MDI Ventures, Finch Capital join hands to launch new US$40M fund Arise to plug ASEAN's pre-Series A gap
MDI Ventures, the VC arm of Indonesia’s Telkom Group, announced today it has partnered with European VC firm Finch Capital to launch a new early-stage investment fund.
As per a press note, the Arise fund will be run under a joint venture and seeks to invest in Indonesia-focused tech startups in Southeast Asia.
The newly-launched fund has a target of US$40 million in assets under management, and aims to support the next generation of regional founders to emerge from the current economic crisis.
The average investment ticket size will be US$250,000 to US$3 million for startups in the post-seed to Series A range.
Arise claims it differentiates itself from other funds by actively working with portfolio companies to achieve product-market fit. Leveraging on the global portfolio of both firms, the fund claims it would be able to advise companies with effective go-to-market strategies.
The fund seeks to provide portfolio companies with a clear roadmap to validate, grow, scale, and eventually exit.
The launch of the fund generates optimism for early-stage tech companies in ASEAN. As the pandemic has roiled markets worldwide, tech startups in the region have experienced a tangible funding drought.
A recent report by Cento Ventures shows that local tech investing fell to US$5.6 billion in 2020, a 13 per cent drop compared to the same period in 2019.
Meanwhile, investors that have remained active continue to fund companies at the Series A stage and beyond. This results in startups in the pre-Series A stage struggling to secure funding.
According to reports, overall pre-Series A funding saw a 20 per cent plunge in 2020, coming after a plateau in the last few years.
While the region was once known as a hotbed for seed investing, early-stage funding has stagnated in recent years. The first generation of successful seed investors has gone on to raise larger funds and is now shying away from early-stage deals.
Meanwhile, the next generation of high-quality founders is emerging. Local entrepreneurs are still building startups that tackle complex problems that have the potential to become unicorns.
“A disproportionate allocation of capital makes it even more challenging for promising early-stage companies to secure investments during the region’s economic slowdown,” explained Aldi Adrian Hartanto, Partner at Arise.
“Many of these seed startups already show great early traction, but they have yet to really get their names out there and require further support in accelerating their product-market fit in order to raise proper Series A rounds,” he added.
Ririek Adriansyah, CEO at Telkom Group, said: “This is a key component of how we build the strongest national economy possible in Indonesia and establish a truly modernised state-owned business sector.”
According to Hans De Back, Managing Partner at Finch Capital, Indonesia is already ASEAN’s largest economy but it is now also poised to become the region’s largest tech hub by 2025. “We expect to see the birth of many tech companies riding a new ‘digital wave.’ Arise is ready to support these companies.”
“Startups backed by Arise should ideally go on to receive investment from Centauri Fund at the Series A stage, MDI Ventures at Series B and later stages, and finally see a meaningful exit via acquisition with Telkom Group as one of the potential buyers or IPO,” Hartanto concluded.