In the summer of 2004, venture capitalist Peter Thiel made a $500,000 angel investment in the social network Facebook for 10.2 per cent of the company. In 2011, the winner of that year’s Global Entrepreneurship Program Indonesia, Go-Jek, received an undisclosed amount of funding from American angel investor Arthur Benjamin. Both companies went on to be one of the largest tech startups, in the world and Indonesia, respectively.
However, the role of angel investing in the industry is often overlooked, even in ecosystems in the more developed countries, where venture capital firms get all the glory. In Indonesia, the very concept of angel investing was relatively unknown before 2015. Two years later, after the formation of two angel networks, ANGIN and Angel-eQ, local high-networth individuals are starting to learn all the ropes in this space, albeit rather slowly.
DEALSTREETASIA sat down with Indonesia’s digital pioneer and co-founder of Angel-eQ, Shinta Dhanuwardoyo, about her ventures, experiences, and concerns as an angel investor in a very nascent industry, yet operating in the largest market in Southeast Asia. As a digital visionary, Dhanuwardoyo has always been ahead of her peers. In 1996, she created Bubu.com, a web development platform that has now evolved into a digital advertising company. She then helped found marketplace platform Plasa.com (which later became Blanja.com) in 2008, when Indonesians were still learning to trust online news. Recently, she was named co-founder and CEO of “social networthing” platform, Sqeeqee.com.
You along with other prominent names in the business and entrepreneurial world founded Angel-eQ in late 2015. What role does this network have in the national dream of $130 billion digital economy, and how important is it?
Being an angel (investor) could mean two things: money and mentorship, but in most cases it would be more about mentorship than money. An angel is practically a go-to person for young entrepreneurs who want to learn how to run their business, and a bridge to wider networks. So at the end of the day, it’s all about guidance.
I formed this network with that intention, because it’s crucial for young entrepreneurs to have a sort of adviser early in their business. Right now we have about 15 angels, all high-networth individuals. Some have been investing very actively, some others have not. The idea is not only to help startup founders, but also to educate investors, to grow their confidence in this sector because we select potential investees very carefully.
How much funding are you committed to deploy through the network within the next two years?
We are very opportunistic when it comes to investing, so there’s no certain range of numbers that we have in mind. What we do at Angel-eQ is that we have a dinner every two months. In that dinner there will be startups pitching in front of the angels, which they can pick later the ones they want to invest in.
A staff of Angel-eQ would screen applications, and then I will interview the ones that get shortlisted. We also have an internal committee to filter the applications. Once we agree on the startups, we let them pitch. Our angels are also allowed to co-invest with other individuals or institutions outside of our network.
So it’s very different to how funds work.
If you were given a magic wand and you could solve one of these three most urgent problems in the Indonesia’s ecosystem: logistics, infrastructure, or lack of talents/human resources, which one would you pick?
For me it would be the human resources. Which means education. Before we could talk about being the largest economy in Southeast Asia, let’s get real first and assess: do we have the talents or not? It’s impossible to achieve without human resources.
Funding can come from anywhere, it’s not a problem. But human resources is very critical because like it or not, everyone is going to be tech-based. Traditional businesses will have to go tech sooner or later. So we need way more developers with more advanced skills than we have now, developers who can start their own companies and can tackle the modern obstacles, such as the ever increasing traffic and transactions. This is some high-trained developers that we need.
A fast way to do this is that we work with global tech giants that can transfer their knowledge to our talents. Create more schools for developers. Not only developers, we need business leaders: entrepreneurs who really know how to run tech-based businesses. So really, forget talking about $130 billion digital economy if we don’t have well-nurtured talents.
How much funding has Angel-eQ deployed since its formation? What is the typical ticket size?
Ticket size ranges from $100,000 to $750,000, depending on the need of the startups. Personally, I’ve been investing from between $50,000 to $100,000 since 2011. I can’t say that most of my investees are successful, quite the opposite, a lot of them have been shut down. But I have accepted that as the consequences of being an angel investor in Indonesia. The success ratio that I have now is 50:50.
What is the number one problem often faced by young entrepreneurs who are just starting?
Execution. It’s very easy to have ideas and plans, but executing is a different story. Entrepreneurs often have these perfect decks where they present their projections and road maps of “this is what we’re going to do next”, but I rarely see good executions. When you call yourself an entrepreneur you must also be able to execute your plans. We really need to dive in to be able to know if our plan is going to work or not.
I find this very common among Indonesian entrepreneurs. Most of the time they take a long time to pivot, sometimes they wait until the funding runs out. What I have always highlighted to them is that it’s okay if we make mistakes. In the 20 years that I’ve been in the business, I’ve failed so many times but I always think of it as something that you must do as an entrepreneur.
Which sectors that you and your network have been investing in?
Fintech, marketing, e-health and sports. We see a huge potential in fintech, but we are still waiting for the government to make up its mind about regulations.
For e-health, there are budding players out there who are still unknown, but are starting to make their footprints and are trying to integrate themselves with hospitals and clinics’ systems here.
What about media?
One of the reasons that I like media is because I’ve been in the advertising industry for 20 years. I know that it’s not an easy sector, but the industry is a necessity. I mean, you HAVE to do media, it’s a part of everything, it’s inescapable.
Most of the investors are not too keen with this sector because it’s tough to sell content, not to mention high competition. So you have to work extra hard to differentiate yourself among other news platforms. Nevertheless, I still have faith in the sector.
What are the exit schemes like for angel investing? Any planned exits soon?
In a lot of cases, angels exit by selling to a venture capital firm. There’s one investment from Angel-eQ who are seeing the possibility of an exit, but it’s going to be undisclosed so I can’t tell you.
We generally don’t announce investments or exits. Our most active investors, such as Erick Tohir and Sandiaga Uno, have been investing in a lot of startups but without announcements.
Angel investing is still a pretty new concept for high-networth individuals in Indonesia, who are mostly used to investing in exclusively larger funds. From your observation, what is their perception towards this sector? How would you convince them to become an angel investor?
I think they know what they’re getting into. They want to participate in this angel network more because they want to support the Indonesian tech startups (than expecting returns), to grow the ecosystem, and that it’s partly giving back.
Most of their concerns now only revolve around, for example, what type of startups they should invest in. But I notice that at the end of the day these investors will invest in something they’re interested in or passionate about.
For example, our of our investors, Erick Thohir, who is very passionate about sports, would tend to invest in sport tech-based companies. Initially they are most worried about what type of sectors they would enter, but in the end they would choose entrepreneurs who they think will most likely to succeed.
Has any of your investment given any return?
No, not yet. We’re seed funders and have just started investing a little bit over than a year ago. If we’re talking about returns I think it will still be at least another few years. Our main concern here is to mentor entrepreneurs and accelerate growth.
In your opinion, how could the government assist in further pushing the angel investing sector?
So this is the second thing (after human resources), that we need to have in order to support the ecosystem. We say want to be the player in Southeast Asia, well for me I want to put Indonesia in the digital map of the world. But fine, let us talk about SEA first. To be a recognized player in the region, we need to have the same policy infrastructure like our neighbors.
For example, tax breaks for angel investors, like in Singapore or Malaysia. We have been helping the country to invest and nurture this sector, but there’s not incentives for us. We need to be in the same playground as our neighbors, that’s the first thing.
Of course most of the time entrepreneurs will work with what they have anyway, but it would be nice if we could get support from the government from the beginning.
We have actually initiated dialogues with the government regarding this. And it’s definitely on my list to start an initiative to further pushes angel investing agenda into the government’s. Apart from one-on-one dialogues, I am preparing an event called IDByte where all stakeholders would come together on the issue.
The Indonesian Chamber of Trades (KADIN), an organization which I’m also a part of, is also doing its part in growing the industry.
You were also the founder of venture capital firm Nusantara Ventures. What’s the status of this company? Is it still operating?
It’s been shut down. I built Nusantara Ventures in 2010 when I saw the need for a tech-focused investment vehicle, but had to close it down in 2012. It was one of the earliest venture capital firms. One of our early investments was MalesBanget.com, which still exists until now.
Do you see yourself setting up another venture capital firm?
Of course! it’s always been on my wish-list. There are so many people that have approached me too. But taking care of a fund is a full-time job, and there is already so many other things in my bucket list that I want to pursue.
Tell us about your new role as co-founder and president of Sqeeqee.com?
So Sqeeqee is a platform that allows users to make money doing what they already do online; building a network of associates, post status updates, share pictures, host videos and browse pages in line with their interests. In this way, Sqeeqee is the first platform to integrate the numerous features of world-renowned websites and allow its users to monetize their daily social networking.
It was founded by my good friend Jenny Ta, who has actually trademarked the term “social networthing”. My role as a co-founder and CEO is mainly to bring my Southeast Asian network into the platform.
What is your view on impact investing and social entrepreneurship? Have you done it before, and do you see yourself making a move towards this?
I would actually classify angel investing as impact investing, though I’m aware that what you mean by impact investing is enterprises that have social mission in the grass-roots level. I’ve been browsing quite a number of these enterprises, and I’ve been advising some of them too, which operate in agriculture mostly.
About 90 percent of our economy relies on small and medium enterprises, so for me social entrepreneurship in Indonesia must touch on this sector, finding a way to empower this sector.
It takes up a lot of energy and hard work, but yes I would definitely appreciate it if more young founders would take up the challenge.