Indonesian startups in the eyes of venture capital

Silicon Valley’s Fenox Venture Capital explains its involvement in Indonesia

Gilang Ardana
Sep 2, 2018 · 6 min read
Jeff and Aldy

When talking about startups, one of the most crucial elements is obviously capital from investors willing to take a risk. In Indonesia, Fenox Venture Capital, an established player in the field, has taken the bold move to put its regional office for Southeast Asia in Indonesia.

This Silicon Valley-based venture capital (VC) company already has 65 portfolios globally, around a dozen of them coming from Southeast Asia, where it operates in four countries: Indonesia, Singapore, Thailand and Malaysia. The increased presence in Indonesia is a testament to the country’s growing importance as a home for start-ups.

Fenox provides private equity to bridge the gap between startups and the large corporations that seek to work with them. It focuses on disruptive opportunities in IT — health, finance and next generation technologies — and tries to connect its portfolio companies to the right strategic partners for business development, product integration, distribution and global expansion.

It currently has several multi-million-dollar funds under its management. In Indonesia itself, Fenox’s portfolio includes the breakthrough Muslim fashion e-commerce site hijup.com; human resources startup Talenta and leading health portalAlodokter.

I recently spoke with Jeff Quigley, SEA Regional Manager and Aldi Adrian Hartanto, Associate for the SEA region, to learn more about the venture capital view on Indonesian startups.

Tell us about your company?

Jeff: We are a Silicon Valley headquartered VC firm, we invest across the globe, we do a lot of deals in Silicon Valley, but we are also quite active in Asia. Now we are trying to really increase our activities here in as a dozen of our 65 portfolio companies globally are here. I think we are on track to double that number at least by the end of this year.

Aldi: What differentiates us from other VCs is that we only take money from multinational corporations [MNCs], which makes us tend to give more value to the portfolio investment. We also bring value to our MNC partners as when they invest in startups, they can get access to the latest technology that we have in the region or have a partner [product development etc] or even other potential revenue opportunities.

Tell us about your existing portfolio in Indonesia?

Jeff: To name but a few that stand out, the first will be hijup.com, the largest Moslem e-commerce fashion site in existence. I think this is really special because it’s got a female founder and it has managed to get global recognition. Despite growing up in Jakarta, Diajeng, the CEO, was recently in Paris and London for fashion week and she brought the hijab to this European market and made a splash there as she was covered by all the media in fashion week. They are really making an impact on the global stage by shaping up the idea that Muslim fashion is also fashionable. It is empowering women to express themselves while still maintaining their religious beliefs.

Aside from our portfolio, we have also our own community-style accelerator here, and we are currently accelerating six early stage startups, all from Jakarta. Just to give one example, we have Klikdaily, which is something that is boggling my mind because I’ve been spoiled growing up in the States; I had no idea that there wasn’t a public gas line connection to homes here. I did not know that you couldn’t just pay the gas utility bill [when it’s due]. Instead, you have actual gas canisters. So Klikdaily created on-demand access to water tanks and gas canisters, so they connect local mom and pop shops that provide to those who need the products. They have an algorithm that matches the nearest mom and pop shop that provides these things to your home so you can get a delivery guarantee within two hours, even in rush hour.

These are essential things that Indonesian families need on a daily basis, and they are providing it on demand, and these kind of things are our work focus. Our strategy here is just to look at something that solves a problem. I think there are a lot of unique problems in SEA, especially here in Jakarta. Not necessarily consumer focused, but we are looking for something that helps people, helps their daily lives.

Indonesia has great potential in the digital economy and startup development. In your perspective, as venture capitalists, how do you view this potential?

Aldi: Indonesia definitely has huge potential and a huge market. It is the largest population in SEA and the largest economy in the region. The infrastructure is growing to support technology development. The Internet and smartphone penetration is also quite high. Smartphones now in Indonesia are becoming cheaper and cheaper, and support higher penetration. As a result, we see a lot of startups that are maximizing the use of mobile applications developing very fast here.

There are also still a lot of inefficiencies [traffic, trust in buying products etc] here, where it becomes the opportunity for startups to tap-in. The supply of entrepreneurs is also getting better, with some of them also foreign graduates who bring international knowledge and expertise to the country.

How do you compare this with other Southeast Asian countries, especially the countries you operate in?

Aldi: The opportunities are very dependent on the type of industry. Singapore is more favorable for the high-tech side, especially for financial technology. Malaysia is similar to Indonesia, but the way they solve the problem is more regionally instead of local, ie, Grab, coming from Malaysia, but they very aggressively go into the SEA market. It is similar with Thailand, they have a small market compared to Indonesia, and now they are also trying to expand into Southeast Asia. However, for the Philippines and Vietnam, we see the ecosystem [for startups] is not there yet, the funding or investment climate is not as favorable in other countries. So far we only focus on four countries, primarily Indonesia.

The reason why we put our SEA headquarters in Indonesia is because we see those guys from SEA countries definitely will be coming to Indonesia. It is more of an advantage for us — those that have extensive local knowledge in every particular market that we operate in, to help them come to Indonesia and speed up their development.

Jeff: In addition, while others focus on the SEA region, I think Indonesian entrepreneurs can still explore an untapped massive multi-million-dollar market by focusing even just in the greater Jakarta area. Here in Indonesia, also, there is an influx of foreign investment for startups, particularly from Japan. It makes the country’s startup development even more favorable.

As providers of funding to Indonesian startups, how does this funding help them develop? What is the difference between before and after they receive the funding?

Aldi:The first is their ability to increase coverage. Startups that have been invested in by VCs are commonly the ones which are already in the spotlight. The funding will help them to widen that. Second will be in terms of strategic connection. Once they have received the funding, we will also help them in market entry. We are backed by corporations so we are trying to connect corporations with startups to help them in various things, including product development. The startups also enjoy the benefits of our existing portfolio in other regions, so they can have cross-border relationships to share dos and don’ts. The connection itself can be possibly broader to acquisitions or partnerships in the future.


Transcript from my interview with the SEA Regional Manager of Fenox Venture Capital on June 26, 2016. First appeared in AmCham Indonesia Newsletter. Above version was edited from the original version.

Gilang Ardana

Written by

On a journey making resources accessible to every youth-led organization. Co-founder Youth Corps Indonesia. MA candidate at Sussex University.

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