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Decoding Venture Capital In Indonesia: In Conversation With Sebastian Togelang Of Kejora Ventures

Decoding Venture Capital In Indonesia: In Conversation With Sebastian Togelang Of Kejora Ventures

Prestige 40 under 40, 2015. A serial entrepreneur with more than 25 investments across Asia. Founder and Managing Director of a VC firm. Many accolades, one man: Sebastian Togelang.

In 2014, when Sebastian Togelang came back to Indonesia from Germany, he could count the number of VCs active in the archipelago on his fingers. This number also included the few international players that had made their foray into the emerging Southeast Asian startup pool.

Jump to 2017, and the number has grown significantly to reach 20 prominent players, indicating that Indonesia’s startup ecosystem is growing at a unprecedented pace by all, including the frontrunners of the startup ecosystem.


Togelang who founded Kejora Ventures in 2014, is also the co-founder of Ideabox – an incubator set up between Mountain Kejora Ventures and Indosat/Ooredoo Group, focussing on incubating technology companies in the emerging markets.

Sebastian has invested in about 29 startups, 16 of them are through the Ideabox programme. With a presence in Jakarta, Singapore, Makati City and Bangkok, Kejora recently announced the launch of its second fund, with an expected corpus of $80 Mn with plans to expand to Malaysia.

In an exclusive interview with Inc42, he shares what it takes to be a VC in Indonesia, the startups evolving there, and how companies can maximise on growth and development in the island nation. Here are the excerpts from our recent interaction.

[The interview has been edited for length and clarity.]

Inc42: According to you, which sectors in Indonesia will see a potential rise in funding and demand in the near future?

Sebastian: In the Indonesian tech space, at the moment, fintech is in rising demand. Whether it is about experimenting with new technologies or attracting funding, fintech startups are doing it all. Secondly, logistics, which is still a big problem in the country, has a huge opportunity for startups to cash upon. The opportunity lies at both the ends, both first-mile and last-mile, so the sector will see a rise in ideas and emerging startups.

Lastly, data, which very important and how can one manage it, is also a hot segment and is in demand in the country at the moment – especially with the AI and machine learning entering. Additionally, maybe in the coming future, healthtech and edtech will gain supreme importance too. But, right now, the space belongs to fintech. It’s the big thing out there. At the end of the day, it’s all about solving problems with scalability.

Inc42: What prominent industry trends do you see when it comes to fintech scene in Indonesia?

Sebastian: Fintech in Indonesia is growing at an unprecedented pace. We can already see the changes it has brought in everyday lives – in payments, insurance, and online banking. The industry has shifted rapidly in the last 2-3 years.

We, at Kejora, have already invested in four fintech companies, and have also co-founded a fintech association, so there are more and more companies to come. The fintech association started from 3-5 startups and within couple of months this number has grown to reach 90 The number of product launches in the fintech space has left behind all its contemporary industrial/tech sectors.

When it comes to entirely replacing cash with digital payments in the country, I think, Indonesia still has a long way to go. The fact that only 40% of the country’s population is currently bankable posts a big challenge for the fintech startups. Nevertheless, the industry is moving more towards cashless and digital payments have become the go-to strategy.

Inc42: Just recently, Kejora closed an $80 Mn fund.  How do you plan to deploy the fund? What are you key focus areas?

Sebastian: Our business motto is very simple. We look at what are the successful companies  (revenue making and sustainable) in other countries including Europe, China, the US and other parts of the world and try to apply their business model here because sooner or later other countries will buy similar stuff in this region.


We are very focussed on bringing these successful business models to startups in Southeast Asia and help them expand as fast as possible, when it comes to digital businesses, the number one player can probably take almost 70% of the market, so speed and timing is everything in a digital venture.

And now, even with the new fund, we are still going to focus on things we are good at. I think we are good at understanding the insurance sector. We are putting more energy towards logistics, because that’s something that is still a very big problem in Indonesia. Edtech is also something we might focus upon in future.

Inc42: Since the advent of startup ecosystem in Indonesia, the country has seen some shifting investment and investor patterns. Where 2016 saw some major acquisitions and partnerships such as Lazada-Alibaba, Uber-ExpressTaxi etc., where do you see 2017 going? Additionally, what is the investor strategy at this moment in the industry?

Sebastian: 2017 will be a continuation of the scenario that began in 2016. Where 2014-2015 was the year of rapid growth, while at the end of 2015, it saw a sudden halt. The unicorn crisis happened in 2016 when a lot of companies became mature, and investors that were once focussing on market growth suddenly realised ‘Okay, it’s now time to ask for revenue, real numbers, to create a sustainable company.’

So, for 2017, I guess investors are much smarter now. Hopefully, there will be not too much hype anymore, but they will be investing more in sustainable companies. It is going to be the time for bigger and smaller players coming together and optimising business expansion in different sectors across Southeast Asia. There are different factors for the same. The bigger startups are now getting so much more funding, that they want to grow faster, and one way to do that is by acquiring smaller companies, the ones that they think are strategic for their growth and development.

At the same time, the smaller players are realising that if they don’t join the bigger ones, it will be difficult for them to gain funding or grow at the pace similar to the bigger players. So I think the market is getting more reasonable, where the stronger will acquire the smaller to stay in the game.

Initially, everybody wanted to become the Google of Indonesia. I think now the market is getting more mature where people understand that they need to collaborate.

Additionally, strategic partnerships across countries for investments are also gaining pace. So let’s say there are two companies, one is operating out of Thailand and the second one is from Indonesia. Both of them have good traction and user-base in their own respective countries. The two can possibly enter into a partnership where they will combine their resources and customer bases to capture the market share in both the countries.

Inc42: Venture capital surfaced as a comparatively new concept in Indonesia. How do you think VC funding is panning out. Throw some light on upcoming trends as well.

Sebastian: When I came back from Germany in 2014, I think the number of VCs in Indonesia could be counted on one hand. And that’s actually saying something. And, even then, a part of it consisted of international VCs that had an affiliate here.

Then came 2015, and we saw the rise of Indonesia’s wealthy families. It was a game changer for funding and venture capital in the country. As the big, powerful families of Indonesia created their own VC funds, thus, more and more VCs are popping up in the archipelago. With the rise in number of startups, the number of VCs and investors has also increased, and this growth has been almost directly proportional.

Now, Indonesia has gradually emerged as the next big destination for investments. I can say this because I remember being back in Silicon Valley, and there wasn’t much talk about Indonesia being the next big investment hub. In fact, there was no talk at all. Even when I went to China, nobody really cared about Indonesia. But the times have changed and now we are seeing all these American VCs, be it Sequoia, or 500 Startups, or Chinese VCs coming to the country and they all want to put their money in the Indonesian market now.

Inc42: You are currently serving as the Secretary General of the Indonesian Venture Capital Alliance. Could you please shed some light at the role and aim of this body and how is it boosting the startups in the archipelago?

Sebastian: Traditionally, venture capital in Indonesia was synonymous with debt or a loan and did not function as investment for a company. It wasn’t an equity-based deal. So, the entire structure of venture capital had to be built from scratch here. We needed to work very closely with the government to build this digital economy hand-in-hand.


VCs, as a part of the digital ecosystem, directly/indirectly support the tech startup growth in Indonesia. A lot of the successful business groups in Indonesia come from traditional industries. These conglomerates and the Indonesian Government are relatively new to this digital business world. Until now, unfortunately it’s still hard for startups to get Series A, B funding from Indonesian Investors. If the VC ecosystem grows, it can help the startups to grow as well.

In addition, this alliance supports the synergy among the VCs in Indonesia, such as co-investments, knowledge and technology transfer, etc. Besides that, it encourages the VCs to work together and support each other.

The ecosystem of a country in its entirety needs to be nourishing for the startups. The direction and the position of the current government with respect to startups is to be appreciated, and being hopeful of the future ahead, this growth will keep continuing. The government is trying to make policies that are more startup- and investment-friendly and is also providing special tax benefits to startups. It’s all in the process and it will take time.

Inc42: Let’s talk about historical way of funding in Indonesia and how the launch of bigger funds (Series A and above) could affect the ecosystem.

Sebastian: VCs in Indonesia initially did just one thing: Seed investment.

Presently, we have an increasing number of seed investors, and steady Series A investors, joining forces to finance the Series B round. Otherwise, the Series B round of a startup is usually backed by the big international guys, or some PE firm.

At the same time, I think there is a lot of gap between Series A and B round when it comes to investors, but this trend is also shifting. The new trend would hopefully have more investors coming to the B and C rounds, because essentially the bet is that only strong companies would survive and go to Series B from A. So far, Indonesia is growing in a healthy way, but the Series B scale is still underdeveloped.

Inc42: What are the factors that you, as an investor, keep in mind before putting your money in a startup?

Sebastian: There are a couple of factors that we keep in our mind while investing in a startup. We have our 3Ts: Theme, Team, and Time.

A startup’s theme (business idea) is very important for us. Then comes their business model, and sustainability being the third key factor there. Basically, I invest in a very strong team, that can make this theme (the proposed business idea) successful enough to become the leading startup in that sector.


Kejora is still sector-agnostic, in the sense that we will invest in a startup as long as it belongs to a lucrative market, is sustainable and, at the same time, is creating disruptive technology in its domain. Kejora is now focussing on the entire Southeast Asian region, and is planning to expand its portfolio across the entire region, not just Indonesia. That’s going to be the focus of our new $80 Mn fund.

Inc42: In your opinion, what are the major roadblocks that startups operating in Indonesia face?

Sebastian: Population is definitely a key aspect for tech companies that want to grow in the country. While Indonesia is on the good side of this issue, at the same, time people have to also be ready to buy things/products and for that, they need to have money in their pockets. Consumption patterns are changing and it would be right to say that Southeast Asia is on the right track.

That being said, I think there are a lot of challenges that startups face here. Indonesia has 17,000 islands, that makes logistics one of their biggest problems. But payments are  still challenging. The reach of banks and digitisation is not very high, which leads to a situation where different people prefer different types payment methods – depending on user preferences and reach of technology. This becomes problematic for the startup when it wants to capture the bigger chunk of a market.

At the same time, all of these problems are possible opportunities for startups to create a space for themselves, solve them and, in turn, become indispensable for the economy and the population.