Question: What is the story behind Alpha JWC’s founding?

Answer: We started Alpha JWC in 2015. There were three founders and actually, JWC stands for our initials: Jefrey, Will and Chandra. The concept dawned on us in 2014, a time when Indonesia’s digital economy was in its earliest phase.

We had a unique position in the market back then, because we were one of the few Indonesians representing Indonesia in the digital ecosystem. There were very few venture capitalists [VCs] in Indonesia, and the number shrinks even more for Indonesian founders.

We started Alpha JWC because we are very passionate about technology; I am, to say the least. We got into this because we saw that tech would grow big as time passed.

When I was living in the United States, I saw that many of the biggest companies came from the tech sector, and many billionaires came from it as well. And it’s not only the money that we considered, but the impact on people’s daily lives would be vital. Tech can drive a country’s economy, and we realized that.

We are different from international VCs because we are an Indonesian-focused market and we wouldn’t get anywhere if Indonesia’s digital market is not good. Even if Indonesia did not turn out well, we would most likely stay and think about how we can help the ecosystem.

Of course, we can enter other markets, but Chandra and I are Indonesian, we live in Indonesia, and our focus is Indonesia.

Our dream is to be the kingpin that brings Indonesia to the global stage. We want to be at the forefront, leading the growth of Indonesia’s digital economy into the future.

 

How does venture capital actually work?

The most important thing in VC is to generate the best possible return for our investors. With that in mind, say if there is a really bad crisis, we are not mandated to invest because we have no such thing as a yearly volume or value target.

It’s better for us not to invest than knowing that we would lose if we did, and when the economy is good, we invest more.

So, how we do it is we [observe] the market condition. We have no quota, we have no target, but what I can say about this is, the long-term potential of Indonesia’s digital economy is really good.

We normally target internal rate of return of around 20 percent to 25 percent. Note that we invest in early stage start-ups from the seed round to Series B, with a ticket size ranging from $100,000 to $200,000 [and] up to $10 million to $15 million.

Start-ups are a very high-risk game, though. So, not all start-ups can get to the growth stage and yet, if they do manage to get there, we of course hand over more funding.

 

How big is Alpha JWC?

In a nutshell, we have US$650 million in assets under our management, meaning we are the largest tech VC in Indonesia.

To date, we have over 70 active portfolio companies and we have four unicorns on our shelves, namely Kredivo, Kopi Kenangan, Carro and Ajaib.

From our last closing in November 2021, we have a fund size of $450 million left. However, it is crucial to understand how money flows in VC.

We don’t have that $450 million in our pockets right now because the way it works is, we have a certain amount of money that our client has committed, which we can call gradually according to our needs. So if there’s no investment, we don’t call the capital.

However, the chance of us not investing is minuscule because we have a massive digital economy potential. Maybe in the next year we will do another fundraising, we have started preparations for that.

Our investors come from all corners of the world and a few of are institutions. Some that we can disclose are the World Bank, the International Finance Corporation and Morgan Stanley.

 

What did you do in 2022?

We invested in plenty of companies in 2022. Around 30, if I recall correctly, and we have deployed funding of more than $100 million. Not only did we invest in Indonesia, we were also involved in some start-ups in the Philippines.

Most of the start-ups we invested in belong to the consumer technology, agriculture technology and financial technology sectors, but we don’t exclusively invest [in these] because we have, for instance, climate technology as well.

 

How are you going into 2023?

Many have forecast that the economy will be challenging this year. We still have a lot of capital to deploy but now, many investors, including us, plan to observe the economic condition first before deciding anything.

Specifically, we pay attention to how the economy affects companies’ traction. We want to see if valuation needs to be adjusted.

So this year, the name of the game for Indonesia’s start-up market is valuation discovery. VCs need to [uncover] accurate valuation that we can use as reference in the next three to five years.

Prior to 2021, start-ups were ruled by a growth imperative, but the playbooks for 2022 and 2023 are different because interest rates spiked, capital costs increased, there’s also inflation, and all that would affect demand.

Many valuation corrections took place in 2022, and more will come in 2023 because many companies are going back to fundraising, and that’s when we will see the valuation.

We would still deploy because we still have more than 50 percent of the amount we raised. We are still very active, although what we are doing right now is observing how the economy will impact companies’ traction.

Bear in mind that even if the economy turns challenging, the digital economy [projection] is still very positive. Also, don’t forget that recession does not mean zero opportunity. Be it a bull run or bear market, opportunities will always be there.