Indonesia is one of the world’s fastest growing markets for mobile devices. Over one in five Indonesians already use a smartphone and that number is expected to increase rapidly over the next few years. Despite a very promising market opportunity, however, Indonesian startups still have to deal with many drawbacks, including lack of venture capital funding and mentorship. Convergence Accel wants to change that.
The Jakarta-based VC firm just announced a $25 million fund that will focus on early stage startups in Indonesia. The new fund plans to invest up to $500,000 in 25 to 30 startups over the next five years, with followup funding for the most promising companies. Convergence Accel has already participated in online publication Female Daily Network’s $1 million Series A. Its partners, Adrian Li and Donald Wihardja, also want to bring advice from U.S. and China-based venture capitalists to entrepreneurs.
Li is very upbeat about Indonesia’s growth prospects, noting that in 2018 there are expected to be over 150 million smartphones in Indonesia, with over 100 million using 3G or faster connections. “On the adoption side, we recently saw in Mary Meeker’s presentation that Indonesia already has the highest consumption of screen minutes per capita globally, together with the fourth largest Facebook population and some of the most engaged Twitter users. Adoption of Internet products clearly has momentum,” Li said in an email.
“Finally, with an economy nearing 50 percent of Southeast Asia’s total GDP and among the fastest growing at a forecast seven percent, Indonesia clearly has a lot of market potential in the next decade. I think of Indonesia as China (albeit one-fifth the size) five years ago,” he added.
Li also points to several major raises by Indonesian companies, like online marketplace Tokopedia (which recently landed $100 million led by SoftBank Capital) as a sign of increasing interest in Indonesia’s startup ecosystem. Convergence Accel is not certainly alone in focusing on Southeast Asia startups. In addition to SoftBank Capital, other investment firms interested in the region include Japanese e-commerce giant Rakuten and Singapore-based Monk’s Hill Ventures.
Convergence Accel will keep an eye on a wide range of sectors in Indonesia, though Li says they are particularly interested in media, online marketplaces, and mobile startups. In order to help portfolio companies grow, Convergence Accel will not only provide funding, but also a mentoring network that will connect startup founders with successful entrepreneurs and companies.