Discussion: Inside the Mind of Local Investors

Full disclosure: East Ventures is an investor in Tech in Asia.

Left to right: Willson Cuaca, Kevin Mintargaa, moderator Vanessa Tan, Antonny Liem, Andi S. Boediman

At a packed afternoon panel at Startup Asia Jakarta, Tech in Asia’s own Vanessa Tan took the stage to moderate a panel with a number of high-profile local investors:

• Antonny Liem, CEO of Merah Putih Incubator (MPI)
• Andi S. Boediman, director at Ideosource
• Kevin Mintaraga, co-founder of Project Eden
• Willson Cuaca, investor at East Ventures

After the introductions, Vanessa asked Mr. Boediman about the tech scene in Indonesia. He said there are only four business models here: selling content, media, products, or services. Content has potential but isn’t there yet, and media remains small in Indonesia, he said, and most of it isn’t digital (yet). Physical products of course get a lot of attention, and services is also growing. “Everything about Indonesia is potentially big, but [just] potentially,” he said. Mr. Mintaraga said he agreed with Boediman.

Vanessa asked Mr. Cuaca about what kind of startups East Ventures was interested in. We’re only interested in mobile internet and consumer market startups, Cuaca said. He said that what they really look for is people, though, and that they place more emphasis on that than some others in Indonesia. To invest in Indonesia requires “kind of a leap of faith,” he said, but he also said that looking forward, East Ventures is very satisfied with where the Indonesian market is headed. Mr. Liem agreed it was a leap of faith, but said “we’ve already jumped and are in the water, swimming.” So the question is more how to keep your breath — how to be sure you’re still in the right place in a few years as the market matures and develops.

Boediman pointed out that some bigger players have also put tons of money into Indonesian tech, too. “Is it a good investment or not? We are not there yet,” he said.

Cuaca added that while top-down is always an option, you can always estimate the market by “getting your hands dirty” with a more grassroots approach. “Anything can happen,” he said, and East Ventures doesn’t want to completely limit itself to any one kind of company because in the course of development, things could change. And the numbers may look small, but the growth is very good. The question is, can they keep growing? “When you’re going into an emerging market, you need to learn the market, and to learn, you need time,” Cuaca said. But East Ventures is excited about Indonesia.

He also talked about East Ventures’ angel network, saying that it had been partially put on hold because East Ventures doesn’t have the “bandwith” to educate lots of angels about the investment environment in Indonesia.

Mr. Mintaraga talked about Project Eden’s expectations for its startups and the importance of launching the product ASAP. He said that so far, their startups are doing well. Mr. Liem said that MPI’s startups are also doing well. All their numbers are growing; and MPI gives them space, time, capital, and help with networking. Then he talked about the company’s new casual game studio. “We’ve just started it,” he said, and after trying some iOS ports, they’re going back to the drawing board. But they will announce a new product in Q4 that is related to music in some way. “We’ve been building on this product for quite a while now and it’s going to be launched maybe sometime in September.” It will not be selling music, but rather more of a music/community platform.

Talking about teambuilding, Mintaraga talked about the importance of finding a balance between finding good revenue streams and “not eliminiating [the startups’] dream of creating their product.” He also talked about SpotDoctor, an app to help users find nearby doctors and health facilities. It has more than 20,000 downloads and Mintaraga says the company is planning an aggressive marketing strategy.

When startups come to us, it’s not about free money, Boediman said. Many startups have unrealistic expectations of overnight Angry Birds-level success, or building a new platform. “It’s totally bullshit,” he said. You cannot solve a problem by creating a platform, he said. A lot of the startup expectations they see don’t make sense, he said. The challenge for us isn’t investment, he said, it’s finding startups with realistic expectations and the right timeline to execute.

Mr. Liem added that once the product is launched, there’s also a talent war, and once companies get into the real business, it can be hard to keep talent. Another thing, he said, is that startups here need to create global products. People won’t use a product just because it’s Indonesian, even in Indonesia. They need startups that create products that can compete with outside companies.

Mintaraga agreed, saying that his company has to drill its startups on business plans and “bring them a little bit down to earth.” Cuaca agreed as well. “The biggest challenge for investors is to find a good founder,” he said. Even if the product or idea isn’t that good, “a good founder will find a way,” he said. On the flipside, Liem added, a great product isn’t going to go anywhere if there isn’t a good founder behind it.