hit the headlines last year when it filed for insolvency in June 2020 due to one of the biggest accounting scandals in modern European history.

Founded in 2014, Nium (earlier known as InstaReM) is a global payments platform to enable businesses to send, spend, and receive money from around the world, in addition to empowering them to develop their own products that simplify cross-border payments.

Also Read: Digital remittance startup InstaReM rebrands into Nium, offering global enterprise payments platform

The platform connects businesses to the world’s payment infrastructure through one API. Its modular platform for Pay In, Pay Out and Card-Issuance allows banks, payment providers, travel companies and other businesses to collect and disburse funds in local currencies to over 100 countries, plus issue physical and virtual cards globally.

The firm claims it issues approximately 30 million physical and virtual cards today and is licensed in 11 jurisdictions, including direct card issuing capabilities in 24 countries and in 40 currencies.

The company is regulated in the US, the European Union, Singapore, Canada, Hong Kong, India, Australia, and Malaysia.

To date, the company has raised over US$170 million across several rounds of financing. This includes US$41 million Series C funding led by Vertexg Growth in March 2019 and US$18 million in Series B led by GSR Ventures in July 2017.

Nium’s other investors are MDI Ventures (Indonesia), Beacon Venture Capital (Thailand), Rocket Internet, and SBI-FMO Fund.

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Image Credit: Nium

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Hero Electric Vehicles raises US$29M

Investors: Gulf Islamic Investments (lead), OAKS

What the funding will be used for: Expanding production capacity, consolidating market position to strengthen market leadership, and invest in technology to grow footprint across India-like markets.

The company will also direct this investment towards the objective of further supporting the EV industry and ecosystem.

More about the story: To achieve the vision of exponential growth and double sales every year, the company plans to make significant additions to its manufacturing capacity by setting up multiple plants over the next couple of years.

It will also focus on India-centric, flexible, and cost-effective innovations that will drive the growth of electric mobility which is in line with making India the EV hub of the world.

“The EV market has undergone tremendous change over the last few years since we raised our first round of funding. The policies are extremely conducive for the growth of the segment and despite the pandemic, the company is poised to grow at over 2X from the last fiscal. Hero aims to sell over 1 million units per year in the next couple of years,” said Naveen Munjal, Managing Director, Hero Electric.

theAsianparent appoints Fiza Hasan Malhotra as Chief Branding Officer

More about the story: Prior to her current role Hasan was the head of business development and corporate innovation at Impact Hub Singapore. She has also worked for global brands Credit Suisse, Space Matrix, and Citibank.

Also Read: Ecosystem Roundup: AirAsia is set to fly higher, Bukalapak looks for the largest IPO in IDX history

“My goal is to put theAsianparent Group and its core brands on the path of global market leadership, powered by authentic brand experiences delivered to our community of parents, employees, clients, and our current and future stakeholders,” she said.

About theAsianparent Group: An online magazine for parents that helps them in parenting their children.

Virtual Internships raises US$2.5M led by Sequoia India’s Surge.

Other investors: 500 Startups, iSeed, Arc Impact, and Hustle Fund.

About the company: Based in London, Virtual Internships provides global work experience programmes for young people to kick-start their careers in a borderless world.

The company aims to widen participation and provide access to jobs for students of all backgrounds and nationalities.

More about the startup: The platform claims to have seen a rise in the number of student sign-ups from 100 students in 2019 to 1,700 in 2020, and over 6,000 are set to take part in 2021.

It also has the participation of 4,000 host companies across 70 countries, and over 100 universities and educational institutions worldwide.

“Digitalisation has completely accelerated the way we work with people across the globe and internships should mirror this pattern. With a focus on accessibility, diversity, and clear learning outcomes, we’ve redesigned the internship experience for a new, virtual and borderless world,” said Daniel Nivern, co-founder of Virtual Internships.

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Alternative Housing Group (AHG), a real-estate tech startup and proptech incubator in the Philippines, has secured P55 million (US$1.1 million) in seed funding.

The round was led by Foxmont Capital Partners, a local VC fund and investor in homegrown startups such as Kumu, Edukasyon.ph, and Booky.

Real estate mogul David Leechiu, entrepreneur Melissa Limcaoco, and Magsaysay family also joined.

The startup plans to fuel its upcoming projects that they have prepared and lined up in the coming years — ready to reach greater heights and build the future of the Philippine real estate industry.

Also Read: Can SEA’s proptech come back to its pre-COVID-19 glory? Experts speak

AHG was started by Revianne Sesante, Ryan Llamoso, and Patrick Llamoso. It focuses on rolling out asset-light accommodation brands, organising and structuring integrated services for renting and buying, and developing proptech applications. It also builds real estate vertical platforms and develops new applications for property auctions, fractional property ownership and other solutions for the real estate market.

The company’s specialised affordable rental and student housing platforms include rentalbee.ph, bedsandrooms.ph, and enta.ph. Already in beta, further platforms for staff housing, warehouses, billboard, land, agricultural properties, parking, holiday homes and many more will soon be launched.

Aside from the platforms, the company has also launched new accommodation brands such as Havitat, Cozy Folk, 825 Spaces, and Link Living, which have been launched in the Sinigang Valley: the up and coming silicon valley of the Philippines.

“The developments around the world, which have been accelerated by the pandemic, means that the definition of home, live, office and work has rapidly changed. The same applies to the way people search, view, own, rent, lease or transact real estate. Unfortunately, the Philippe property market has been stagnant for decades. However, it is now is ripe for disruption,” Llamoso said.

Also Read: zennya nets US$1.2M to scale its mobile healthcare, medical last-mile logistics services in Philippines

“Rather than being a challenge, the pandemic became an opportunity for more Filipinos, including Overseas Filipino Workers (OFWs) and entrepreneurs, to utilise and engage more with technology when it comes to searching, buying, leasing, and managing properties,” Sesante added.

In May, Foxmont Capital Partners co-led a US$1.2 million funding round of zennya, a mobile healthcare and medical last-mile logistics startup in the Philippines.

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Image Credit: Alternative Housing Group

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Bambu, a Singapore-based startup providing digital wealth technology for B2B businesses across the globe, has announced the acquisition of Tradesocio, a developer of wealth management software for advisors, based in the island nation.

The terms of the deal were not disclosed.

The company said that this acquisition strengthens Bambu’s team size and will give it access to TradeSocio’s stock trading technology. “Like many startups, we have a flat structure. We will merge the TradeSocio team with the Bambu team. Bambu HQ will remain in Singapore but we now have global reach both in terms of team tech and clients,” CEO Ned Phillips said.

Additionally, Tradesocio’s presence across EMEA (Europe, Middle East, and Africa) and India is set to grow Bambu’s reach in a rapidly expanding and evolving global digital wealth market.

“After five years of building solid foundations, Bambu is now entering a phase of rapid growth. This deal helps us in three key areas: it expands our product offering into stocks and crypto, it gives us a wider global footprint, and enables us to scale our team effectively to match exponential demand. We believe this positions us well for our Series C and ambitions of becoming the global leader in wealthtech,” he added.

Also Read: Bambu raises US$3M to provide automated, algorithm-driven financial planning services to investors

Separately, in an emailed response to e27, Phillips said that Bambu is in talks with investors to raise US$25 million in Series C round and aims to make US$100 million in annual revenue within five years.

Founded in 2016, Bambu provides digital wealth technology services for businesses of every size and industry, from finance to commercial. The firm uses Machine Learning tools to enable companies to make saving and investing simple for their clients.

With 70 employees, Bambu is present in London and Hong Kong, besides Singapore. It also has representatives in San Francisco and Johannesburg, with clients in the US, Europe, the UAE, and across Asia.

The company had previously raised US$3 million in Series A funding, led by Franklin Templeton Investments, with participation from Singapore’s family office Octava and Japanese fintech investor Mamoru Taniya.

Established in 2015, Tradesocio enables financial institutions worldwide to access, manage and offer investment management and brokerage solutions to their customers. It provides an end-to-end financial management solution, from development, hosting and maintenance, to security and post-sales technical support.

According to Tradesocio, it offers tailored digital investment management solutions to the wider investment management community that it claims reduces costs and increases revenue potential.

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Image Credit: Bambu

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