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E-commerce tops venture capitalist wish list for 2015
AFP/Joel SagetThe gains made by local start-ups such as Berrybenka and Tokopedia have definitely caught peopleâs interest, from venture capitalists looking to sink their money into the next big thing to fellow startups needing funding to make it big
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AFP/Joel Saget
The gains made by local start-ups such as Berrybenka and Tokopedia have definitely caught people's interest, from venture capitalists looking to sink their money into the next big thing to fellow startups needing funding to make it big.
So if you're searching for funding, this wish list of the things most desired by people looking to invest in tech might help.
E-commerce tops everybody's wish list
Venture capitalists are saying that e-commerce start-ups top their lists of desired investments for this year.
Kuo-Yi Lim, a partner at Monk's Hill Ventures, said that e-commerce was one sector they were eager and ready to invest in. The firm focuses on investments in Asia, tapping into a US$100 million fund that they launched in May.
'Generally, the macroeconomic conditions and consumer behavior are what underpins a promising e-commerce sector,' Lim said, adding that the firm would announce one or two investments in Indonesia alone.
The Global Retail Development Index (GRDI) by AT Kearney shows that Indonesia is in the 15th spot as a retail destination amid other developing countries, while the Indonesian E-Commerce Association (idEA) expects the market to be worth Rp 295 trillion (US$24.6 billion) by 2016.
Although notable players have entrenched themselves in the Indonesian market, Lim said that there are still many apples to be picked. 'E-commerce has a lot of different verticals, and there still remain verticals like online travel and retail to venture into.'
Similarly, Andi S. Budieman, managing partner at Ideosouce, said that his firm was eyeing more e-commerce investments this year.
'We invested in ORORI.com and Female Daily toward the end of 2014, and we continue to have a big appetite for e-commerce for the year ahead,' he added.
The firm plans to raise $10 million this year, following a $7 million fundraising round in 2014, Andi said.
'We plan to begin our next fundraising round in March, and once we have completed the round by the end of the year, we will start injecting funds once again.'
Financial tech getting hotter
Interest in e-commerce has rubbed on its closest vertical, the financial tech sector ' including payment gateways for consumer transactions to websites that provide people access to credit cards and insurance ' is getting more attractive.
Andy Zain, managing director at Mountain SEA Ventures, said that the startup accelerator has already entered the financial tech space through Cekaja, a website that compares financial products from banks and insurance companies.
'We see that e-commerce is linked to online and insurance,' he said. 'We think that to have a strong e-commerce sector, the infrastructure, especially financial technology, must be present as support,' he said, talking about payment gateways.
Mountain SEA Ventures is working with cell phone operator Indosat to set up Ideabox, a seed and early stage investor that provides funds starting from $20,000 to support start-ups at the inception level.
Meanwhile, Mountain SEA Venture is injecting funds starting from $500,000 into startups at more advanced stages.
Takeshi Ebihara, a partner at Rebright Partners and Batavia Incubator, said that the presence of a large, unbanked population meant there was a rosier future for digital payments.
'Financial technology is always full of opportunities, even in developed markets,' Ebihara said. Of his roughly 15 start-ups, seven are Indonesian, with some dwelling in the e-commerce space.
Infrastructure, infrastructure, infrastructure
Besides financial technology, venture capitalists have started rummaging through start-ups whose businesses support the rising e-commerce industry.
Andi said that he 'was probably interested in advertising technology', given that it was closely connected to e-commerce. 'Advertising media and cloud services are some things I'm looking into.
Lim, on the same note, said that media was 'a possibility' along with logistics. 'Online health care can also be attractive because of the population size.'
He said that the interest of many stakeholders, including the government, in improving access to education was something to look out for as well.
President Joko 'Jokowi' Widodo has launched social programs to grant health access to those in need, in addition to introducing a universal health care program available for all Indonesians.
Pause those games
Amid the buzz around some industries, one has hit a pause.
Andi said that his venture has decided to hold off investments in gamemakers ' not because of a lack of talented startups, but due to the unavailability of a solid ecosystem.
Ideosource led an investment round of around $1 million for Touchten, a local startup that develops games for iOS.
'The ecosystem, including app distribution channels, remains as an issue,' he said.
If the firm invested in gaming, it would focus on startups that tried to solve the problems faced by the sector, Andi said.
'We'll probably invest in market places,' Andi said. 'Until we answer the problems, gaming cannot grow into a significant market.'
