Indonesian venture capital firm Convergence Ventures has merged with fellow local VC Agaeti Venture Capital, according to six sources aware of the development.
According to one of the sources, the merger has led to the general partners and teams of both firms working together, bringing their respective networks to a single new entity.
Neither of the said VC firms replied to DealStreetAsia’s query on the matter.
It is understood that the merger was driven by Pandu Sjahrir and Adrian Li, partners at Agaeti and Convergence, respectively, who are well acquainted with each other since their time studying at Stanford University in the US.
In fact, Sjahrir has been an advisor to Convergence, and Agaeti has also been engaged in some level of collaboration with Convergence, with respect to deal flows and expertise sharing.
The merger, a source said, took shape in the third quarter of last year, and sees the partners and teams of the two firms working jointly as a fresh entity to raise a new fund. The VC firms’ first funds, however, will remain separate and will continue to be managed by their respective teams.
The new fund being raised by the combined entity, according to another source, goes by the name of ACV Capital. While the target of ACV Capital is not known, industry sources said the new vehicle would be ‘much bigger’ than the first funds of both Convergence and Agaeti combined. In addition, several industry sources also confirmed that ACV Capital has already raised a significant amount, and has quietly been making investments from this vehicle.
The development comes as Convergence Ventures, led by partners Li and Donald Wihardja, is understood to be raising a second fund of around $50 million, as reported by DealStreetAsia. But another industry source had said that Convergence was targetting to raise a much higher amount for its second vehicle. The figure, however, has not been confirmed by the firm.
Convergence, which focuses on early-stage deals, closed its first fund at $30 million in 2016 when it burst on to the scene and quickly built a reputation of being one of Indonesia’s most active VC firms. Since then, it has backed 29 companies, according to its website. Among its more prominent investee companies are Sorabel, PayFazz and Docquity.
It has also scored exits through some of its earlier bets, such as Moka and Female Daily.
Agaeti, meanwhile, is led by Sjahrir, also the managing director of asset manager Indies Capital Partners, and businessman Michael Soerijadji. Agaeti closed its debut fund at $10 million in 2018 and has since invested in over 19 companies including Bobobox, Kargo Technologies and Fore Coffee.
A merger of the two firms will mark one of the first major consolidations in the VC space in Indonesia. It would also mean one less player in an increasingly crowded industry.
Over the past couple of years, Indonesia has seen the emergence of a host of new homegrown firms like BRI Ventures, OCBC NISP Ventura and Kinesys Group, while it continues to be a hot target for regional and global investors.
According to DealStreetAsia data, Indonesia has seen the closing of as many as 12 VC funds by local VC firms over the last couple of years. That is the second-highest number of funds in the region after Singapore, which is known as an international business hub.