AC Ventures recently hosted a closed-door webinar titled “How to Navigate Southeast Asia’s Tech Winter.” The firm’s founding partner Pandu Sjahrir spoke on a panel with Credit Suisse director Varun Ahuja and delivered a presentation on how macroeconomic conditions and the current geopolitical landscape are affecting the tech industry closer to home, here in Asia.
Now, with the very real possibility of prolonged war in Ukraine and a potential energy crisis on the horizon, startups are feeling the same pain that corporates are worldwide. Many of yesterday’s deals evaporated overnight, startup valuations dropped sharply, and many institutional investors (think limited partners who put money into venture capital firms) now have cold feet in the Indonesian market.
Because of these new, cold dynamics, Pandu Sjahrir advises local founders to switch up their playbooks, now that the tech winter has officially arrived in Southeast Asia.
Pandu Sjahrir on getting back to basics
“So, what does this mean for all of you as founders or c-level team members? It’s about the importance of capital efficiency,” said Pandu succinctly. “If you look at private tech valuations […] On average, there has been a decrease north of 30% in private markets. If you look at public markets, it can be up to 50% to 80%, based on the country you operate in.”
He added, “In fundraising, if possible, extend the capital runway to 36 to 48 months to better weather the ups and downs. Cheap capital is not going to come in for a while.”
Not necessarily unique to startups in Southeast Asia, founders worldwide need to get back to basics and focus on bolstering their unit economics and hedging risks.
In startup parlance, this may mean increasing your company’s ‘take rate’ or shortening the road to profitability by monetizing faster or more aggressively.
“In these market conditions, no one will blame you for this,” he assured the audience of founders, investors, and members of the press.
The investor went on to outline the importance of gaining market share in creative ways, beyond just organic expansion. In some cases, this could even mean strategic M&A of competitors in the market. It could also mean joining forces with companies that are complimentary to yours.
If there was a single most crucial takeaway Pandu hoped the audience would glean from the webinar, it was this: founders must take this time to focus relentlessly on hiring unique all-stars that fit their business well.
He explained, “Focus on doubling down on team quality. This is the best time for you to focus on getting leaner in your team. If you have several B or B+ members, maybe this is a good time for you to say: ‘You know what, we can’t afford these talents. But we can afford an A+ person.’ This one A+ person may actually be equivalent to five or six B+ people.”
AC Ventures is a leading Southeast Asian venture capital firm backing early-stage startups primarily focused on Indonesia. The firm’s mission is to partner with and empower entrepreneurs with more than capital. It combines operational experience, industry knowledge, local networks, and resources to create value. Its vision is to be a generational partner to founders driving positive societal change and economic impact.
The investment firm currently has more than US$380M in assets under management, invested across four funds. Since 2012, AC Ventures’ partners have backed more than 100 tech companies, including some of the most iconic names in the region. Its founding partners Adrian Li, Michael Soerijadji, and Pandu Sjahrir lead a team of over 25 professionals with offices in Jakarta and Singapore.
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AC Ventures is a leading venture capital firm investing in early-stage startups focused on Southeast Asia. We are a generational partner to founders driving positive societal change and economic impact in Indonesia and beyond.
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