Gayo Capital's First Move as Ideosource's New Venture Entity
It is now focusing on conventional organizations, helps those with digital transformation
Randi Eka - 19 May 2020
After the new unit, Ideosource Entertainment, created to accommodate investment in a specific industry, Ideosource plans to target another business coverage. The company has officially announced a new entity named Gayo Capital, in charge of Ideosource Green Initiative.
Gayo Capital's Co-Founder & Managing Director, Edward Ismawan Chamdani told DailySocial that the new venture has its own managed fund consists of "strategic investors" as Gayo Capital's partner; later, there will be other funds as the investment thesis developed.
"Gayo was formed in early 2020, in fact, the idea and research have been brewed for 2.5 years," Chamdani said.
Gayo Capital also has Ishara Yusdian to lead along Chamdani, both are fully responsible for the operation and execution of the defined roadmap. While Jefri Sirait and Andi S. Boediman acted as advisors.
Gayo Capital investment approach
The investment approach is quite unique, they're focus on two things. First, Gayo targets companies that are working on a large traditional/conventional market share, for example in the agricultural, logistics, retail, supply chain, and others. However, they ensure that technology can be components of disruption. Ideosource's experience is expected to improve the process of digital transformation in order to improve business.
Second, the founder sees fund pattern in venture capital does not match the investment thesis in conventional companies. There should be a breakthrough in order to connect. Therefore, an operating holding is formed, combining the "venture debt" model. It allows companies to obtain a "working capital" kind of funding, comes with intensive equity; in financial terminology, it is called "quasi-equity".
"However, this pattern is to be combined with the venture capital model, in general, using a closed-ended fund structure, particularly for our investment in pure-tech companies," Chamdani continued. "We basically expect to form a 'reversed conglomeration', where the companies we help and invest in are able to innovate and put a breakthrough in their respective sectors and make changes to the bottom-up business patterns."
In addition to capital assistance, as an operating holding, Ideosource expects to play a role in providing direction, opening networks, providing access to capital, and forming inter-company synergies.
"Gayo Capital as an operating holding company has invested in several companies such as Inacom, PT Petani Kakao Lampung, WLabku, Hydro Retailindo, Foom.id, and several other portfolios in the ongoing process of mentorship and initial investment," Chamdani said.
Optimizing business potential in Indonesia
In particular, Chamdani also told the reason behind Gayo Capital's focus on business in Indonesia. There are quite principal reasons; He told an example, most of the agricultural sectors, such as coconut, cocoa, pepper, and others are managed by regular farmers. However, there is no disruption in terms of the supply chain that provides efficiency in the buying and selling, export-import, and product innovation processes.
"While we know that Indonesia's strongest demographics in the world for this sector and archipelago land have indeed been the target of the entire world since the colonial era, it's time for innovation to grow not from the top-down course, we hope the bottom-up can be more and more bold," explained Edward.
Gayo through its social foundations will also penetrate the farmer-specialize education sector with a specific curriculum according to their managed land; currently under discussion with the stakeholders to be involved.
Investment amid pandemic
Debuting amid a crisis caused by the pandemic didn't wash off the spirit of Gayo Capital's founders. Edward and his team believe that timing as one of the key components along with strategy, roadmap, team, and capital.
"In every crisis, there will be a greater opportunity, just as the ball we press into the water will bounce higher and faster when released," Chamdani shared a parable. "Every week we'll be contacted by 1 to 3 Asian and American financial companies wanted to dig more on Gayo Capital, and we believe that we're working in the right sector."
We've come into anticipation of the "new normal" situation. Edward also said the shaded sectors are now increasingly focused on transparency. That is because each party is getting more literate on technology, creating technological opportunities to be elaborated.
–Original article is in Indonesian, translated by Kristin Siagian