How to Get Funding From Venture Capitalists
Jakarta. A good startup is one that can solve problems in everyday life, equipped with a high-quality management team and having potential to become a multi-billion-dollar unicorn, venture capitalists said during a panel discussion in Jakarta on Thursday (22/02).
Erika Go, a principal at local venture capital firm Alpha JWC, said during the discussion titled "How to Get Investment From Investors" that besides a startup creating solutions to problems, venture capitalists also look at the overall solid management team of a startup and the quality of its founder.
"For example, like [ticket booking platform] Traveloka, they have great expertise with all local engineers," Erika said.
"Before they became a unicorn, local engineers wanted to be employed there because they wanted to work alongside its high-quality chief of technology. Great people will follow great people," she said.
Alpha JWC actively funded 15 startups in Southeast Asia, with most them, including Tokopedia and Traveloka, based in Indonesia.
Stephanie Yeo, a venture partner at Silicon Valley-based Fenox Venture Capital, said founders must also have integrity and perseverance at the beginning, as startups will most likely fail at first.
"[Being a] tech entrepreneur is going against the odds. You are either making progress, or failing. We look for someone who is flexible, yet still [can be shaped]," she said.
Stephanie said the most important thing for a startup to remember is that venture capital exists not to start businesses from scratch with the founder, but to help them expand and grow by offering them the funds and mentorship.
Fenox only finances early-stage Indonesian startups. The company currently manages and actively funds dozens of portfolios across the world and in a wide range of sectors, from payment services and blockchain to e-commerce.
Hot Sectors
Eddie Danusaputro, president director of Mandiri Capital, a venture capital subsidiary of state-controlled lender Bank Mandiri, said his company cannot invest in other startups aside from payment services, because they inject capital into selective startups to support the conventional banking business of its holding company.
"For us, a hot sector for startups is still the payment services sector, but we also see agricultural technology [agritech] as an interesting sector now," Eddie said.
Mandiri Capital manages eight portfolios focused on fintech payments, all of which currently support Bank Mandiri.
He said since most Indonesians are still unbanked and live in rural areas, there are plenty of opportunities to grab the market as it still needs to use a payment platform to serve the unbanked population, especially outside Java Island.
Indonesia's fintech industry is still very promising. According to data released by Bank Indonesia, an estimated $14.5 billion in fintech transactions were conducted in 2016, and this is expected to grow by up to 20 percent annually, to $28.8 billion by 2020.
Erika echoed this by saying that despite the payment services sector having a myriad subsectors and challenges, there is a mass market that traditional lenders still cannot capture.
"We see foreign fintech startups have difficulty to penetrate that specific market, but locals must be able to capture that because we understand the situation and know the environment better," Erika said.
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