AC Ventures (ACV) founding partner Pandu Sjahrir, who is also the vice president director of energy company TBS Energi Utama, spoke to The Jakarta Post’s Aditya Hadi about the venture capital (VC) firm’s history, its positioning and what start-up founders can do to increase their chances of succeeding in the current investment climate.

Question: What is the background of AC Ventures?

Answer: AC Ventures was formed in 2019 through the merger of two venture capital firms in Indonesia, Agaeti Venture Capital and Convergence Ventures.

Today, we are a top Southeast Asian venture capital firm investing in early-stage start-ups focused on Indonesia and the region, with over US$500 million in assets under management [AUM].

We have invested in more than 120 tech companies since 2012, prior to the merger. We have offices in Jakarta and Singapore with a team of more than 35 professionals led by Adrian Li, Michael Soerijadji, Helen Wong and myself.

What is the current investment focus of AC Ventures?

We focus on fintech, e-commerce, logistics, digital enablers that help traditional companies join the digital economy, as well as start-ups that help Indonesia’s 64 million micro, small and medium enterprises transition to the digital era.

What kind of start-up founder is AC Ventures looking for?

Venture capitalists seek out strong founders, but what constitutes “strength” is subjective and lacks a clear definition or standard criteria. However, certain attributes that we and other VC firms commonly consider include age, education, humility, drive, ambition, leadership potential and domain expertise.

Yet, there is still debate over which combination of personality traits leads to success. At ACV, we like to see founders that have proven they can execute well and are results-driven.

This means they must come to the table with a track record to back up what they’re pitching. We’re always looking for founders that come to the table with inherent, unfair advantages.

What is the “rising star” sector in 2023?

At this moment, we are looking quite closely at electric vehicles, renewable energy solutions and unique ventures addressing the future of carbon management and mitigation.

What suggestions would you give to founders during this so-called tech winter?

During a funding winter in the tech industry, it can be challenging for founders to secure investment for their start-up. However, there are steps that tech founders can take to increase their chance of success.

First, they need to focus on building a sustainable business model that generates revenue. Investors are more likely to fund start-ups that are already profitable or have a clear path to profitability.

Then, they should set realistic expectations when it comes to fundraising. They should be prepared for a longer fundraising process and consider alternative sources of funding, such as grants, loans or crowdfunding.

Founders also need to build strong relationships with investors, even if those investors are not ready to fund a start-up immediately. This can involve regular updates on the start-up’s progress and demonstrating a deep understanding of the market and industry trends.

Furthermore, founders should prioritize delivering value to customers and building a strong product or service. This can help generate positive word-of-mouth and attract investors who are looking for start-ups with a strong user base and loyal customer following.

Lastly, they need to keep innovating. Even during a funding winter, innovation remains critical. Founders should continue to develop new products or services and stay up-to-date on emerging trends and technologies.

What should Indonesian founders and investors learn from the Silicon Valley Bank (SVB) case?

To be honest, this is sound advice regardless of the SVB incident, but it just further highlights the importance of due diligence and risk management for both founders and investors.

For Indonesian founders, my advice is the same as it always has been. It is crucial to thoroughly research and understand the investors they are thinking of partnering with. Indonesian founders should take the time to research the track record and reputation of potential investors to ensure that they are a good fit for their company.

For investors, the SVB case highlights the importance of diversifying their portfolios and conducting thorough due diligence before making investment decisions. Investing in a single industry or sector can be risky, especially if the investor is not fully aware of the potential risks associated with that industry. Investors should also conduct a thorough assessment of the company’s financial health, business model and leadership team before making an investment.

Overall, the SVB case serves as a reminder that both founders and investors should prioritize due diligence and risk management to minimize the potential for financial losses.

What is your biggest challenge right now?

I think it is the same for most other investors, and that is predicting the future to the best of our abilities, given the rapidly evolving and less predictable macro environment now. But as a firm that deals explicitly in risk capital, we are up to the challenge.

What are your plans for this year?

In 2023, we plan to support our existing portfolio companies by providing them with the resources and expertise needed to achieve their growth and impact goals. We work closely with founders to help them overcome any challenges they may be facing, and to help them identify new opportunities for growth and expansion.

At the same time, we will continue to scout for innovative start-ups that align with our values and mission, and that have the potential to drive positive impact in Indonesia.