Indogen Capital: A VC Firm That's Changing the Way Venture Capital is Done

Indogen Capital is a sector-agnostic venture capital firm based in Jakarta, Indonesia, with investments across the Southeast Asia region. It typically invests in post-seed stage up to Series A companies, with a focus on startups that are addressing large and growing markets in Southeast Asia. Indogen Capital is known for its close collaboration with its founders and its commitment to helping them build long-term sustainable businesses. The firm leverages its key members' extensive networks and operating experience across various functions and sectors to provide its portfolio companies with the support they need to grow and succeed. With that, why don’t you join me in learning more about Indogen Capital with its Managing Partner, Chandra Firmanto.  

Can you tell us about your background and what led you to venture capital?

I had my education in the United States. I went to the University of Southern California. Afterwards, I actually worked for about 2 and half years in the Marina del Rey Area. I came back to Indonesia for good in 2005 and then handled my family business. My family business revolves doing distributions like Yamaha motorcycles. We also do tire distributions, consumer goods, and property groups. We also have a bank, a multi finance company, and hotel franchises as well. From 2005 until 2015, I was very busy with the family business. My job was to scale up the business. Fortunately, I was able to scale it up in 2015 and then handed the operations to professionals. After that, I then became the chairman.

In 2016, I started Indogen Capital because I invested in a couple of early stage unicorn companies in Indonesia. After that, I realized that there's a lot of potential in the Southeast Asian market. So I decided to set up a fund.

What is Indogen Capital and how does it differentiate itself in the venture capital landscape?

What sets us apart is that we do not invest too early. We invest in pre-series A to pre-series B. We only look for startups that are in the hot sectors. Sectors are very important for us. On top of that, the startups have to be able to raise funds easily. I will be able to connect them to corporations to create some kind of synergy, while being able to use the ecosystem as well. But along the way, I will also be able to help the conglomerate groups. So it's a win-win situation between the corporations and the startups. This actually sets us apart in comparison to other VCs. What also sets us apart is that I personally go to every meeting. Usually, what I do is that I join meetings with the corporation representative explaining about the failure of the startups and what they can possibly bring, then try to find angles to collaborate. 

There are a lot of times that we fail, of course. Meaning that the corporation is actually not in good shape, maybe they don't think about that kind of solution first, maybe they just don't want to collaborate, or the person in charge actually doesn’t understand the startup ecosystem. If that’s the case, then it's a drop. But I don't like wasting the founder's time.  So once the needs and the win-win situation is established between the corporation and the startup, then a meeting is set up. I’ll be present here as well to mediate between the two parties. I'll be the one to give advice and recommendations. One of our strengths is actually in securing licenses. 

On top of that, we also help them with an exit plan. I always think about how to achieve profitability, how to be able to scale up, and how to exit investments or bring it to the next level. We have a past history of a listing company in SGX already called: IDX. I actually helped a Japanese company start in the Philippines. It is a fintech company and we helped them expand to Indonesia and get their Fintech license and eventually listed in IDX last December.

This is what sets us apart from other VCs. We are really hands on in terms of helping the portfolio founders. We have three partners. The first two focus on the founder creation and then the other partner focuses on the research for the hot sectors.

How does Indogen Capital identify and evaluate potential investment opportunities?

Like I mentioned before, we look into the sectors. We look for the hotter sectors. We do research for North America, Israel, Europe, and East Asia, among others and look for the hot sectors and then predict. We cannot just invest in the current hot sectors. Sometimes the hot sectors do not last. For example, like quick e-commerce. This really boomed during COVID, then suddenly all of them shut down operations very quickly as well. So you have to be very careful with your approach. Another one would be electric bike rentals that boomed in China. This worked there because of the cool climate and the acknowledgment to tackle climate change. But in Southeast Asian countries like Indonesia and the Philippines where the climate is really hot and humid and climate change isn’t given as much attention, this will likely not boom compared to that of China. That's why we have to do in-depth research. The hot sectors right now are I think anything related to consumer logistics.

Could you share some success stories or portfolio companies that you're particularly proud of, and what made those investments successful?

We are a venture capital based in Jakarta, Indonesia. Our strength is we can help penetrate the Indonesian market easily. This lies in giving the advice first. I’d engage with corporations, startups, and even unicorns as well that are actually interested to come here and be able to capture the market, create the story maybe for the IPO plan. Our specialty is actually providing free advice because everyone cannot reject free advice. We have been working with the likes of JETRO and KOTRA and connecting to many VCs as well. We love connecting to all VCs. If they have a portfolio they want to bring to Indonesia, they can reach out to us. We're more than happy to give free advice to their portfolio. We have been doing that with many other VCs as well because we need to be close to other VCs since we are going to invest in their portfolio as well. For them, it's a good advantage to engage with us because we can provide free advice to their portfolio company and that if they're really good, then we can help them expand. 

We helped Carsome from Malaysia to expand to Indonesia. Then they turned to be the Malaysian unicorn, the only one right now. After that, we helped Venteny. That one is very special because the founders have never been to Jakarta. Despite this, we helped fill in everything, including hiring the local team as well and getting the fintech license. Also, since he's Japanese, I was able to connect him to all the Japanese corporations. You play to the strength of the founders and help them find the angle for exit.

Can you share some insights into the challenges and opportunities for startups in the Southeast Asian market, most especially in the Indonesian market? 

I think both  Southeast Asia and Indonesia have similar problems. Now, startups are required to have a healthy cash flow and profitability as well, which is actually not something new for me because I came from a traditional business background. It's actually a good thing because once you hit the IPO part, you will get a very fair valuation and it will actually help you not to have your shares drop by 50%- 70% after the IPO. We don't have to worry about that because I think all the startups in the region right now are doing well, but unfortunately because of that, there is a survival of the fittest. We believe that the one doing a good job on this, in regards to getting revenue and profitability, also gets the funding. There are many startups that don't have that luxury. The problem for them is actually burning money first to build an ecosystem. But they don’t have the money to do that.

There is an opportunity in Southeast Asia because the corporations here are actually very rich. Our region has been steadily growing, by 5 to 7% every year. We are one of the richest regions. Corporations continue to become rich. Because of this, it's a matter of being able to connect to the corporations and use their ecosystems to scale up without having to burn much of the cash flow. This is becoming a problem because not many people are actually doing what we do wherein we try to connect corporations and startups. The struggle to fundraise is happening a lot. Venture capitals have the funds, but they are becoming increasingly selective nowadays. Because of that, startups that cannot show profitability will definitely die out. That is becoming a problem because it's not fair for them as well. They don't know anyone, they don't know how to scale up, and they don’t know how to burn money properly in order to create a business. Our recommendation to founders is to reach out to as many traditional business people as possible to acquire funds and ecosystems.  

What are your thoughts and feelings with IGNITE 2023 coming up? How was your experience overall experience with IGNITE throughout the years (if applicable)

I’ve had the privilege to work with Kotaro for quite some time already. I really appreciate him and respect his mission of trying to help the Southeast Asian startups. When it comes to regional we are doing really well right now and we don't need much promotions.

Having IGNITE and Techshake events are important in order to give startups the knowledge to scale up in these kinds of environments, most especially where people demand profitability and revenue right away. IGNITE can make the participants or the startup founders realize that in order to build startups, they need profitability. For startups, the best thing to do is actually to meet decision makers at IGNITE events that are connected through Techshake. My recommendation for all startup founders is to use events as best as possible, try to connect with as many people as possible, especially traditional corporations.

Chandra Firmanto is the Managing Partner of Indogen Capital. Chandra’s role is crucially important since he guides the firm’s investment strategies and overall operations, such as deal sourcing, decision-making, networking, and brand building among others. With inspiring passion, Chandra is committed to helping Southeast Asian startups grow and scale to further energize Southeast Asia as the world’s next investment hub.

Visit www.techshake.asia if you would like to know and connect more with Indogen Capital.