Change Business Focus, Ideosource Immediately Work on "Venture Debt" This Year

Local venture capital firm ideosource revealed that he is preparing his new business unit venture debt (venture debt), because they see that there is potential that has not been properly exploited here. This announcement also marks a shift in Ideosource's funding focus from equity-based to venture debt.

To DailySocial, Ideosource Managing Partner Edward Chamdani explains, venture debt quite well known as a startup funding option in the United States, Europe and even India, but still very new in Indonesia.

Before settling in this new realm, Edward admitted that he had conducted in-depth research since two years ago. According to him, Indonesia has a funding void in the industry brick and mortar and conventional, not only in technology startups.

According to him, the concept of startup investment in Indonesia is a little misguided because there are too many mirrors in Silicon Valley. There are many product developments with long processes and require qualified engineers.

Unlike in Indonesia, such an ecosystem does not yet exist. As a result, most startups here are born and grow up because they start from problems in the field that do not require a long development process and can be directly marketed.

In fact, outside of that there are many efforts that are in nature brick and mortar, is big and good, but no one can help because not yet bankable. Funding needs for business capital assistance are still needed.

The Indonesian Ministry has many startup development programs, the funds disbursed are huge. However, not many can be sure how they can continue to operate, from getting grants, receiving funds from VCs, to bankable, who can guarantee it?. This is what he thinks can be entered by venture debt and project financing.

It should be emphasized here, venture debt is debt financing that usually includes a warrant option to convert debt into stock. There are no deluded stocks in venture debt, unless there is a warrant agreement. Temporary, project financing it is purely credit.

"Form growthit's like a startup, have you ever got it? seed or angel investors from friends and family to make working capital. Sales have been going up slowly, but in the end piece. Need new innovations, this means that it requires even greater working capital. there so spot switches make venture debt come in," said Edward.

Ideosource takes advantage of the license pocketed by Dana Mandiri Sejahtera to play in this segment. Based on POJK No. 35 of 2015 concerning the Implementation of PMV Businesses, it is stated that: venture debt are different investment models and mechanisms from equity investments. To enter here, you can use a permit as a PMV or Venture Fund.

Ideosource itself does not have a PMV permit because the regulations are considered burdensome, including having to deposit a minimum capital of IDR 50 billion. This is not in accordance with the pattern of VC players who mostly play in technology startups, they raise a lot of funds from external investors.

"So PMV license very burdensome in terms of requirements, but the Venture Fund is in accordance with the VC pattern tech. Most VC tech the pattern is not to deposit capital, but to raise funds from external investors."

In addition to Dana Mandiri Sejahtera, two PMVs that have a Venture Fund permit are Mandiri Capital and Reliance Venture Capital.

Reduplication like Ideosource Entertainment

Ideosource will create a subsidiary that acts as operating holdings. The plan is to start operating by the end of this year. The name of the business entity is still being kept secret by Edward.

later holding This will have access to institutional investors from within and outside the country using various sources of financing and based on projects, not pool of funds like most VCs use.

The same way has also been done through Ideosource Entertainment (IDEO), Arm VC for the film industry. There is fund A special program formed to channel financing called the Ideosource Film Fund (IFF) targets film & media investment, film production, media analytics platform, digital marketing, etc.

"All value what we have will be entered and managed by holding by asset. The same concept has actually been applied to the financing of films, managed by Mr. Andi [Managing Partner Ideosource]," he said.

Of course there will be a difference value chain which Ideosource wants to strengthen through venture debt this. For example, to fund a business in manufacturing, if you want to innovate, you will need an IP license, and there are more and more derivative products. Gradually, more and more partners can be taken to raise it.

"Later we work like a conglomerate, from value chain have a lot businesses. So holding this is like ecosystem builder."

While waiting holding operational, Ideosource prepares a startup-specific incubation that is fostered before accepting venture debt. They do proof of concept of its business model and its business direction in the market after being given a certain amount of funding.

At least the startup has been operating for two years, including the time when it came to formulating the initial idea. Its segments are engaged in agriculture, FMCG, and fintech.

In its debut, Ideosource chose the segments engaged in fintech, infrastructure, logistics, marketplace, plantations. The first three segments are prioritized because they are considered substantial in supporting the initial ecosystem that Ideosource wants to build.

The targeted startups are not only engaged in technology, but also conventional with the potential to collaborate with technology. Edward emphasized that the startup has a target of b2b consumers and good cash flow. "If pure tech, but good still can. The point is that there is ."

Later, Ideosource assigns warrants that were locked from the start before venture debt injected. They still position themselves as VCs, but this has all been negotiated with the startup and entered through venture debt. However, the conversion of the shares is behind before the debt maturity ends.

The consideration he took, because Ideosource's goal is to build an ecosystem, will most likely take a majority stake in startups. "Depends value, the count varies. But it can be up to 50% [take shares] because of us operating holdings so want to be together with the startup. We're not leaving them behind."

According to him, the old concept that Ideosource used to use when investors came in, is now considered unattractive for the company. As a result, he chose to invest once and for all. The end is towards a joint IPO and building a shared ecosystem.

"We will stay so on, so it is more suitable to enter into venture debt," he concluded.

Ideosource's role as a VC can be said to be quite long, having been operating since 2011. A number of startups have been included in its portfolio, namely Touchten, Stockbit, Immobi, Jas Kapital, Orori, Female Daily, Bhinneka, Kapanlagi Network, eFishery, and many more.