Big-ticket Series A deals, worth more than $15 million, are becoming more frequent in Indonesia as investors loosen their purse strings to meet the growing demand for capital from the country’s early-stage startups.
In January this year, four Indonesian startups — fintech firms Ajaib, Bibit, and Alami, and B2B e-commerce startup Ula — closed Series A rounds exceeding $15 million each in ticket size; the same number as in the entire 2020.
In contrast, just three startups in the country secured $15 million-plus Series A rounds in 2018-19, show data compiled by DealStreetAsia.
|Year||Company||Headquarters||Sector||Investors||Funding size ($ mln)|
|2021||Ajaib||Indonesia||Fintech||Horizon Ventures, Alpha JWC, Softbank Ventures Asia, |
Insignia Ventures, Y Combinator
|Ula||Indonesia||B2B ecommerce||Sequoia Capital India, Quona Capital, Lightspeed India Partners, |
B Capital Group
|Bibit||Indonesia||Fintech||Sequoia Capital India, East Ventures, EV Growth, AC Ventures, |
|Alami||Indonesia||Fintech||AC Ventures, Golden Gate Ventures, Quona Capital||20|
|iStox||Singapore||Fintech||JIC Venture Growth Investments, Development Bank of Japan, |
Juroku Bank, Mobile Internet Capital,
Tokai Tokyo Financial Holdings, Hanwha Asset Management
|Zenius Education||Indonesia||edtech||Northstar Group, Kinesys Group, Beenext||20|
|Socar Malaysia||Malaysia||transportation||KH Energy, Eugene Private Equity||18|
|Kargo Technologies||Indonesia||logistics||Tenaya Capital; Sequoia Capital; Intudo Ventures; |
Coca-Cola Amatil; Agaeti Convergence Ventures;
ATM Capital; Alter Global; Mirae Asset Venture Investment
|GudangAda||Indonesia||B2B marketplace||Sequoia India; Alpha JWC||25.4|
|Shipper||Indonesia||logistics||Prosus Ventures; Lightspeed; Floodgate; Y Combinator; |
Insignia Ventures; AC Ventures
|Holmusk||Singapore||healthtech||Health tech, data analytics, AI||21.5|
|Propzy||Vietnam||Proptech||Gaw Capital; Softbank Ventures Asia; Next Billion Ventures;|
RHL Ventures; Breeze; FEBE Ventures; Rsquare;
Insignia Ventures Partners
|TONIK||Singapore||Fintech||Sequoia Capital India, Point72 Ventures, |
Insignia Venture Partners, Credence Partners
|Incomlend||Singapore||Fintech||Sequoia Capital India, CMA CGM Group||20|
|2019||Kopi Kenangan||Indonesia||F&B||Sequoia Capital India (lead), |
Serena Ventures, Jonathan Neman, Arrive, Caris LeVert
|RWDC Industries||Singapore||Biotech||Vickers Venture Partners, WI Harper Group |
(Existing Investor) and Eversource Retirement Plan Master Trust
|Deskera||Singapore||Technology||Naver Corp. (South Korea)||40|
|Aspire||Singapore||Financial Services||Mass-Mutual Ventures Southeast Asia (Lead), Arc Labs, |
Y Combinator, Hummingbird, and Picus Capital
|Neuron Mobility||Singapore||Electric Vehicles, IoT||Square Peg Capital (lead), GSR Ventures, Seed Plus, Seeds Capital, Didi||18.5|
|Trusting Social||Vietnam||Financial Services||Sequoia Capital, 500 Startups, and BeeNext||25|
|2018||MediSix Therapeutics||Singapore||Healthcare||Lightstone Ventures (Lead), Temasek Holdings, |
Osage University Partners
|Lion TCR||Singapore||Healthcare||Yashang Capital, Westlake Ventures Capital||20|
|Ark||Singapore||Healthcare||Venturecraft (lead), Gaorong Capital||40|
|Deskera||Singapore||Technology||Jungle Ventures, Cisco Investments, Tembusu Partners, |
Susquehanna International Group, Innoven Capital
|Common Ground||Malaysia||Real Estate||-||20|
|EV Hive||Indonesia||consumer||SoftBank Ventures Korea (lead), H&CK Partners, |
Tigris Investment, Naver, LINE Ventures, STIC Investments,
East Ventures, SMDV, Sinar Mas Land, Insignia Venture Partners,
Intudo Ventures, Michael Widjaya, Chris Angkasa
|Koinworks||Indonesia||fintech||Mandiri Capital Indonesia (lead), Gunung Sewu, |
The investment sizes in 2020 and 2021 are much higher than the more common $5-15 million range seen in early-stage fundings in Indonesia.
So far, large Series A rounds were mostly centered around Singapore, which clocked four $15 million-plus Series A transactions every year from 2018-2020 as investors were drawn to early-stage startups in the country’s healthcare, biotech, cloud computing, and IoT sectors.
In 2021, so far, Singapore’s iStox is the only non-Indonesian startup to raise a big-ticket Series A round.
“I think it [larger early-stage funding in Indonesia] is a sign of the market maturing, as well as more capital being available in the hands of investors. Folks who move early and execute better could build the next Gojek. So VCs are okay funding bigger-ticket deals to make sure you win,” Krishnan Menon, CEO, and co-founder of the digital bookkeeping app BukuKas, told DealStreetAsia when asked about the trend.
BukuKas raised a $10-million Series A round in January this year and secured $9 million in its pre-Series A round.
Joshua Agusta, director at Mandiri Capital Indonesia, the investment arm of the state lender PT Bank Mandiri Tbk, says there are not enough quality startups to meet the current investor demand. “Not every startup has the same good quality. Therefore, the valuation of startups will get higher,” Agusta said.
Aldi Adrian Hartanto, vice-president, investment at the VC firm MDI Ventures echoed this opinion: “There are more investors in Series A, which means the probability of raising funds in that stage is higher. However, the number of startups, especially the high-quality ones, available is less.”
The higher ticket size in January shows the market is “starting to be hopeful about post-COVID trajectory,” he added.
Most Indonesian startups that raised massive money in their early stages are online businesses with an offline component such as logistics, offline distribution, or inventory management. Hence, their costs are enormous compared with online-only startups, said Agusta.
He is, however, sceptical about the future of fintech investments, as investors have been drawn to the sector lately by a surge in retail investors during the pandemic.
Preferred destination Indonesia
Some investors believe Southeast Asia, Indonesia in particular, will attract more startup funding this year, as the market has become more mature.
Chandra Firmanto, managing partner at Indogen Capital said: “Next year will be a boom year for investment. Big tech companies will go for IPOs, and some of the investors want to have a stake in that pie. Therefore, they are aggressively expanding to Southeast Asia, as the political condition is relatively stable here compared to other countries.”
Firmanto predicted that Indonesian startups’ fundraising amount will double this year compared to last year, given the positive start to the year.
A study by Google, Temasek, Bain & Company predicted that Southeast Asia’s digital economy will top $100 billion gross merchandise volume (GMV) in 2020 and reach $300 billion by 2025. The lure of growth has caught the attention of global investors.
“There is a better focus on Indonesia by foreign funds as the country is on the global map now. There are more and more founders doing interesting things across sectors,” Menon of BukuKas added.
Major global investors like Sequoia Capital India and SoftBank are participating in the big-ticket funding rounds, said Hartanto of MDI Ventures. “These investors have billions of dollars in dry powder that need to be deployed within three years after launching the fund. Moreover, they can only invest in India and Southeast Asia.”
Hartanto stressed Indonesia and Singapore will still be the investors’ preferred destination. Indonesia has a vast local target market with significant gap issues to be solved. Meanwhile, Singapore remains the regional market for growth.
Ardi Wirdana contributed to this story.