Heaptalk, Jakarta — The rapid growth of a startup in Indonesia has attracted numerous Venture Capitalists worldwide to target this country as one of the potential markets for making sustainable investments, one of which is RHL Ventures, a Malaysian-based Venture Capital firm.
As stated by Co-Founder and Managing Partner of RHL Ventures, Raja Hamzah, Indonesia is one of the most attractive countries for Venture Capitalists, containing over 270 million people. This country also has youngest populations compared to other SEA countries.
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“Since we first invested in Indonesian startups, We have observed the startup landscape evolve exponentially. Also, the last two years have been an exciting journey as the local ecosystem has grown, with the average ticket size for early-stage fundraising doubling and the number of startups increasing,” added Hamzah.
ESG-based investment growth in Indonesia’s startup landscape
The sustainable investment growth in Indonesia can be indicated by the Multinational Corporations (MNCs) existence to generate more fantastic sustainable solutions for society. In addition, Hamzah explained that this increase would continue to occur in the future through the cooperation between the entire stakeholders and the government authority.
“We have recently discovered Indonesia’s ecosystem shift has resulted largely from foreign investors’ pressure. Thus, Indonesia’s government is expected to be more proactive in creating a smooth transition to Environmental, Social, and Governance (ESG) and United Nations Sustainable Development Goals (UN SDG), aligned with the country’s development agenda,” affirmed Hamzah.
He further elaborates on several examples among multiple Indonesian enterprises that have implemented ESG-related investments. One of which is the achievement of Green Rebel startup to raise $17 million in pre-Series A and Happy Fresh company that focus on the green solution and redistribution of food surplus.
Hamzah also mentioned the accomplishment of a solar energy startup, Xurya, to close its Series A funding round as other examples of ESG-based investment. In addition, the growth of sustainable investment has been indicated by several mining companies that lead investment in solar energy, including TBS Energy and PT Sumber Energi Sukses Makmur.
Likewise, the Morgan Stanley Capital Indonesia (MSCI) research recorded that APAC investors have significantly increased by implementing the ESG investment principle to reach a sustainable impact on society by 79% by the end of 2020.
Aligned with the company goals, Hamzah also revealed that the ESG investment principles had been a core value of RHL since its inception. He believes the sustainable investment will remain during the pre and post-pandemic era as this condition has produced new habit for people through the digital technology adoption for their daily activities.
This increase further underlines the need for ESG investment in the climate change challenges. As a part of its role in tackling the obstacle, Hamzah revealed that the company has determined to invest in Indonesia’s startups with preservation and sustainable living goals aligned with RHL’s primary values.
To ensure the long-term implementation of sustainability policies, Hamzah mentioned that his party always takes a founder-first approach to grow their business. Apart from the regular reporting and monitoring, he also claimed to retain open communication with the founders in ensuring the sustainability regulations are followed and maintained.
The RHL’s investment strategy to bridge the expansion of Indonesia’s startups
The long journey of this Malaysian-based investment firm to inject numerous startups in Indonesia could not be separated from the existing challenges, especially during the pandemic. Hamzah stated that the openness to accepting transformation is one of the challenges faced by RHL during investing.
Further, he revealed that finding startups that are resilient to external environment transformation and simultaneously able to pivot to other prospective offerings during the pandemic is not an easy job. Also, a lack of transparency and accountability also delivered challenges to building clear communication and performance credibility between stakeholders.
And now, as a part of RHL’s investment strategy, Hamzah will focus on the startup founders regarding their commitment to execute the plans on top of a robust business model to struggle with unexpected risks of the early-stage investment. His team has also retained continuous communication with RHL’s portfolio companies over the last two years, engaging them and providing guidance to navigate their transformation more quickly and efficiently.
“We aim to invest in the founders that can quickly adapt to changing environments and pivot the business when necessary. Most of our portfolio companies have survived the pandemic as our strategy of focusing on the proper founders with viable business models,” Hamzah affirmed.
For its long-term plan, RHL will cooperate with KB Investments and Malaysia’s Ministry of Finance to unlock the opportunity for Indonesia’s startups to expand in North Asia and Malaysia. This initiation is expected to support startups in Indonesia in ways other than capital investment, including resource sharing technical knowledge and cross-border networks to bolster local startup enhancement beyond the Indonesian market.
“We anticipate that our Indonesian companies will perform well and be the leading startups in their industry and vertical. With our strong network in Malaysia, we can provide a good testbed for expansion into Malaysia before their full SEA expansion,” Hamzah said in his statement.
RHL Ventures journey
Established in 2016, this VC firm was founded by Rachel Lau, Co-Founder and Managing Partner of RHL Ventures, Jojo Kong, General Partner at RHL Ventures, and Raja Hamzah, Co-Founder and Managing Partner of RHL Ventures. The company embarked on its existence as a multi-family venture capital firm that invests in early-stage companies. This Malaysian-based investment firm continues to leverage its family and investor network to bolster the early-stage startups’ scale to the IPO stage.
Hamzah affirmed that the company aims to take an essential part in the venture capital sector. He claimed that the RHL was one of the selected fund managers under Malaysia’s Ministry of Finance Dana Penjana Program, with a total capital seized of USD70 million. This VC company has invested in over 30 companies and contained Assets Under Management (AUM) worth USD170 million.
Perceiving numerous potential technology companies around the private market, RHL Ventures focuses on pouring capital into Southeast Asian technology enterprises, spanning the Healthtech, Edutech, and Consumer-Related companies that prioritize innovation and growth to disrupt existing business models.
This company has enriched several portfolios, including Alami fintech startups, GLife, HappyFresh, TiffinLabs food-tech startups, and Naluri healthcare companies. RHL company will also continue to invest in ESG-related principles, covering food-tech, healthcare services, and fintech enterprises that promote financial literacy and access for people with limited financing access.
“Businesses will have to start rethinking their business models to secure a sustainable future as the world faces complex challenges, from food security, climate change, and rapid population, to growing inequality. We expect the fledgling startups can initiate their solutions for a sustainable future for everyone,” Raja Hamzah concluded.