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Indonesia’s Next Unicorn: Giants from Fintech and Logistics

Published on November 5, 2020

Original post by 7.5 degrees

I think Indonesia’s next unicorns will appear in two areas: fintech and logistics, and in the next 12 to 18 months.

Current Figure:
AC Ventures
Founding Partner Adrian Li


Personal: Entrepreneur / Investor / Triathlete

In October, Indonesia’s early stage venture capital AC Ventures announced that it had completed its initial US$80 million new fund, raising US$56 million. Adrian Li, the founding partner behind it, is a Chinese British, with the experience of studying and working in the United Kingdom, the United States and China, and finally settling in Indonesia. “Growing up in many countries, it is particularly important to understand people and local culture for early investment. Diversified growth experience allows me to find the right entrepreneurial team and founder to invest more quickly” says Adrian.

In addition to being an investor, 7.5 degrees notes several achievements in Adrian: a top graduate of Cambridge University, Stanford University, Tsinghua University; Founder of online English training company Idapted (later acquired by Eleutian, an American education company); Former managing director of JPMorgan Investment Bank and Rocket Internet, a German Internet giant; Business mentors at the Entrepreneur Institute, Endeavour Institute, etc. Nominated in Indonesia Forbes & famous luxury magazine Prestige Indonesia’s 40 under 40 elite list····· Besides these, he also has a special achievement: Triathlete – he has completed multiple marathons and full triathlons in New York, London, Tokyo, Beijing and other places.

For Adrian, the 2012 Hong Kong Marathon was special. He met his wife in the early days of (Entrepreneurs Organization), an entrepreneurs association in Beijing, and was linked to the sport of long distance running. Later, Adrian took her to the 2012 Hong Kong Marathon. After completing the race, Adrian stopped her at the finish line and proposed. It was also after the marathon that Adrian began to prepare for his first full Triathlon race in his life. In this long-term persistence sport, what he gained was not only the satisfaction from completing it, but also the philosophy of life intertwined with life and work.

Adrian competing in triathlons

7.5 degrees:

I know you like triathlon very much. How did you start this hobby? Does this have any effect on your life or work?


My first contact with Triathlon was in 2003, when CNBC TV channel was telling the story of a 70-year-old woman participating in Triathlons World Championships. I was surprised that it seemed impossible for a 70-year-old to complete a 4-kilometer swim, a 180-kilometer bike ride and a 42-kilometer run. There were even many older people, as well as some people with disabilities, completing the Triathlon competition. At that time, I was thinking, why can’t I do such a thing, and challenge the impossible?

In 2006, it was my last year at Stanford when I studied MBA. I asked my roommate to accompany me in preparing for the Triathlon. We trained together for nine months, but four weeks before the event, I got into an accident on my bike and broke my arm. I did not make it to the event and was very depressed. After graduation, I came to work in China and became busier. But I have also been taking time to exercise to take part in some marathons and semi-Triathlon races. After taking part in the Hong Kong Marathon in 2012, I made up my mind once again to prepare for the 2013 Triathlon race with an old friend. In order to train, it is often necessary to ride a six-hour bike and run 40 kilometers on the treadmill. After 12 months of training, I completed the first whole Triathlon race in my life, which felt unforgettable.

Triathlon has taught me life is not smooth sailing, in life many unexpected things can happen. It takes a long time to stick to something you have always believed in, and it takes a lot of courage to persevere till the end. For example, if you train for a triathlon for a long time, but during the course of the race, you can still encounter a flat tire, crashes, being kicked in the face while swimming and other accidents. But the most important thing is the whole process, including the prior training. I made a lot of fitness plans and goals for myself to compete. When I entered this sport, I was thinking only one thing: to build up my body and finish the race. This concentration allowed me to enter a state of meditation and self-regulation.


7.5 degrees:

In addition to being an investor, you are also engaged in public welfare activities, in the United Kingdom to create a charitable organization CNYTrust to help Chinese children learn; You have also served a number of roles in Entrepreneurs OrganizationYoung Presidents Organization etc. How do you balance work and life?


Everything I do has to do with my life creed, and I hope it will have an impact on society and individuals. Whether it is starting a company, doing charity work, or participating in some social organization, they are not unrelated. Everything can work together and complement each other, so they end up being the same thing. I think if you have a strong enough will to do the things you want to do, you will make time to do them.


For example, in 2013, it was a very busy year for me: I finished the triathlon competition; Settled in Indonesia and had my first child; resigned my old job to to start a new business; dealing with business associations and all that. …I believe when you want to do something, now is always the best time, not 10 years or 20 years from now. In order to seize this opportunity, I prioritize and work with the right people to build an effective architecture and process.


7.5 degrees:

Why did you choose to settle in Indonesia and start an investment business? Does this have anything to do with your work experience in Rocket Internet?


I went to Indonesia because I found the right time and business opportunity.

I first came into contact with Indonesia because of my wife, who is an Indonesian Chinese. When we were together in 2010, I began to fly frequently to Indonesia. When I went to Indonesia, I found that there was great potential in this market. Many of the ecommerce companies we saw today did not exist at that time. Many of the entrepreneurial models in China can actually be replicated in Indonesia.

The timing comes from my own entrepreneurial and work experiences. When I was a student at Stanford University, I started Idapted, an online English training company, which was officially launched in 2006. In that venture, I realized entrepreneurs must be at the forefront of the times. Idapted’s success, in retrospect, is similar to the success of VIPKID, an online English education company today. In addition, the timing of entering a market is also important if you want to make an impactful career. If you enter too early and the market is not mature yet, you will find it difficult to be successful. After starting my own business in 2010, I joined the German Internet company Rocket Internet, first in Beijing and then in Indonesia. Everyone says that Rocket Internet is very good at timing, and they saw the innovative model of the Internet in the United States, which they quickly copied to Europe and other regions, such as Southeast Asia. Then I thought it was time to move into Indonesia and start a new business, using my previous experience to help Indonesian entrepreneurs who are moving to the forefront of the times.


Talk about changes: two VC merges / Indonesia market / VC price

After moving to Indonesia, in 2014 Adrian launched an Indonesia’s early stage venture capital, Convergence Ventures, which invested in Carsome, a used car platform known as Southeast Asia “Guazi”  and Indonesia’s fintech company Payfazz that just raised a Series B this year. Until April this year, Convergence Ventures merged with Agaeti Venture Capital, another early stage Indonesian venture capital fund, officially renaming the merged firm as AC Ventures. After years of experience in investing, Adrian witnessed changes in his individual career as well as changes in the Indonesian market.


7.5 degrees:

Why did you choose to merge Agaeti Ventures with Convergence Ventures? What are the considerations behind this change?


It all started when I met Pandu Sjahrir, a partner at Agaeti Ventures. We went to Stanford together and have known each other for a long time. When I moved to Indonesia, my investors connected us again, and he became an investment advisor to my first fund. At the time, Pandu was already a well-known unicorn angel investor who made the right calls most of the time. In 2018, he set up an early angel fund, Agaeti Ventures, and introduced his partner, Michael Soerijadji, to me. After that, we shared some investment insights, co-invested together, and met more frequently. After that, we were looking raise new capital, so it naturally crossed our minds that we could combine the advantages of the two teams to form a more sizeable venture capital fund. We did not act rashly on the decision to merge but because we have known each other for a long time, we all share the same investment philosophy and focus on early stage start-up companies in Indonesia, therefore we are determined to bring more resources and value to the companies we invest in.


Michael Soerijadji(left), Pandu Sjahrir(middle), Adrian Li(right)


7.5 degrees:

What major changes have you seen in the Indonesian VC market since founding Convergence Ventures in 2014? Where do you think Indonesia is compared to China in terms of progress in internet? How many years has the gap between Indonesia and Indonesia narrowed?


Compared with 2014, Indonesia’s technology system still faces many challenges, but these challenges are much easier to solve than before.

In Indonesia during 2014, not many people wanted to start a business in Indonesia. Since there were no local Internet giants at the time, many investors and potential entrepreneurs did not like Indonesia. Although some early VCs came in, there was a lack of downstream capital. People have been talking about the risks of investing in startups for a long time, but who is going to guarantee the next round of financing? Many investment companies are reluctant to invest, whether it is Indian VCs, global VCs or new local VCs, it is still considered a very young market. We call this phenomenon the Series B Gap (lack of Series B funding). There are also many challenges in terms of local entrepreneurship. Take e-commerce for example. Cash is king in Indonesia, online payments did not do well back then. With no household e-commerce platform, people have low trust in online shopping. E-commerce infrastructure was also imperfect, logistics was also not fully developed, resulting in long delivery time.

Today however, many problems have improved. There are unicorns like Gojek and Tokopedia in Indonesia. Indonesia now has a high Internet penetration rate and high coverage, consumers are not so resistant to the Internet, we all know how to book tickets online, make online shopping, and do online transfer payments. The logistics industry has also become more efficient, thanks to the development of traditional third-party logistics companies and the entry of emerging technology logistics companies.

It is often said that Indonesia is like China ten years ago. But i think the gap between China and Indonesia is narrowing. How much Indonesia resembles China a few years ago depends on how it compares. If mobile penetration and online consumption are taken as indicators, the gap between Indonesia and China is three to five years.


7.5 degrees:

In an interview with Tencent around 2016, you said Indonesian venture capital investments were much lower: round A, which costs between $1 million and $2 million, can account for about 15-25% of shares, compared with more than $100,000 for angel rounds. From now on, has Indonesian venture capital investments appreciated in prices? How much has gone up? Does Indonesian venture capital still have an advantage in terms of price?


On the whole, it has indeed appreciated. Because the capital in the market has also increased, not only do we have VCs now, but there are also a lot of venture capital, private equity and family offices. More and more people pay attention to the Indonesian technology market, they want to invest in Indonesian companies causing demand to rise sharply, and since the market supply cannot keep up with the increase in investment demand, prices end up rising. However, it depends on the specific situation. Because Indonesia’s investment market is not as open and transparent as the United States, investment prices often depend on the quality of the entrepreneurial team and the connection between the team and investors. The company financing of the seed round can reach $3 million, $8 million, or even $10 million; the financing of the angel round is still within the valuation range as a whole; and the valuation of Series A has indeed increased, mainly depending on the total amount of money raised.



Industry: E-commerce / Logistics / Fintech / Education

In Adrian’s opinion, there are many excellent startups in Indonesia. Even though this year’s pandemic has caused plenty of inconvenience, Indonesia’s Kargo, B2B fishery e-commerce Aruna, social e-commerce KitaBeli, digital bookkeeping application BukuWarung all completed significant fundraising rounds, of which AC Ventures is involved. Over the next three years, AC Ventures will invest new capital into 30 Indonesian start-ups, with an initial investment of about $3 million to participate in the company’s seed round to Series A financing, along with a continuing focus on e-commerce, financial technology, digital media and other areas.


Part of AC Ventures Portfolio


7.5 degrees:

In e-commerce, we see AC Ventures investing in B2B e-commerce Aruna, social e-commerce KitaBeli, etc. Can we understand that AC Ventures is more optimistic about vertical e-commerce companies? Why has it steer clear of e-commerce investments on platforms like Tokepedia and Bukalapak


Our investment is mainly based on the timing of the market. The first opportunity of investing in ecommerce is in ecommerce platforms. About four or five years ago, our partner Pandu invested in Bukalapak (now an Indonesian ecommerce unicorn), when it was the best time for ecommerce. We can now find opportunities to invest in similar companies, but they are already valued at $1 billion, which is not in line with our early investment goals.

From the perspective of China market, e-commerce platform gives rise to vertical e-commerce. First, e-commerce platforms such as Taobao and JD.com appear before verticals such as fashion, furniture, electronics, decoration and second-hand car trading.

Next, we see the rise of another platform — social e-commerce. Social e-commerce in China has many different models, such as community buy model based on pinduoduo, content marketing model based on the xiaohongshu, agent and distributor model based on micro businesses. Social e-commerce based on micro businesses may be more suitable in Southeast Asia, such as India’s Meesho, currently Indonesia has many social e-commerce companies using this model.

Finally, there are e-commerce that focus on products. As e-commerce consumers become more mature, they will pay more attention to e-commerce direct sales of products, the typical example is Xiaomi. Xiaomi’s OEM, white label product model has proven to be a global success, thus other vertical categories like cosmetics can also do the same. Because Southeast Asia does not have the manufacturing base of China, Xiaomi’s success is difficult to replicate in Southeast Asia. However Southeast Asia still hold advantages in FMCG and white labels for electronic.

In addition to the four e-commerce business model, I think the future fifth e-commerce model may focus on B2B e-commerce.


7.5 degrees:

Another popular sector: logistics. What does AC Ventures think? What are the reasons for investing in e-commerce logistics platform Shipper and Kargo?


Logistics development follows the development of e-commerce. As more and more people shop online, more and more goods are transported by logistics. Comparing with traditional logistics in Indonesia, we can find that technology-enabled logistics can bring more value. Compared to the last mile that has seen plenty of involvement from many big players, we are more interested in the logistics matching platform, which can be divided into trucking and third-party logistics. Globally, successful truck matchmaking platforms include China’s Manbang and India’s BlackBuck. Successful third-party logistics matchmaking platforms, including China’s Cainiao and India’s Delivery. We think these two categories of logistics have more potential, which is why we invested in Kargo and Shipper.


7.5 degrees:

Many of the projects invested by AC Ventures are also directly aimed at small and medium-sized micro-enterprises in Indonesia, such as Indonesian fintech company Payfazz (previously Convergence Ventures investment) and Indonesian digital accounting application BukuWarung. In your opinion, where are the opportunities and pain points for small and medium-sized enterprises in Indonesia? Why can BukuWarung attract the investment of a lot of big names VCs in the early stage of starting a business


In Indonesia, there are 60 million MSMEs registered, and in reality there may be far more than 60 million. It is often said that these MSMEs contribute half of Indonesia’s GDP. The potential of MSMEs in Indonesia is huge, but most of them have no bank account, inefficient supply chain services and little use of technology to expand their business. So there is a lot of opportunity for tech companies to use technology to create more value for SMEs.

Using BukuWarung as an example, it provides SMEs with a simple digital bookkeeping application that allows SMEs to move away from paper-based bookkeeping. BukuWarung attracts a lot of capital investment because its product has a strong product-market fit, driven by technology and data, to truly address the main difficulties faced by SMEs and help them achieve business development.

At this stage, BukuWarung is still focused on products, it is too early to talk about profitability. But BukuWarung will leverage its vast business network to provide different forms of financial services to companies. As far as we are concerned, BukuWarung will eventually reach profitability as a fintech. Many MSMEs do not have sufficient banking services and financial services because they cannot produce financial data to prove their business status. But BukuWarung can help these companies record data, describe the business status to financial institutions, and obtain credit funds to expand the business. While the opportunity originates from micro, small and medium-sized enterprises, but through the use of financial technology businesses may also discover new business models.


7.5 degrees:

As a former co-founder of online language education Idapted, I believe you have a deeper understanding of the field of online education. Back in Indonesia, online education companies such as Ruanguru and Zenius are also growing very fast. Is there any chance to do online education in Indonesia now


I have always been interested in education. From the entrepreneurial experience I mentioned earlier, I think investment is also about the timing, investment in education cannot be too early. So we didn’t invest in education technology when we launched our first fund, until 2020 when we invested in Indonesian online education CoLearn.

Especially under the influence of this year’s pandemic, everyone’s acceptance of education technology has increased. Under the pandemic, online education has become the only choice for many students. So, I think there are still many investment opportunities in the field of education technology in many markets, not only Indonesia, but also India, China, the United States and so on. There are a lot of educational technology players, and there are a variety of technology models for retaining users. Ruangguru and Zenius are content-based, focusing on a range of learning subjects. We are more concerned about recent opportunities, such as after-school tutoring. Educational technology combines learning problems with live streaming, allowing students to contact their teachers after class, conduct group learning, or get private tutoring. I think teaching and learning must be connected with the teacher, and dynamic content allows students learn more efficiently.

Future: Indonesia’s next unicorn/Indonesia’s opportunities

Overall, Adrian sees Indonesia as a very attractive market. There are plenty of opportunities to try out proven models from China, India, and the U.S., where Indonesian entrepreneurs can come up with unicorn value-level market solutions. Now is still the best time to invest in Indonesia. “I think local VCs like us also have some advantages during the pandemic. Many foreign investors have no way to come to Indonesia because of the pandemic, we can find the best early companies and complete the investment without competition.”


7.5 degrees:

Overall, based on your investment experience (or AC Ventures investment methodology), how do you know if the company is worth investing in? In what way?


We focus on the market, the team, the attractiveness of these three aspects.

In terms of market, we focus on some trends that have long been dominant, such as e-commerce. Online sales in Indonesia account for only 8% of total retail sales, compared with 30% in China. According to the development trend of e-commerce, the Indonesian e-commerce market will triple in the next few years, and we will seize the opportunity to invest. In addition, whether the model on the market has been proved feasible, the timing of the market is appropriate, all has to be taken into consideration.

In the team, it depends on whether the characteristics of the entrepreneurial team and the founder match with us, and whether they have the confidence to become a big company. We spend a lot of time getting to know the team and the founder, See what their characteristics are, whether they have real potential, whether they have a tough entrepreneurial spirit, whether the founder has leadership skills, whether they can adapt their localization strategy to help the company achieve further growth. We look at these factors to rate the team.

In terms of attractiveness, we have a wide definition of attractiveness, which can be the main indicators such as number of users or marginal efficiency, product development ability, recruitment ability and cooperation ability, and so on. For different stages of the company, we look at different points of attractiveness.


7.5 degrees:

What industry do you predict will be Indonesia’s next unicorn? What kind of features will it possess


I think the next unicorn in Indonesia already exists. They are not brand new startups. I think Indonesia’s next unicorns will appear in two areas: fintech and logistics, and in the next 12 to 18 months.

There are many companies valued at hundreds of millions of dollars in fintech in Indonesia, which may be just one or two steps away from becoming a billion-dollar company. If further breakdown has to be made, unicorns are likely to be created in payment companies and lending companies. In addition, it is also very likely that unicorns will appear in the field of logistics. Because logistics is a key part of the whole ecommerce ecosystem, especially from the growth of ecommerce demand this year, logistics has ushered in great development.

Their characteristics can be seen from the three aspects I just mentioned. First, whether they are in a $1 billion market; second, whether there is a team behind them that has been created for several years and performed well, and I remember that it took Tokopedia six or seven years to become a unicorn; and third, in addition to the market and team, it depends on the attractiveness and data of these companies.


7.5 degrees:

Last year, you published an article in Forbes THERES NEVER BEEN A BETTER TIME After the global experience of the pandemic and various black swan events, is this still the best time to invest in Indonesia


Even after the epidemic, I still think this is the best time to invest in Indonesia.

Affected by the pandemic situation, the development of science and technology has made great progress, and the digital adoption of society is also accelerating, such as more and more people do online shopping and use digital payment, the development of e-commerce also helped spurred the growth of logistics. The pandemic is still widespread in many parts of the world and will continue to have an impact on the economy in the next 12 months. Technology enterprises can continue to develop with the help of this tailwind.

On the other hand, even in times of recession and economic hardship, there are still many well capitalized VCs out there. The reason why Investors often find the most promising founders in the most difficult times, is because some companies are able to come up with more effective solutions in testing periods like this. If you dare to start a business at a time of uncertainty and difficulty, you must be a very good entrepreneur and have a strong sense of faith to succeed. On the whole, we have seen more good entrepreneurs in this period than ever before.


About Adrian:

Adrian Li is a founding partner of Indonesian early Ventures capital firm AC Ventures and a founding partner of Conversion Ventures, Indonesias early Ventures capital firm. Prior to this, Adrian was an entrepreneur, in 2006 founded the online English training company Idapted (later acquired by the American education company Eleutian). After his successful exit, he joined German internet giant Rocket Internet as a managing director, working in Beijing and Indonesia. In 2015, Adrian was named one of the 40 Under 40 Elite People in Indonesia by Forbes & Prestige Magazine.


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