1. Startups

Glancing at the Insignia Ventures Hypothesis on the Prospects of Indonesian Startups

Insignia Ventures seeks web3 platform developer startups, agriculture, health, and climate change solutions to invest in its third managed fund

The dynamics of startups that continue to develop also influence how investors hypothesize before investing their funds. Insignia Ventures sees that this year, thanks to the digitalization wave driven by the pandemic, new startups from various sectors have emerged that are even relatively leading in terms of innovation.

In a joint interview DailySocial.id, Founding Managing Partner Yinglan Tan explains, “Even they [startups] are in relatively leading-edge spaces such as web3, agriculture, healthcare, to climate. We want to play our part in supporting these ventures early and help push them further.”

It is these leading sectors that the company will support through its newly announced managed fund focused on early-stage funding. In this third run, Insignia Ventures managed to raise $516 million (more than 7,7 trillion Rupiah); claimed excess demand (oversubscribed).

The funds are divided into three types under management, namely $388 for fund main IVPF III, $28 million for fund Entrepreneurs who invest on the side fund main; and $100 million for Annex Fund I. Investors participating in this round came from key institutions, including sovereign wealth funds (sovereign wealth funds), foundations, university endowments, and offices of renowned families from Asia, Europe, and North America.

Tan did not specify what percentage of funds will be channeled to Indonesian startups. However, from the previous managed funds, the percentage of investment for local startups took a significant amount because this country became the core market for Insignia Ventures thanks to the market size and diverse business opportunities presented.

In fact, he continued, although there are several players who have dominated, Insignia's portfolio is claimed to still be able to take new space, especially in two areas. Namely, digitalization of traditional businesses and rival companies or startups that build their products on the basis of the gap from larger technology companies in terms of market segment or product depth.

“Therefore, we hope that our activities in Indonesia will continue to grow in this decade, but at the same time, we also want to open up more opportunities in markets such as Vietnam, the Philippines and Thailand.”

Separately in official statement, Tan shared the reasons why his company is interested in investing more aggressively in “next potential sectors” such as web3, climate technology, healthcare, and agriculture. He said the impact made by the biggest companies outside Southeast Asia in the last decade would be a fresh start compared to the impact that market makers would make in the next decade.

According to him, there is an unimportant, but critical alignment between solutions emerging from this area and longstanding problems in the region from end-to-end food sustainability to trust with institutions. The solution to this problem cannot be solved by tech startups alone and these sectors themselves may be in their infancy.

“But the right founder who fits the right problem can solve the problem, and that's precisely why we can't waste time in this “golden time” problem solving to support them.”

Since Insignia Ventures debuted in 2017, it will continue its initial mission to support startup founders in building great companies, seeing opportunities to build technology across a wide range of industries and activities as digital has now taken over more aspects of life and business.

“When we started in 2017, investors globally were still not familiar with the potential of Southeast Asia's digital economy. In 2019, when we raised our second fund, there was a lot more attention but still more attention directed to e-commerce, fintech, and giant companies in the region with massive growth loops.”

Pressure on the trend of tightening liquidity

Apart from global inflation which poses a serious challenge for the technology market as a whole, Insignia Ventures actually views this condition as a “golden time” for digital economy market leaders and makers to emerge.

Tan said that his party saw a once-in-a-decade opportunity to capture bigger profits because winning was exposed very clearly when conditions were ups and downs. At the same time, the winner cannot simply be determined by the valuation and scale of the business, because in the end, companies with sustainable economic units and concrete value creation are the most important factors.

“There is a fine balance between speed and endurance that dictates our search for the best returns. This is 'golden hour' when the Southeast Asian market leader in the decade will be printed. The funding landscape in this region is in the best position as investors are now more strategic with their allocations than ever before, say as in 2021 or 2019.”

In Indonesia, Insignia Ventures has a number of portfolios, including Southeast Asian car retail platform Carro, platform wealthtech Magic, company fintech Payfazz (now Fazz Financial), platform e-commerce enablersShipper, platforms open financesafe, and several others who already have businesses and teams in Indonesia.

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The company first debuted with fund $120 million, then raised a second $200 million in 2019. Over the past five years, Insignia Ventures' approach has successfully supported startup founders in building their businesses as market leaders in Southeast Asia, creating a greater impact for everyone.

To date, Insignia Ventures is valued at $46 billion with an invested capital of $304,9 million, with a loss ratio of less than 2%. Its portfolio companies also managed to attract a follow-up investment of $7,7 billion. With all this performance, Yinglan sees this as just the tip of the iceberg in terms of how much more technology market creation the region can bring.

“We are proud of the impact our portfolio companies have created and proud to have partnered with them from the start, through growing with them and witnessing firsthand how they have shaped Southeast Asia's digital economy. But it's still early days for us; these are still early days of digitization in the region. We believe there are more opportunities for such companies to emerge in Southeast Asia,” said Tan.

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