Intudo Ventures Talks About Early Stage Startups, Gaps, and Anticipating Economic Slowdown

Intudo Ventures is a venture capitalist that focuses on funding startups in Indonesia. If you look at the funding portion, it is enough to reach all scales, starting from the initial stage (early stage) until the stage of development (later stage). We had the opportunity to talk with founding Partner Eddy Chan, discussing trends and issues around investing.

Starting the conversation, Eddy again emphasized Intudo position, "We focus on early-stage funding, especially for series A (50%), but still provide opportunities in pre-series A (25%) and series B (25%).

In pre-series A the goal was more experimental, supporting new business ideas and concepts to take off. While in series B, it is allocated to startups that have succeeded in making a big impact on Indonesian society through certain business verticals.

"For series A, this is 'bread and butter' we, where we fully implement the Intudo methodology, offer three main pillars covering in-market distribution, follow-on capital and talent sourcing."

Didn't see any funding gap

Quantity, funding seed until series A in Indonesia always dominates from year to year. But trust investors in new ideas often lead to business failure spurring them to the next stage – in part collapse, others close with pivot.

Then, is this due to the existence of funding gap or gaps that make it difficult for startups to find investors later stages?

"We don't see any gap in this market. While debatable, the reality is that there is more capital available to founders than ever before. In the early days, everyone always talked about A-gap series, B-gap series etc. When the market was as mature as it is today, these gaps filled themselves.”

Latest data DSResearch said that the trend of series A funding and above has continued to increase in the last three years. Taking a deeper look, the growth metrics and potential of the business verticals being worked on are key measures.

Apart from that, Eddy explained, currently more and more global funding is looking at ecosystems in the country. The offering made by this new fund covers the entire “venture cake”, from initial investment to pre-IPO rounds. Many of them even cut smaller, faster checks to simply test their effectiveness, or simply to provide new market exposure for support partners.

Finding early stage startups

Intudo Ventures' second fund was launched in February 2018, valued at US$50 million and will certainly focus on funding startups in Indonesia. Every year, they are optimistic that they can cover 4-6 investments every year.

"Almost all of our transactions are sourced through direct relationships (with founder) after knowing him for many years, or through warm acquaintance through our highly trusted contacts. This is why funds operating in Indonesia must have strong local roots. Initial funding is based on mutual trust, personal relationships and reputation," said Eddy.

There are no plans to raise new funds yet, while the funds mentioned above are still being absorbed by the right startups. Latest Intudo leads funding for Visinema film company to realize its vision of increasing business coverage and international expansion.

Apart from Visinema, several other portfolios include Populix, Ride Jakarta, TaniHub, Kargo, CoHive, and BeliMobilGue.

About the pillars of Intudo Ventures

First point in-market distribution, is a matter of connecting startups with local partners. It says it has good relations with conglomerates to executives unicorn in Indonesia, including in the fields of finance, health, consumer, education to technology. The focus is on helping the portfolio handle business development and strategies that focus on distribution, product localization and government relations.

Next follow-on capital, regarding efforts to help funded early-stage startups to get a follow-up round through their global network. There are approximately 25 venture capital/private equity/hedge funds who have partnered, one of which is the Founders Fund based in San Francisco. Then the third one about talent sourcing, seeks to help startups to connect with alumni from top universities in the United States in filling key positions in startups.

Investment climate slowdown

Many analysts point to a potential slowdown in the investment climate in Southeast Asia. The causes are varied, from global economic issues to specific ones such as some cases over-valuation. Eddy did not deny the existence of this potential.

"We have begun to anticipate and see that there are funds being withdrawn; and investors guiding portfolio companies for prioritize profitability – which approach is consistentlyn has we've advocated for our portfolio over the last few decades."

In the case of a slowdown, what we continue to do is focus on maintaining our discipline. Apart from that, there are actually good impacts that are indirectly felt due to the difficulty of disbursing investment funds. For example, instead of establishing a new startup, candidates founder choose to join an existing startup; meaning it can slightly fill the talent gap.

"Our founding team has invested in many Indonesian, Silicon Valley and North Asian startups since the 1990s. This has allowed us to accumulate invaluable experience through various investment cycles, including dot-com crash in 2000 and the global financial crisis in 2008. Through this process, we have found that investor sentiment is mostly driven by greed and fear, resulting in a constant pendulum that is overly focused on growth or profitability," explained Eddy.