With plans to take its third tech company to IPO, Indonesian investment firm Kresna Graha Investama is clearly tapping the unchartered stock market route to raise funds.
In less than twelve months, Kresna took two of its subsidiaries M Cash Integrasi and NFC Indonesia to list at the IDX, respectively raising $22 million and $21 million in their oversubscribed IPO. These are feats that should not be overlooked, argues Kresna’s managing director Suryandy Jahja.
For over two years, the Indonesian Stock Exchange has been talking with some of the country’s biggest tech companies to discuss potential IPOs, which has so far been in vain. As of this moment, only three startups have listed on the Jakarta bourse – and none of them are VC-backed.
Among the many reasons for the reluctance among startups to make the IPO leap is said to be the perceived lack of understanding and appetite for tech companies in the market. This is a notion that Kresna has strongly dismissed.
“We already have proof. M Cash listed and raised Rp 300 billion, which is not small. How much do the startups that say that are planning to raise? DIVA (the next startup to IPO) is looking to raise Rp 800 billion ($53 million). Yes, it’s not as big as Tokopedia or Go-Jek, but when we tested the waters with M Cash, it was oversubscribed 10.96 times. How can we say that there is no appetite?,” Jahja said.
He added that, while almost all companies would want to eventually go public, not many startups are ready to take that step. This is a problem that the IDX itself has identified and has tried to address by launching a special acceleration board and an incubator program to support Indonesian tech startups to go public.
Jahja said that for startups looking to go public, the most essential thing to focus on is building a solid business model, that will enable the company to make money instead of just burning cash.
“They need to prepare a good business model. That’s most important at the end of the day. Investors want to see whether the business has good prospects or not, whether they have growth potential or not and whether they have a good business model or not. So, the first is the business model, and then, of course, growth. I always say that it is these two things. If you have these two, you can have a go at IPO,” he said.
In an exclusive interview with DEALSTREETASIA, Jahja shares his views on startup IPOs and also Kresna’s tech investment strategy.