More investor money flows in Indonesia’s startup ecosystem. AC Ventures, which focuses on early-stage startups in the country, announced today that it has raised $ 205 million in committed capital for its oversubscribed Fund II, more than double its original target of $ 80 million. Investors include the World Bank’s International Finance Corporation (IFC) and Disrupt AD, the venture development platform of Abu Dhabi Developmental Holdings. This brings the company’s total assets under management to approximately $ 380 million.
AC Venture’s Fund III has been actively investing since it first closed in March 2020 and has now completed 30 of its 35 targeted investments and is well on its way to raising over $ 100 million in pre-series A startups by the end of 2021. Phase. The company says many portfolio companies gained traction during the COVID-19 pandemic, with some like Shipper, Stockbit, Ula, Aruna, Bukuwarung and Colearn reaching “Centaur” status or valuation of at least $ 100 million . AC Ventures also says Fund III is delivering strong early returns, with a multiple on invested capital (MOIC) of 1.94X less than two years after its initial close.
Back in October 2020 when TechCrunch covered the first close of Fund III, the target was $ 80 million. That number rose until it eventually hit more than $ 200 million. The typical Fund III check size varies widely. Founder and managing partner Adrian Li told TechCrunch that having a larger fund gives AC Ventures the flexibility to provide the right amount of capital based on the stage of a startup so there is no need to worry about finding co-investors or other sources of capital . This means that Fund III’s first checks could be anywhere from a few hundred thousand dollars to several million, depending on traction and sector.
“I think with the increased traction of the portfolio during COVID and an increase in global interest in Asian companies, startups have grown faster than,” said Li. “The larger fund allows us to ensure we keep our pro ratas and that Be able to hold ownership shares in the best companies. “
He adds that in early 2021, “it became clear that technology companies were reliant more than ever on helping people get on with their daily lives, whether it be shopping, paying, or even entertainment, and this was quickly reflected in the public markets ”. He added, “I think the turning point was probably in August or September last year. From then on, institutional investors and LPs began to realize that COVID was not going to go away in the short term. So they started looking for companies that “had great adoption moments, new users, and new user frequencies by existing users, and Indonesia stood out”.
AC Ventures’ two previous funds achieved 2.99 times and 2.41 times gross MOICs, including unicorns Xendit and Carsome. The company’s portfolio companies have also raised more than $ 500 million in follow-up funding from investors such as Sequoia, Tiger Global and Prosus.
The company began investing as Convergence Ventures in 2014 and became AC Ventures in 2019 through a merger with Agaeti Venture Capital. It now has more than 100 portfolio companies in total, making it one of Indonesia’s largest early-stage venture capital firms, according to AC Ventures.
Many of AC Ventures’ partners, including Li, are former entrepreneurs who have worked in markets such as the US, China, and Indonesia. Therefore, they are uniquely positioned to work closely with startups from the early phase through to exit. For example, AC Ventures assists its portfolio companies in hiring key talent, introducing them to the right business partnerships to scale them, and helping with downstream financing. A larger fund gives AC Ventures more options to invest in its value creation team or a group of experts in areas such as data operations and growth and scale.
“We are very excited about building a specific team whose sole aim is to increase the value of our portfolio companies through their advice and interaction. With a small fund, it’s difficult to build an operational team to help portfolio companies, but now with the bigger fund, we can invest in them, ”said Li.
As AC Ventures works with very early startups, AC Ventures has developed specific strategies for making investment decisions. For example, it makes decisions based on a comparable market and business model analysis in order to understand new industries.
Li says AC Ventures invests in companies with great teams and strong ideas, or in companies that have made their way to customers and sales. “There is no hard and fast rule, but we want to get involved as early as possible in companies that we have convinced ourselves of in the team and in the market, so that we can be a long-term partner for them when they grow. ”
In the early stages, “there isn’t a lot of data for insurance to go into,” he added. Fortunately, investing in Indonesia gives us the advantage of having retrospective models that have worked around the world and the ability to analyze where particular markets in Indonesia are relative to the country as a whole and economic development of the country. We can do a lot of market and business model research, etc., all in advance. We can see whether this model looks right, whether it has great potential, whether it is a business model that works well in markets like China or India. “
AC Ventures has also performed quantitative and qualitative analyzes of its most successful portfolio companies and analyzed a number of signals that identify the founding teams with the greatest potential. Li said this gives the company a more objective way to evaluate early-stage startups.
For example, it is important that at least one of the founders, usually the CEO, has a strong ability to convey his vision to relevant stakeholders, voters or first-time users and business partners. When AC Ventures asks founders about their business, they need to be able to go into great detail, including all the numbers of what works and what doesn’t. “When you run a business, all these devils are in the details that are very necessary for you to know what experiments to conduct and how to iterate your product. There is a lot to consider in the early stages of a company, but we think it is crucial that the founding team is really under control. “
In a statement on IFC’s investment in AC Ventures’ Fund III, Azam Khan, IFC Country Manager for Indonesia, Malaysia and Timor-Leste said: “IFC’s partnership with AC Ventures underscores our long-term commitment to Indonesia’s economic development and digital transformation. “