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Islamic Finance

Indonesia VCs reach for key growth sectors during pandemic as Mar-May placements beat 2019

JAKARTA – Indonesia’s GDP may have contracted by 5.32% in the second quarter due to the COVID-19 crisis but venture capital placement during the lockdown period increased.

From March to May, venture capital firms put up 39.997 trillion rupiah ($2.7 billion), 38.74% more than the same three months last year, according to data from the Financial Services Authority (OJK).

Most of these funds were pumped into trade, restaurants and hotels; business support services; industry; and agriculture, fisheries and forestry.

For the past five months, upward trends include in e-commerce as the lockdown and ongoing pandemic move essential goods, medical and agriculture online.

To understand what’s happening on the ground and how VC firms manage the COVID-19 situation, Salaam Gateway interviewed three firms that have invested in halal start-ups: Ideosource, Astra Ventura and MDI Ventures. We focused on three key themes: How they mitigate COVID-19 risks, how they planned their investments, and new growth sectors.

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Ideosource Managing Partner Edward Chamdani said companies representing several sectors in the VC’s portfolio, including hospitality, B2B, and entertainment (film), were severely hit because of the pandemic.

As COVID-19 forced people away from movie theatres to TV or video-on-demand platforms at home, one start-up in Ideosource’s portfolio pivoted by channelling its movie catalogue towards Go-Play, a service by tech unicorn Gojek.

“But on the positive side, digital transformation has now become mandatory for all corporates, if they aren’t ready to serve their customers online it will be very hard for them to survive,” Edward told Salaam Gateway.

“Several sectors such as agriculture, food and FMCG, and e-marketplaces are also growing. I see players such as Tokopedia and the others growing more solid in terms of their market base,” he added.

“Our e-marketplace Bhinneka has also added more categories for our corporate clients since the pandemic. Their needs are getting bigger not only in electronics and computers, but also health tools to monitor employee health as well as FMCG.”

Edward believes tech companies, with their financial resources and large customer base, need to push themselves to innovate their services to be friendlier, and make the tough decisions such as to lay off employees when needed. Once any service starts to experience difficulties expanding, they need to shut it down and re-focus on growth, he said.

Ideosource has not allowed the pandemic and economic downturn to downgrade its own investment outlook. It did not revise down its initial target and is actually planning to increase it.

In February when news of the pandemic had already spread globally, sister company Ideosource Green Initiative (Gayo Capital), that was set up end-January, invested in cocoa beans trading company Petani Kakao Lampung and other pandemic resilient sectors.

“The thing that drives our investment decisions at the moment is more to change the market. For instance, Traveloka recently received new funding because investors believe the sector will recover or partially recover next year. The sector itself is healthy as a precondition,” said Edward.

Ideosource portfolio includes: Indonesia Commodities And Agriculture (INACOM), PT. Petani Kakao Lampung, a cocoa beans trading firm, Tunas Farm Food, and that focuses on sustainable agriculture


Ideosource points to several emerging growth sectors that are likely to make an impact.

  • Agriculture and essential end-consumer products such as face masks and personal protection equipment are on the rise, as well as fintech that supports medical tools.
  • Online education and health techs like telemedicine are also promising since many people are currently too afraid, or are avoiding, hospitals.
  • In contrast, the VC believes sectors like peer-to-peer lending, both B2B and B2C, will likely fail in the future.

What does Ideosource look for in an investment?

  1. Founders should have resilience, integrity and good commitment.
  2. Founders who believe in their venture and are genuinely motivated to solve the problems they have identified, not just copying foreign business models.
  3. The sector must be big enough in terms of market size in order to scale.
  4. There is opportunity to surpass competitors in the segment. 



Jefri Sirait, President Director of Astra Ventura, told Salaam Gateway that as the aggregate demand decreased in the last six months, the main issue for the VC is maintaining liquidity, to be more prudent in terms of placing funds (prioritizing existing investments), and having the vision or projection to achieve better decision-making.

The VC, an investment arm of automotive maker Astra International Tbk, continues to be prudent in its due diligence processes and has not lost momentum buying or dealing with start-ups during the pandemic.

Pandemic-time issues for start-ups and portfolio companies include increasing employee productivity to avoid more layoffs. Jefri believes employees need to have a sense of belonging and work as if it’s their own company and contribute more to drive revenue streams, especially in the current business environment where SMEs, conglomerates and even major tech players are all impacted by the COVID-19 crisis.

Although none of Astra Ventura’s start-ups are experiencing zero income during the pandemic, some of have seen their incomes plunge sharply. The VC’s priority is to help maintain their liquidity so they can survive.

“Many of them have made every cost as efficient as possible, avoid any unnecessary expenses, their revenue and production are down sharply and we help them in terms of management, and some working capital only if they really need it for the survival of their company,” said Jefri.

He said there is still investor confidence even amid the economic downturn. Astra Ventura is monitoring the business and economic situation to buy or invest for the third-quarter, which is when Jefri expects some recovery to kick in. The majority of investors are holding back their funds, according to Jefri. Likewise, Astra Ventura is using this period to prepare and study positive sectors to invest in.

“The horizon is still the same with what we aimed for early this year, but we revised slightly our target by 25% in terms of investment value and we are trying to achieve this,” said Jefri.

“The difference in decision-making now is how we look at trends. If in the past we looked at sector A, now we are also looking at sector B,” he said.

Astra Ventura portfolio includes: Ternakopi, that sells cold brewed coffee, and Webtrace, an IoT logistics platform


In terms of new growth sectors, the “meat and rice” (Indonesia’s “bread and butter”) companies will be the new growth sectors.

  • Astra Ventura gives the examples of start-ups that sell cold brewed coffee in one-litre packs since people are staying at home a lot more instead of going to coffee shops, or
  • start-ups that produce fertilizer for modern farmers in the city.
  • The start-up that earns in U.S. dollars is also more favorable at the moment, for example those that export cocoa beans as polyphenol antioxidant for the pharmaceutical industry.

Astra Ventura’s Jefri Sirait believes that in general, investors shouldn’t be aggressive in new sectors since risks are rising amid the pandemic.

What does Astra Ventura look for in an investment?

  1. A leader that has vision and dreams, and is able to influence other people and build a strong team
  2. The product can be leveraged or scaled up
  3. Proven demand and select sectors that relate to Astra’s business as a captive market



The changing behaviors of consumers has been the biggest issue for Donald Wihardja, CEO of MDI Ventures, the investment arm of telecommunication provider Telkom Indonesia.

Around 55% of MDI’s portfolio comprises late stage or mature start-ups. Some of these companies’ business models have not stood the test of the pandemic and have been forced to pivot to stay in business. Key examples include dine-in restaurants soft landing on food online orders, while those with non-essential products have instead crash landed.

In contrast, e-commerce, for instance, rode the wave and earned triple growth during the pandemic.

Donald warns start-ups against relying on scheduling their fundraising efforts only once a year, which is traditionally after the peak Eid al Fitr season. Fundraising is more unpredictable now, he said.

Among state-linked venture capital firms, an issue is the high level of employee turnover, especially after the restructuring exercises following the general election in 2019. In the last year there have been four new corporate VCs from state-owned enterprises.

Overall, the COVID-19 situation has been like a time machine that has accelerated growth by three years for resilient start-ups or crashed others by three years as well.  In all, MDI Ventures sees more positives.

“We warned them in February that the pandemic will last longer and that this isn’t going to be easy, and that it’s better to prepare a plan B,” said Donald.

“Some were aware and started to take conservative approaches by saving cash, cutting salaries and laying off staff but many miscalculated that their cashflows would be enough until the next fundraising period which is usually after Eid al Fitr. Unfortunately that didn’t work out.

“Some have been successful in pivoting to new sectors. Probably the most noticeable new growth sector is telco,” he said.

Donald also sees big changes in major tech companies. Telkom and MDI for instance, are cost saving every component.

The resilient start-ups, said Donald, aren’t the ones unaffected by the pandemic, they are the ones that can handle and deal with the pressure and are navigating well through the crisis.

In recent months, MDI cut costs by 30-50%. The most important thing for the VC now is that all employees and management agree to be more efficient in crisis mode. The pandemic has made many big tech companies leaner, more efficient and resilient, said Donald.

He expects a fivefold growth of MDI’s capital placement to $100 million this year in line with the mandate from the minister of state-owned enterprises, which is to boost investments by collaborating with telco-related start-ups and fellow state-owned enterprises.

MDI Ventures portfolio includes: Postr, a platform that provides content for restaurants like KFC and McDonald’s , Opsigo, an online booking system for umrah travel agents like MyTour and MitraTour, and Volantis, an AI platform that serves zakat management institution Dhompet Dhuafa


MDI Ventures’ investments will focus on mature start-ups that have proven their resilience in the last five months. It is now relatively easier to choose between the good start-ups and the excellent start-ups just by looking at their performance during the last five months, according to CEO Donald Wihardja.

He is looking at a few sectors for growth:

  • Health
  • Logistics
  • E-commerce

Logistics start-ups under MDI’s management grew threefold in the last three months, and the VC believes fintech start-ups have the potential to drive cashless payments in Indonesia to 16% of all transaction volumes, from the current level of around 10%.

The COVID-19 crisis, said Donald, has been the best Chief Transformation or Information Officer that has forced rapid digital transformation among many companies.  

What does MDI Ventures look for in an investment?

  1. The champion in each sector
  2. Ability to collaborate with Telkom and other state-owned enterprises
  3. Mature in terms of revenue and business model
  4. Resilience amid the COVID-19 crisis


(Reporting by Yosi Winosa; Editing by Emmy Abdul Alim [email protected])

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