An Inside Look at CyberAgent Ventures’ Hunt for Indonesian Startups

Credits: Chip.co.id

As one of the most well known venture capitalists in Asia, CyberAgent Ventures (CAV) has put its money into quite a few companies around Asia, and some of them have achieved successful exits. Hailing from Japan, the venture capital firm first set foot in Indonesia about two years now, but so far there are only two Indonesian portfolio companies invested by CAV – the marketplace Tokopedia and babycare online shop Bilna.

So on average, CyberAgent Ventures invests in only one indonesian company every year, which is pretty low. We spoke with CAV’s Indonesian investment managers Steven Vanada and Liauw Oswin Liandow to find out more about the team’s progress in Indonesia.

Let me first bring you up to speed on the context. If you have gone to at least two startup events in Jakarta, then you would most likely have seen either Steven or Oswin as they participate in those a lot. They have been quite active in getting to know Indonesian startups and making themselves available for people to approach them. Yet they have only invested in two companies so far. Why is that?

3 things that CyberAgent Ventures looks for

Steven told me that they look at three things before making an investment decision. First is the potential market size, to gauge how huge the startup can grow, and whether that particular market is ready or not. Oswin personally believes – for example – that while the Indonesian market for medical startups has potential, it is not yet ready. So what kind of markets both have potential and are ready, in their mind? He says that vertical e-commerce, dating, mobile-related industry, and social networking services among others are now in primetime. Steven adds:

We prefer a business that has a vast user-base and may not necessarily need to monetize in the short term. The key is in the long-term user value. So even if the platform/service is not profitable for the short term, if it can retain user activities for longer term, it would prove to be much more valuable than the short-term monetization

Not all business models can monetize quickly, some need more time than others. If your business model is one that needs long-term monetization, and might need to burn a lot of money first, this is where external funding like CAV comes in. “We are here to help you with the funding, so you can do what a bootstrap startup can’t usually achieve by themselves,” says Steven.

Second thing they look at in a startup is the team. Steven likes to say that their ideal team would be one who can commit for the long term and has passion in what they do, or at least believes in what they are doing. Tokopedia’s William Tanuwijaya and Bilna’s Ferry Tenka are among those who fit the profile.

The third thing is strategy. It is about how the company plans to be the market leader. What makes the company unique or different from the rest of of the pack. And whether they have a sustainable competitive advantage.

Helping the industry grow

What makes CAV stand out compared to the other VC firms in the region? Steven says that the company’s extended network – helped by parent company CyberAgent (TYO:4751)
– across the region is one to look out for. That network reach is beneficial for startups wanting to expand or when looking for the next funding round. Furthermore, besides coming from an internet business background, CAV has experience and exposure in many internet business models from various countries, which can lead the VC to offer different perspectives to founders and advise accordingly. The team likes to think that they are quite hands-on when it comes to helping their companies through weekly meetings to discuss strategies and progress.

Both Steven and Oswin are Indonesians, and it is nice that they wish to help grow the local tech industry here. The team will soon hold monthly events where they can share case studies with aspiring tech entrepreneurs, as well as help advise current startups about their business strategies. Having friends to discuss business strategies is always a good thing.