In the midst of a prolonged period of limited funding, Southeast Asian startups may have found a glimmer of hope.
The Jakarta, Indonesia-based venture firm, AC Ventures, has just announced the successful raising of their fifth fund, called ACV Fund V, totaling $210 million. This final close includes investments from esteemed limited partners such as the World Bank’s IFC, as well as investors from the United States, the Middle East, and north Asia. With over 50% of the fund coming from returning LPs and institutional capital making up over 90% of its total, AC Ventures has already begun investing in startups like MAKA Motors, an Indonesian electric vehicle maker, and Koltiva, a sustainable farming startup. In total, AC Ventures now boasts over $500 million in assets under management across their five funds, and Fund V is expected to add around 25 companies to their existing portfolio of 120 startups. While check sizes will vary between $2 million to $5 million, ultimately depending on specific investment opportunities, companies aligned with AC Ventures’ impact goals and experiencing rapid growth may receive a larger investment of $20 million to $30 million.
Co-founder and managing partner of AC Ventures, Adrian Li, spoke to TechCrunch about the challenges of raising Fund V amidst a declining funding market. “2023 has proven to be a difficult time for venture and technology businesses in terms of fundraising, perhaps one of the most challenging periods in the last decade.” However, AC Ventures was able to secure both new and returning limited partners who also saw potential in Indonesia and Southeast Asia.
“Our limited partners share our firm belief that challenging times often present the best investment opportunities,” Li continued. “We have a strong confidence that our latest fund will prove to be one of our best yet, thanks to Indonesia’s ongoing long-term demographic trends and robust economic fundamentals.” He also noted that they have encountered an increasing number of high-quality teams over the past year, teams that prioritize profitability and are available for investment at favorable valuations.
While AC Ventures invests across Southeast Asia, the firm’s primary focus is on Indonesia, which represents 40% of the region’s economy. With Jakarta’s economy projected to reach $360 billion by 2030, and the country implementing pro-investment policies and digital economy initiatives, AC Ventures co-founder and managing partner, Michael Soerijadji, believes Indonesia’s economic growth will be largely driven by private consumption, manufacturing, services, and exports.
For Fund V, Li revealed that the firm is particularly interested in investing in fintech, e-commerce, health tech, MSME enablement, and climate-focused startups. The team is also excited about companies that cater to changing consumer habits, such as online retail, consumer services, and consumption upgrades, taking advantage of the growing digital adoption.
“We strongly believe there is significant potential in these changing patterns and offer unique, value-driven solutions for Indonesian consumers that not only challenge incumbents but also drive new markets,” Li stated.
AC Ventures takes a hands-on approach to working with their portfolio companies, providing support in business development, strategic partnerships, talent recruitment, government relations, financial planning, and fundraising. Additionally, they offer guidance in marketing, public relations, and ESG (environmental, social, and governance).
An essential priority for AC Ventures is to invest in firms with a high environmental and social impact. They report that their third fund, Fund III, achieved an overall impact ratio of +37%, as measured by Finland’s The Upright Project, surpassing the Nasdaq Small Cap Index average of +29%. Managing partner, Helen Wong, explains that when considering potential investments, AC Ventures conducts a baseline assessment across four areas: environment, health, society, and knowledge.
The firm also strongly advocates for gender parity, with women making up 50% of their leadership team and 41% of C-level leaders in their portfolio companies. Wong notes that AC Ventures is a signatory of the UN’s Women’s Empowerment Principles and IFC’s Invest2Equal program. They encourage their portfolio companies to prioritize diversity and inclusivity in hiring and leadership development and have held events with limited partners, like IFC, to facilitate networking and mentorship for female founders.
“Highlighting the success stories of female-led startups in our portfolio is another crucial aspect,” Wong emphasizes. “It serves as a powerful example for others to follow.”
