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Venture Capital Initiatives to Support Portfolios Amid Pandemic

Yenny Yusra - 13 July 2020

The pandemic situation has forced some fundraising to postpone activities performed by foreign and local venture capital in Indonesia. Nevertheless, there are still some VCs that continue to carry out these activities, by implementing a more rigorous and focused startup curation process, adjusting the current conditions.

In the Startup Clinic session in collaboration with Ventura Discovery, UMG IdeaLab, Plug and Play Indonesia and Alpha Momentum Indonesia, several VCs shared their portfolio management tips and stories, and how a pandemic can be the most relevant momentum, to see the powerful and potential of startups.

The right time to slow down

Previously, it was possible that most VCs had a target of how many startups to join the portfolio, according to Monk’s Hill Ventures Senior Investment Analyst, RJ Balmater, now is the right time for VCs to loosen their belts while focusing on the right and best business vertical for investment. On the other hand, RJ also saw that startups could also take advantage of this condition to re-examine the advantages of the company along with its business model.

“Eventually, VC wants to invest in startups with healthy businesses, not just to survive in the current conditions,” RJ said.

Kejora-SBI Orbit Fund‘s VP Investment, Richie Wirjan said to not looking solely at the key market, investment delays that currently performed can also be utilized by the VC to dig further on the key feature, both within the portfolio or those with a certain potential.

Meanwhile, Prasetia Dwidharma’s CEO, Arya Setiadharma, utilizing existing data, a more in-depth analysis must be done to see the potential that exists today. Make sure the business model that is owned has adjusted to the current conditions, seen from an uncertain market so that the possibility of the company cannot survive. On the other hand, Arya sees services such as groceries and delivery can grow positively utilizing the current moment.

“For the early-stage startup, I see that there is still a good future for fundraising, but when the pandemic starts to recede within the next two years,” Arya said.

Moral support and VC network

Another thing that later became the VC’s priority during the pandemic was moral support to the extensive network to help startups and founders. For Arya, all founders who are members of his portfolio are entitled to get one-on-one consultation by a psychologist. It was to ensure their mental health, who often pressured to cope up with issues during the pandemic.

“We are also trying to help our portfolio to develop some solutions. One of them is Ride Jakarta, founded by Gita Sjahrir. Utilizing online services, users can now enjoy direct training with coaches easily, at an affordable price. Not only users in Indonesia, those who live in Singapore, also use these online services,” Arya said.

Meanwhile for Kejora and SBI who have been doing business more than just VCs, are to provide support to the ecosystem. Not only to new investments but also those who have entered into the pipeline.

“We do not want to leave them, the best way is to connect them to our ecosystem. Whether through the pilot project, we do this to ensure they can continue with the business. Later, we will discuss again whether there are further investment steps or not,” said Richie.

Utilizing the right technology and tools, all portfolios at Monk’s Hill can utilize communication networks between fellow founders for consultation and possibilities for collaboration. The VC is also ready to help all startups to continue to be able to provide support. Monk’s Hill also conducts a data organization that aims to see the overall portfolio and KPI of each startup.

Diversification and decision to shut down business

When the pandemic began, many startups diversified by presenting new services or pivoting to adapt to current conditions and to remain relevant. According to Richie, this is fine to do, as long as startups can ensure that when the pandemic ends, the new business that is presented can continue. Not just using momentum.

“In my opinion, everything should go back to the core business. If they are not sure that it is better not to do a pivot, even though now is the right time to conduct a trial. When the crisis is focused on revenue rather than starting to explore new services,” Arya said.

He added, currently in Indonesia, most companies imitate other companies, when they want to present new services. Make sure all the right decisions, not just take advantage of the conditions and opportunities that exist.

Meanwhile, according to Arya, an important thing is that the new services or businesses presented can disrupt the business. If a startup has the ability, tools, and resources to build new services, it is possible.

Regarding the decision of startups to terminate their business, as a result of the pandemic, each VC claims to have experienced a number of failures from its portfolio. This condition is undeniable, the right way that can then be done is whether startups can implement lean methods or actually stop their startups.

“Eventually, when employee reductions or other decisions must be taken it is wise to do so. If the process or step can help startups to survive,” RJ said.


Original article is in Indonesian, translated by Kristin Siagian

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