Indonesia’s early-stage venture capital firm Kinesys Group is looking to ramp up investments in lifestyle and entertainment sectors, buoyed by the growing middle-class population and maturing tech infrastructure in the country.
Speaking exclusively to DealStreetAsia, Yansen Kamto, founding partner at Kinesys, explained the key indicators that have not only given a facelift to tech infrastructure in the archipelago but have also caught the fancy of the investor fraternity.
Full-grown e-commerce platforms, higher customers’ trust and confidence in sectors like fintech, and the rising number of unicorn players in Indonesia signal how the country is set to witness increased investments in the new-age economy sectors.
According to a joint study conducted by Google, Temasek, and Bain & Co in 2020, as many as 40 million new users started using the internet in Southeast Asia in the midst of the COVID-19 crisis. That took the total number of internet users in the region to 400 million compared to 360 million in 2019. The total GMV last year was slated to touch $ 44 billion in 2020, growing at 11 per cent year-on-year. Going forward, the report pegged the digital economy’s GMV to touch $124 billion in 2025.
Apart from the maturity of infrastructure in the digital ecosystem, the rise of GDP per capita is also expected to bring in a change in consumer needs – particularly in areas of lifestyle and entertainment.
“Currently, Indonesia’s GDP per capita is around $4,000. When it reaches $5,000, we will see that consumers are willing to invest in self-indulgence, either in education, direct-to-consumers, lifestyle, and entertainment,” Kamto said, highlighting the reason behind the VC’s growing interest in the above-mentioned sectors.
Of the total of 13 portfolio companies, Kinesys currently has five investments in areas of lifestyle and entertainment. Its newest investments are in beauty e-commerce & skincare product BeautyHaul and SOMETHINC; and sports media platform Skor.id.
Its other portfolio companies in the segment are radio streaming platform Noice, food tech startup DailyBox, and eyewear brand Saturdays.
According to Steven Vanada, managing partner at Kinesys, the biggest hurdle for the sector is to get people to pay for products and services. This is even as consumers’ willingness to pay has grown from what it was five years ago, he pointed out. “It is still small, a tip of the iceberg. We believe that the needs of the entertainment and lifestyle will keep growing,” Vanada said.
Sample this. According to research platform Media Partners Asia (MPA), in January 2021, Disney+Hotstar secured the top spot in Indonesia, attracting 2.5 million subscribers in the country. It was followed by Viu with 1.5 million subscribers, Vidio with 1.1 million subscribers, and Netflix with 850,000 subscribers. The net addition of subscribers was about 3.6 million subscribers between September 2020 to January 2021.
“Once startups can find the monetization route, I believe they can scale up their businesses and attract many investors at a later stage,” added Vanada.
Kinesys was founded in the final quarter of 2019 by Vanada, a former executive director at Japanese VC CyberAgents Capital, and Kamto, a former chief executive at local startup ecosystem builder Kibar. The firm cuts cheques of up to $500,000 for early-stage startups in Indonesia in their seed to pre-Series A-stages.
According to Vanada, the firm has poured half of its debut fund to 13 companies and will continue to invest in this area. Kinesys also has hit the final close of its maiden fund at almost $15 million and is currently planning its next fund.