Nothing Ventured, Nothing Gained
Kejora Ventures co-founder on the rise of venture capital in Indonesia
By Tellisa Ramadhani and Karmila Bain
Thursday, June 15, 2017
In the era of startups, venture capital is vital for nurturing fresh ideas and new entrepreneurs around the world. But it is a more recent concept in Indonesia, with one of the major players here being Kejora Ventures.
Kejora Ventures, the brainchild of Andy Zain and Sebastian Togelang, is one of the leading venture capital companies in Indonesia. Its portfolio includes C88, etobee, Hipwee, Investree and many more in various sectors.
We talked to Andy, Kejora’s managing director, about venture capital and its impact on the investment landscape in Indonesia. He is no stranger to startups and was a leading force in creating the Founder Institute, a top accelerator and startup launch program; he is dedicated to not only invest in startups, but also to help nurture them from the earliest stage possible.
AmCham Indonesia: How was Kejora Ventures established?
Andy Zain: Kejora Ventures started three years ago as a venture builder. At that time, the Internet industry in Indonesia had just started to take off. The idea of being a venture builder is we do not want to just invest our money in the startups, but we want to help them nurture their ideas and build their startups. We seek these ideas that have been proven to work properly overseas and try to apply them in Indonesia by finding suitable founders or executors for the idea, and after all that we put our money in the idea. We also provide the startups a co-working space as a starting point.
We have a joint venture with Indosat, which is IDEABOX, and it focuses on startups whose main platform is in the telecommunications sector. For example, the startups that use mobile apps as their means of business.
So far, we have around 30 companies that grew up with us; half are under the Kejora umbrella and the other half are under IDEABOX. For those companies, we highly encourage them to set up their first office in Kejora’s headquarters, which has a space of 4,000 m2 and is reserved for our startups. In Kejora HQ, we have around 600 employees from various types of startups and 11 different nationalities. We embrace this co-working sense among our startups so you can get to know people coming from abroad who have the know-how and pair them up with the local talent along with the technology.
We are receiving US$80 million for our second round of funding, bigger than the first round. So we are hoping for a more assertive investment, ranging from US$2 to 5 million for each company. We hope to invest in between 8-10 companies annually.
Our target is also not only for Indonesian startups, but to help startups around the [Southeast Asia] region to grow strongly. We plan to expand throughout the region and recently opened a branch office in Thailand, and we already operate in the Philippines and Malaysia. We will soon announce our operations in five more Southeast Asian countries.
To help build a strong presence in the region, we have three managing partners who can build a great structure for Kejora. I focus more on building the teaching and mentoring ecosystem for the startups. My other two partners are Sebastian Togelang, who spent 20 years in Germany and is our consultant on which ideas the capital should go to, and Eri Reksoprodjo, who previously worked for Saratoga Capital and because of that experience he oversees if our work is well structured and compliant to the rules.
Does Kejora already have portfolios in other countries?
Most of Kejora’s portfolio companies are in Indonesia. But there are some companies that launched in Indonesia, but in expanded to other countries in the region. For example, CekAja, which is a portal for people who want to search and compare financial products such as credit cards and insurance, expanded to the Philippines under a different name that adapted to the language of the market – eCompareMo.com.
Starting this year, we have one company that will start in Thailand, a coincidence with our branch office opening there, and there are some companies that are in the process of expanding to Hong Kong.
We contribute to the startup world through other channels as well. Kejora supports events like the Founder Institute, Mobile Monday Indonesia and ARENA1 Demo Day.
Founder Institute is a training program for those who have ideas and want to build their own startups. So, before they decide to quit their job or sell their belongings to realize their dream, we invite them to learn from us what the startup world is like. The program is four months long and it involves almost 80 mentors.
The monthly Mobile Monday event is a meet up between players in the mobile industry. The theme varies every month because this is such a wide sector and Indonesia is among the most important players in the world when it comes to Internet penetration through mobile phones.
Also, our annual event is ARENA1 Demo Day, which is sort of like a face-off between existing startup companies and they pitch their ideas in front of more than 80 investors.
Kejora is very active in developing the startup industry. We can say that this office may be be the largest startup campus in Indonesia based on the size of startups and their employees that we accommodate. We are also committed to not merely putting the money in, but also providing a structure where companies can grow.
Compared to other countries in the region, how do you think Indonesia is performing?
Indonesia is lucky to have a big and interesting market, along with very productive consumers. All the numbers are pointing to how great Indonesia is as a market: there more people of productive age that dependents and the growth of the middle class is big. The number of Indonesians adopting the digital world is growing and they do not only use it for e-commerce.
The question is, do we want to just be consumers or do we want to be one of the producers?
The challenge here in Indonesia is to find a startup founder or entrepreneur who is aggressive. We need to nurture this. In our society, most people only learn to be followers. That is why we create a team for the startup that is a mix of foreigners and Indonesians, so we can learn from one another. Local wisdom and lessons from Indonesians, on the one hand, and the entrepreneurship mindset from the foreigners, on the other.
The second challenge is the financial environment. Venture capital is a rather new and strange thing to Indonesia and people see that there are many regulations that are not yet supportive. Hopefully the government can soon have a complete and proper set of regulations that will make it easy and efficient to establish VC in Indonesia. Also, hopefully, there is a plan to include the startup and venture capital industries in the stock exchange. We cannot deny that the online industry is growing very quickly.
When talking about the next unicorn in Indonesia, I am very sure there will be plenty. A unicorn is a company which passes US$1 billion in valuation, and by 2020 it is predicted that the e-commerce business in Indonesia will reach US$130 billion. I am sure these unicorns will be born out of many sectors in business, every sector has the potential.
Is venture capital is disruptive?
Venture Capital does nothing to disrupt the economy. What causes the disruption, in my opinion, is the Internet business. In the past there were people who were terrified of Internet businesses because the existence of Internet can basically cut the long and complicated distribution process.
This time there is a change of mindset. There are entrepreneurs who do not have much capital, but because of moving quickly and aggressively they can overtake existing business players. This is how the business world is being “disrupted.”
Venture capital is a new kind of concept because we can accept your concepts or ideas as a guarantee. In the past, establishing a business was very complicated and asking for loans from banks requires collateral and other things, but not with venture capital. We are just helping businesses to flourish, but the business itself is actually dominant and relies on the young generation.