AC Ventures (ACV), a venture firm targeting early-stage startups in Indonesia and the rest of Southeast Asia, has reached the first close of its fifth investment fund (Fund V). The fund is targeting $250 million and has so far raised 65% of that capital, primarily from limited partners who have invested in ACV’s previous funds. Fund V has already made five investments, including SkorLife, IDEAL and Atma.
The last time businesskinda.com covered ACV was in December 2021, when the Fund III closed. (The fourth fund focuses on Malaysia and is managed by a separate team).
Founded in 2014, ACV’s portfolio now includes more than 120 investments in Indonesia and the rest of Southeast Asia. Some notable companies include Xendit, Carsome, Stockbit, Ula, Shipper, and Aruna. The team has grown to 35 people, most of whom are based in Indonesia, but ACV has also recently established offices in Singapore and Malaysia. Half of ACV’s leadership team is made up of women, and that’s 40% for the entire portfolio.
ACV recently hired Helen Wong as a managing partner. Wong previously worked at GGV and Qiming Ventures and served on the boards of startups such as Tudou and Mobike.
The company is industry independent, but many of its investments are in fintech, logistics, e-commerce, MSME and consumer technology. Fund V will also focus on new themes, including climate technology. The size of the checks in start-up companies is typically $2 million, and it reserves a large portion of each fund for follow-up investments.
“Broadly speaking, we are investing in the digitization of Indonesia and the economy of Southeast Asia,” ACV co-founder and managing partner Adrian Li told businesskinda.com. “Last year Indonesia’s digital GDP was $70 billion and is expected to grow to more than $350 billion in the next five to six years. Through our past experience of investing in funds, we have also developed expertise, particularly in commercial opportunities, fintech and micro and small businesses. Each of these thematic areas represents really deep sources of revenue potential and we see a lot of ways that digital adoption can really make things more efficient, cost less and create value for all stakeholders in these verticals.”
In addition to Southeast Asia, Fund V’s LPs come from North Asia, the United States, the Middle East and Europe. Li said global investors are attracted to Southeast Asia as it continues to prove it is a maturing market, with the successful IPOs of unicorns like GoTo and bukalapakan increase in capital at a later stage and more secondary exits.
With a focus on start-ups, ACV is often the first institutional investor in start-ups.
“Our fund is capitalizing on a successful strategy that we have continued to refine to focus early on,” said Li. “That means supporting companies at a point where we can be really valuable in shaping a company as they build it, and also at a point where we can be meaningful investors working with them. We typically invest in 30 to 35 companies per year. fund and set aside a deep follow-up ratio, 20-1, to invest in companies that create and execute value.”
ACV’s efforts to help founders include several key appointments that will work closely with startups. They are Lauren Blasco as Head of ESG, Leighton Cosseboom as Head of PR and Communications and Alan Hellawell as Senior Advisor and Venture Partner.
The company’s added value includes working with founders to hire key talent and sharing talent operations playbooks. Li said ACV likes to invest early because as teams grow, it can help startups build foundations for culture, talent retention and communication. It also helps companies with compliance and governance, such as ensuring they have functional boards and a good set of advisors.
Another part of the value creation initiatives is partnerships with conglomerates and business stakeholders in Indonesia that can help startups accelerate the growth of their business. For example, it helps fintech companies to collaborate with banks or to access capital that they can use for lending.
Li said ACV typically invests in 10 to 12 companies a year across its funds, and it continues to do so despite the global slowdown in venture capital investment. “In times when money is easier, we might try to act a little faster, and in times like these we might try to trade a little slower, but essentially we’re trying to insure for the right companies, and so we don’t want to be rushed by the timing of how the market is,” he said.
While valuations have fallen by about 30% to 40% at all stages, Li also sees benefits in the market environment, including in entrepreneurial quality.
“The great thing about these periods is that entrepreneurs are much more focused on quality metrics and product-market fit before they start scaling their business,” he said. “I think last year when capital was easy, probably some of the companies pursuing growth had scaled up prematurely, and that’s never the most efficient use of capital. It’s just trying to gain market share and get to the next round, so I think times like these are good for entrepreneurs and investors alike.”
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