Intudo Ventures – a new venture capital firm run by global investors Eddy Chan, Patrick Yip, and Timothy Chen – today announced that it has closed a $10 million Indonesia-focussed fund, its first vehicle in the region.
The firm will be leading seed and series A rounds with a target ownership of 15 to 25 per cent on a fully-diluted basis.
The initial ticket size of an investment into a portfolio company is between $200,000 and $1.25 million, with additional capital to participate in follow-on financings.
LPs committed to the fund include corporate investors, family offices, and founders from the US, Indonesia, Hong Kong, Taiwan, and Singapore.
“We are excited to be part of the promising Indonesian venture capital ecosystem. We see strikingly similar trends in Indonesia to what we observed in China over the past two decades, in particular an increasing number of talented ‘S.E.A. Turtle’ returnee founders, reminiscent to China’s ‘Sea Turtle’ returnee founder phenomenon,” said Timothy Chen, Founding Advisor of Intudo Ventures.
Focusing on early-stage companies, Intudo Ventures I will take what it calls a ‘hybrid approach’, where it will co-found and invest in pure-play homegrown startups as well as in joint-ventures with companies from Sillicon Valley, China, and other markets entering Indonesia.
Portfolio is intended to be concentrated, with only about 12-16 companies operating in the consumer, finance, healthcare, education, and media sectors.
Founding partner Eddy Chan elaborated: “In the case of joint ventures, we are always a co-founder and investor, as we stitch such deals together from scratch and only form and invest in such joint ventures once all the parties noted above have committed their resources to launching such joint ventures.”
“We feel this allows us to solve for many of the challenges startups face, as the breakout company from overseas provides brand, technology, know-how, the Indonesian conglomerates/distribution partner and our fund provide localization, distribution, and government relations…”
In the case of pure-play homegrown companies, he continued, Intudo partners may be co-founders to the extent that they get involved in the business at an early enough stage. In other cases, they may still apply the same hands-on approach but at a little later in the life of the business. Their involvement is aimed to help startups scale and eliminate challenges they often face.
Chan declined to reveal the number of deals in the pipeline, but said that they are currently working with a number of Indonesia-focussed companies, led by “best-in-class SEA turtles and local founders”.
Indonesia’s venture capital and startup ecosystems are still very nascent, even when compared to its nearest neighbors, Singapore and Malaysia. To date, there have been very few exits, with the largest being Kudo’s $100 million buyout by Grab some months earlier.
But Chan and his partners remained optimistic. He believed that the fund will be able to generate returns in a shorter timeline than what has historically been seen in such ecosystem. His company’s exit strategy comprises of three types – structured exit rights, secondary market, and IPOs.
A key strategy of the fund is to co-found and invest in joint ventures focused on the Indonesia market. In connection with each of these joint ventures, the partners would structure rights to allow for the fund to exit its holdings in the joint-ventures via a share swap to the parent company upon the IPO or M&A of such breakout company.
“We believe that this should substantially shorten the hold period from investment to exit, as such breakout companies we bring into Indonesia generally are in later stage (have already raised their Series B/C or later stage financing round), and have a clearer path to exit via IPO or M&A,” Chan stated.
Southeast Asian unicorns have started preparing for listings in the US or other major overseas markets. Garena Interactive, a Singapore-based gaming startup is currently gearing up for an IPO that is estimated to raise $1 billion on a US bourse.
“Such IPOs will set precedent to help pave the way for additional IPO exits from Southeast Asia and will also create publicly traded companies that can then in turn have the size and scale to drive M&A activity in the region,” Chan said.
On secondary market exits, Chan believed that conglomerates have developed an increased appetite for such transactions in the region. Opportunities for seed and series A investors to cash out via later rounds have now increased.
“As our fund focuses on developing a concentrated position as a co-founder and early-stage investor in each of our portfolio companies, we envision substantial opportunities to create liquidity for our fund via secondary sales of our positions in such portfolio companies as they scale,” he concluded.
Chan, along with his founding partners, had backed notable tech companies such as PayPal, SpaceX, Palantir Technologies, Netscreen Technologies and Fortinet in the past. The name Intudo is the stitched combination of the Indonesian words integritas (integrity), tulus (sincerity), and jodoh (serendipity).