Chinese venture capital investors are turning their attention to Indonesia, which has led to a 55% surge in China's technology investment in Indonesia in the first half of 2020.Shunwei capital, founded by Lei Jun, founder of Xiaomi, a mobile phone maker, and bace capital, backed by ant group, a financial technology giant, both said they were looking to the Indonesian market.
Xu Dalai, co-founder of Sunway capital, said he was planning more deals in the Indonesian market and would "not make new investments in India for the time being" but would focus on managing existing portfolio companies. Shun Wei capital manages about $3 billion in funds.
A person familiar with the bace capital plan also confirmed the shift. But he added that bace capital's activity in Indonesia was not high due to the underdeveloped Indonesian market. Another leading Chinese venture capitalist added that Indonesia is the only market in Southeast Asia that deserves serious attention.
But in April, the Indian government's policies had a negative impact on investment and cut off key sources of funding for technology start-ups. Zomato, for example, has not yet received $100 million in financing.
Indonesia is the fourth most populous country in the world, and has the largest number of billion dollar start-up enterprises in Southeast Asia. Global technology companies such as Facebook, paypal and Google have all invested in Indonesia this year.
According to an annual report on the digital economy in Southeast Asia released by Google, Temasek and Bain, the total investment in Indonesia's technology industry in the first half of 2020 was $2.8 billion, an increase of 55% over the same period in 2019.
"China remains a very important investor...... especially in the field of e-commerce.
Strong interest from us and Chinese investors has led Indonesian technology companies ahead of their counterparts in Vietnam and Thailand in terms of valuation and financing. "You're seeing some financing on a scale comparable to Silicon Valley," says beau seil, co-founder of patamar capital, a Southeast Asian venture capital firm "Valuations [of start-ups] in Indonesia have also risen significantly," he added
There is a typical example this month. Grab, a Southeast Asian technology company, this month led a $100 million round of b-round financing for local financial technology company linkaja.
Some of the founders in Indonesia even tried to replicate the business model of Indian companies. Wakurun, a small business based in Indonesia, was set up last year to play the same role in the Indian market as book, which is based in Bangalore, Indonesia. Khatabook, an accounting platform, has been valued at close to $300 million in just 18 months of its inception.
A Chinese venture capitalist said they had looked at buku warung but found that the company was already well valued. "It's hard to justify the valuations of some of these companies, especially those that follow the example of Indian companies. Too much capital, but too few quality start-ups. "