Tackling Limited Local Investors in Advanced Funding

Although more and more provide funding in the early stages (seed), the number of local investors participating in advanced funding is still quite limited.

In Indonesia, those involved in Series B funding and above are usually Corporate Venture Capital (CVC) or those supported by well-known conglomerate families.

Limitation issue "ticket size"

Of course, there are many reasons why not many local investors have played in the advanced stages. One of them is still not big ticket sizes or the amount of investment they can make for each startup. Usually local venture capital companies have a predetermined nominal.

"I see that doing large amounts of funding, for example $20 million and above, is a bit difficult to do" venture capital local. In the end, what can help is Corporate Venture Capital (CVC) or Private Equity," said PrivyID CEO Marshall Pribadi.

The CEO of Akseleran Ivan Tambunan said the same thing. According to him, for the Series B stage and above, there are not many venture capital which can provide a larger nominal.

For ticket sizes the average early-stage funding VC provides from $500k to $1 million. If the startup begins to enter the advanced stage, the amount can vary according to needs and agreements.

"To be honest, I always see values it's not just the amount of money. For example, if a foreign investor wants invest $10 million and then a local investor wants to invest $3 million plus access to government, access to the media, access to his group he's the potential clientsour business partners. Which one will we take?," said Telunjuk CEO Hanindia Narendrata (Drata).

The added value, including in the form of network and access, is an important factor beyond the nominal money offered.

"Capital Venture local and foreign investors can be considered as long as they are relevant to the company's strategy and vision and mission. Local companies will be able to provide valueadd strong in business development, organization buildingand business networks to dominate the national market. If target Go international or regional, foreign companies can certainly provide valueadd itself," said Principal Investment Alpha JWC Ventures Melina Subastian.

Making choices

In the end, when it comes to fundraising, it all comes back to the startup's vision and mission. Startup founders and management can make choices according to their The roadmap which will be applied later.

If the startup is more involved with local corporate networks and government, it is better to choose local investors and minimize the involvement of foreign investors. On the other hand, if you are trying to expand globally, start researching and networking with foreign investors.

"Perhaps what should be considered when a startup chooses foreign investors for funding is whether investors will ultimately place foreign talent, such as engineer and other positions, into the startup team. This is something that needs to be considered if a startup is to raise funds using foreign investors," said Nodeflux CEO Meidy Fitranto.

Meidy added that in the future, global competition will not only be related to market segmentation and business opportunities, but also how each country's innovation can be at the forefront. It would be ideal if local products were created by local talent as well.

According to Drata, in general not many local investors have experience in this digital world. On the other hand, investors in Japan, China, the United States, and European countries already have better experiences.

"I believe and the trend has proven, more and more local advanced stage investors are coming here. History proves that in the past, early stage local investors were rare, now they are mushrooming. So local investors also need success stories before deciding to 'dip' further."

Startups who are planning to raise funds in the advanced stages should identify the profile of the VC/CVC being targeted, in the form of theses, portfolios, teams, and value added that can be given.

Make sure they are the right partners and can work together in building a business going forward.

"Seeing this, we [Alpha JWC] are trying to be venture capital Indonesia-based companies that can provide advanced funding of up to $10 million, as well as to assist the development of startups in Indonesia that have reached an advanced stage," said Melina.