Edward Tirtanata's New Role: An Angel Investor through Kenangan Kapital

The new retail startup Kopi Kenangan has received a lot of attention, thanks to the Indonesian coffee chain business which has received large funding from a number of well-known VCs, including Sequoia Capital and Facebook Co-Founder Eduardo Saverin.

The success of this business cannot be separated from the efforts of its founders, Edward Tirtanata and James Prananto. Kopi Kenangan has now transformed into one of the top-tier coffee brands, especially among young adults in Indonesia.

DailySocial had the opportunity to interview Edward Tirtanata, not as a business founder, but his new experience as an angel investor through Kenangan Kapital. How does Edward define his new role?

Passion for entrepreneurship

Edward's role as an angel investor has been going on since last year. Through his angel fund (called the Kenangan Investment Fund), he has invested in some of Indonesian startups, including BukuKas, GudangAda, OtoKlix, and Medigo (Smart Clinic).

From the beginning, he declared his big passion for entrepreneurship. This is visible from his efforts to build Kopi Kenangan. However, his success in building a business does not end there.

For him, entrepreneurship can be said as "good wealth management" which involves asset class in diverse. This means that if he wants to make a distinction, he doesn't want to invest in just blue chips or deposits.

"A good investor must be able to diversify. Angel investing class assets, to increase ten times in a year is normal. I find it interesting," Edward said.

Through Kenangan Kapital, he expects to contribute more to the Indonesian startup industry. This also encourages Edward to experience new role by being involved in startup funding.

Interest in the consumer tech

Consumer tech is one of the business verticals that attracts many investors. Consumer products combined with technology are the reasons why this business can be easily scalable.

The most obvious example is the mushrooming startups entering traditional businesses and utilizing technology with a direct-to-consumer (DTC) approach. Either eyewear or beauty products can now be marketed without having to build distribution channels.

Realizing this trend, Edward admits that he is interested to top up in the consumer tech sector through Kenangan Kapital. He said that there is still a missing gap in Indonesian consumer tech.

He said Indonesia needs more disruption, considering that products/services targeting the consumer segment are still underrated in terms of technology. On the other hand, Edward curious to what extent this vertical leads him to new experiences in entrepreneurship.

This is reflected in a number of his portfolios that mostly running in the B2C segment. A somewhat different hypothesis is taken when investing in Medigo.

Medigo's business model is considered to have an impact on the consumer segment. Clinics are the main pillars of the health ecosystem in Indonesia. Currently, there are many clinics that are yet to be standardized, while being hospitalized costs quite expensive and is yet to reach the grassroots segment.

"We took an early bet when the numbers are still small, but now they are [Medigo] showing promising results even during the pandemic," Edward said.

Challenges

Apart from his main focus on consumer tech, Edward revealed that he did not set any portfolio targets in 2021. Likewise, the target range of investment for Kenangan Kapital.

In his opinion, angel investors do not have a certain pressure in providing funding. This is in contrast to the way VCs work, which is to follow KPIs. He tends to choose to invest if there's a sight of opportunities.

"I think being an angel investor doesn't require an investment target [issued]. It all depends on the deal per deal. In fact, if there are exceptions for certain companies, I can invest as much as I can," he added.

Without any specific KPI, Edward emphasized that the most important thing in following the growth of his portfolio business is the product-market fit. If a startup is gaining organic traction, the metric is at least customer acquisition cost (CAC).

However, Edward admits that the challenge of becoming an angel investor is not that different from a venture capitalist. The most common issue is selecting portfolios. He tends to choose founders who can run/find the right business.

"There are many good founders, but not many of them pick a good business. Better to invest in a good business even though the founder is quite Mediocre. The most important thing for me is conviction. That is, no matter what happens, they stick around and make the best out of it. The term is determination," he said.

Become the CEO and investor at a time

How come Edward manages his role as CEO and angel investor as the number of Capital Memories portfolios grows in the future?

"First, I need to emphasize that my main full-time job is the CEO of Kopi Kenangan. I don't want my passion to help entrepreneurs interfere with my main job at Kopi Kenangan," he said.

Second, he thinks it is not good for every businessman to be too dependent on their investors for a long time. Ideally, these founders are expected to be independent and focused on their business in three to six months.

"Because Kenangan Kapital is like a family office and there are no outside investors, I have no pressure to deploy capital like private equity or VC. I can invest in a very few but exceptional founders and help 2-3 founders at a time," he said.

In fact, he admits that he is happy when his portfolio joins a well-known accelerator program. According to Edward, that could mean they won't need his further involvement in terms of business.

Accommodating the angel investor ecosystem

It can't be denied that the angel investor ecosystem in Indonesia is quite silent. Even though angel investors play a big role in providing startup funding in the early phase.

Edward said, the existence of angel investors in Indonesia is very different from the one in the United States (US). The country which is the mecca for the startup industry has a database platform that attracts thousands of angel investors. That way, startups can get direct access and find it easier to find funding from angel investors.

"Here, access to angel investors is rather difficult, so they tend to look for funding options from their families. Therefore, this is what makes them unable to provide [relevant] experience to invested startups because the investors are not from a startup background," Edward said.

He is aware of the situation. He thought the phenomenon is similar to when the new VC industry has emerged and popular in recent years. As the industry develops, he expects the angel investor ecosystem to develop along the way in the future.

– Original article is in Indonesian, translated by Kristin Siagian