Indonesian early-stage venture capital firm SALT Ventures has made an unspecified amount of seed investment into women’s footwear brand Amazara.
The investment for the Yogyakarta-based startup comes at a time when the fashion industry worldwide, including Indonesia, is reeling from the effects of the COVID-19 pandemic that has dampened consumer buying sentiment.
While it fully acknowledges the current state of the fashion industry, SALT says it sees long term potential in the industry.
“We predict that fashion will be the first industry that will see a revival. When people start getting spare money back in their pockets, the first thing they will spend it on will be fashion,” said SALT Ventures partner Danny Sutradewa, whose firm cuts cheques ranging between $100,000 and $1 million.
In fact, the firm is scouting for more fashion industry startups over the last few months.
Its decision to back Amazara, Sutradewa said, was partly due to the profile of its founder, Uma Hapsari, who had to shut down the company in 2019 but managed to rebuild it in February 2020.
Founded in 2015, Amazara makes and sells women’s casual shoes at affordable prices. Its products, which are particularly popular among students and young women, are predominantly sold on e-commerce platforms including Tokopedia and Shopee.
“In terms of capex, the capital will be used to drive our research and development,” said Hapsari. “This year, we want to get back on our feet again and next year we will be focusing on our long term vision, which is to empower MSMEs”.
SALT Ventures’ other portfolio company bet in the consumer space is SYCA that sells cosmetics and beauty products.
Led by partners Sutradewa, Andika Sutoro Putra, Bong Chandra and Vincentius Prasetyo, SALT focuses on companies in the ‘creative industry’, which it defines as asset-light, tech, or tech-enabled companies. It is sector-agnostic but is keen on the B2C segment.
Having backed 10 companies last year, Amazara marks SALT’s first investment in 2020. In Indonesia, as is the case around the world, the pandemic has brought out a number of challenges when it comes to investing.
Sutradewa said SALT has had to apply more “caution” when sourcing companies, particularly those that are already backed by other VCs. Such companies are usually reluctant to compromise their valuation, despite a significant decline in their financials due to the downturn, and would, therefore, find it hard to come to an agreement with new backers.
“So there’s a gap between the fundamental valuation of VCs and the expected valuation of the companies. This is the difficulty with funded startups,” he said.
SALT is currently in talks with potential LPs to raise its debut fund for which it has already secured around 60 per cent of its targeted corpus. While Sutradewa declined to disclose the size of the fund, he said that the company expects to hit the final close by the end of this year.