How should innovation be viewed in emerging markets like Southeast Asia?
Innovation is not always about ‘big breakthroughs.’ In developing countries like Indonesia, innovative disruption can lie in improving existing operational processes and systems. These opportunities, although incremental, can offer significant benefits for companies and society in these markets. Innovation needs to be seen in a local context. Localization is a vital part of our own investment strategy – we seek products that solve unique challenges faced by local customers.
Innovation is also a moving target. It comes in waves; you need to predict where trends are headed, not chase a crowd. Looking at e-commerce 10 years ago, for example, online marketplaces were just emerging. Now, to compete with market-leaders, new start-ups in this space need to be looking forward to the next iteration of e-commerce to address specialized niches, like our portfolio company Lemonilo, a vertically integrated healthy food player. As a VC, we have the privilege to not only capture but create future trends to tap into a sector’s full potential.
How do you spot innovative technology companies?
We have seen the rise and fall of many companies over the years, and what sets them apart are the founders. Great innovation usually comes from first-hand experiences and the urge to do something exceptional. In early-stage investment, with limited data points to evaluate things like commercial performance, we seek founders who have both an unfair advantage in a given industry and execution ability – both are hard to replicate and significant differentiating factors. For example, one of our fastest-growing companies – GudangAda – is a B2B marketplace for FMCG traders. It was founded by an industry veteran with 25+ years of experience who was able to identify market nuances that start-ups without this background missed.
How do you help companies remain competitive against rising innovation?
We aim to be an effective sounding board and trusted partner for our founders. Open communication, alongside a value-add approach, are critical parts of our DNA. We actively encourage collaboration among our 35+ portfolio companies and our dedicated VC team – one of the largest in the region – to help shape a company’s future strategy. In addition, investment selectivity ensures we put all our energy, capabilities, and resources into each company we back. This recipe has led to a strong track record of follow-on funding for most of our investments and driven strong fund performance.