AC Ventures Closes First Round of Funds Under Management of 5 Trillion Rupiah

AC Ventures (ACV) has reportedly closed the first round of its fifth managed fund (Fund V). Of the target of $250 million or equivalent to 3,7 trillion Rupiah, ACV has raised 65% or approximately $162,5 million or equivalent to 2,4 trillion Rupiah, most of which came from Limited Partners (LP) in previously managed funds.

"We are investing in digitalization in Indonesia and economic growth in Southeast Asia. Last year, the GDP of Indonesia's digital sector reached $70 billion and is projected to grow by more than $350 billion in the next five years. We have built expertise through our investment experience over the years, especially in commerce, fintech, and MSMEs," said Adrian Li, Co-founder and Managing Partner of AC Ventures Techcrunch.

Based on the data collected DailySocial.id, ACV has invested in 22 startups over the last nine months of 2022 through Fund V, including ScoreLife, KLAR, Esensi Solusi Buana (ESB), Atma, IDEAL, and BRIK.

According to Adrian, although ACV is somewhat agnostic, Fund V will focus on new sectors, including: climatetech. For early stage startups, ticket sizes disbursed is around $2 million, and most of the funds will be kept for further investment (follow-on investment).

For information, the last ACV closed third managed fund (Fund III) worth $205 million or Rp3 trillion. Part of Fund III has been invested since the first closing in March 2020. Meanwhile, the World Bank's International Finance Group (IFC) and Abu Dhabi Developmental Holdings' Disrupt AD have merged into the LP in this managed fund.

Meanwhile, the fourth managed fund (Fund IV) is run by a different team with a focus on Malaysia. Overall, ACV's total portfolio in Indonesia and Southeast Asia has reached 120, including Xendit, Shipper, Aruna, Carsome, and Stockbit.

Continuing the succession unicorn IPO

According to Adrian, global investors are attracted to Southeast Asia because it shows an increasingly market growth mature, marked by the floors of GoTo and Bukalapak on the stock exchange, as well as increased investment in the later stage and secondary exit. Meanwhile, the LPs in Fund V come from North Asia, the United States, Europe, and the Middle East.

He also said that his party played a successful strategy to stay focused on being an early stage investor. That is, ACV wants to support startups to the point where they become valuable in helping founder build a business.

ACV generally invests in 30-35 startups per fund and save some for continued investment at a ratio of 20:1 for startups that can create value. Annually, ACV invests in 10-12 startups through: fund his, and this trend will continue despite the slowing global investment climate.

Adrian said that ACV is more focused on investing in early-stage startups for a number of reasons. First, ACV can engage with para founder to recruit key talents and their various operational guidelines. As the team grows, ACV can help founder to shape the fundamentals of work culture, communication, and talent.

"In addition, we take the initiative to encourage partnerships with conglomerates and stakeholders in Indonesia to accelerate the growth of the startup business. For example, partnerships with fintech startups and banks to expand access to loans," he said.

Focus on business

Adrian also provided a number of important notes regarding the current economic situation and its impact on startups. It looks at how startup valuations at all stages (training) until it drops by 30%-40%. However, on the other hand he also saw that there was a quality development in the founder. 

This situation is precisely the right moment for founder to be more focused on the quality of the metrics and product-market fit before starting to scale their business. He stressed the importance of not rushing into a decision with the current market situation.

"I think when [getting] an investment was easy last year, a number of startups pursuing growth topline actually scale up the business too fast prematurely. It's not an efficient way of using capital, but trying to gain market share and get [investment] in the next round. So, times like this become a good moment for founder and investors." he concluded.