AC Ventures (ACV), a venture firm focused on early-stage startups in Indonesia and the rest of Southeast Asia, reached the first close of its fifth investment fund (Fund V). The fund is targeting $250 million and has so far raised 65% of that capital, mostly from limited partners who have invested in previous ACV funds. Fund V has already made five investments, incl ScoreLife, PERFECT and Atma.
The last time TechCrunch covered ACV was in December 2021, when it closed its fund III. (Its fourth fund is focused on Malaysia and managed by a separate team).
Founded in 2014, ACV’s portfolio now includes over 120 investments in Indonesia and the rest of Southeast Asia. Some notable companies include Xendit, Carsomestockbit, Ula, Sender and Aruna. Its team has grown to 35 people, with most based in Indonesia, but ACV has also recently set up offices in Singapore and Malaysia. Half of ACV’s management team are women, and across the portfolio that figure is 40%.
ACV recently hired Helen Wong as managing partner. Wong previously worked at GGV and Qiming Ventures and served on the boards of startups such as Tudou and Mobike.
The firm is sector agnostic, but many of its investments are in fintech, logistics, e-commerce, MSME and consumer technology. Fund V will also focus on new topics, including climate technologies. The firm’s check size at early-stage companies is typically $2 million, and it keeps a large portion of each fund for follow-on investments.
“Broadly speaking, we are investing in the digitalization of Indonesia and the Southeast Asian economy,” ACV co-founder and managing partner Adrian Li told TechCrunch. “Last year, Indonesia’s digital GDP was $70 billion and is expected to grow to over $350 billion in the next five to six years. Through our experience investing in past funds, we have also developed expertise, particularly in trading, fintech and micro and small enterprise opportunities. Each of these subject areas represents really deep revenue potential and we see many ways that digital adoption can really make things more efficient, cost less and create value for all stakeholders in these verticals.”
In addition to Southeast Asia, Fund V’s records come from North Asia, the United States, the Middle East and Europe. Li said global investors are drawn to Southeast Asia as it continues to show evidence of being a mature market, with successful unicorn IPOs such as GoTo and Bukalapaklater stage capital raising and more secondary exits.
With its focus on early-stage companies, ACV is often the first institutional investor in startups.
“Our fund plays on a successful strategy that we have continued to refine to be early-stage focused,” Li said. “That means supporting companies at a time when we can be really valuable in shaping a business as they build it, and also at a time when we can be significant investors, partners with them. We typically invest in 30 to 35 companies per fund and maintain a deep trailing ratio, 20-1, to invest in companies that perform and create value.”
ACV’s efforts to help founders include several key appointments who will work closely with startups. They are Lauren Blasco as Head of ESG, Leighton Cosseboom as Head of PR and Communications and Alan Hellawell as Senior Advisor and Venture Partner.
The firm’s added value includes working with founders to recruit key talent and sharing talent playbooks. Li said ACV likes to invest early because as teams grow, it can help startups lay the foundations of culture while retaining talent and communication. It also helps companies with compliance and governance, such as making sure they have functional boards and a good set of advisors.
Another part of its value creation initiatives are partnerships with conglomerates and business stakeholders in Indonesia that can help start-ups accelerate their business growth. For example, it helps fintech companies work with banks or access capital that they can use for lending.
Li said ACV typically invests in 10 to 12 companies a year in its funds, and that continues though the global slowdown in venture capital investing. “At times when money is easier, we might try to move a little faster, and at times like this we might try to move a little slower, but basically what we’re trying to do, is to vouch for the right companies, and so we don’t want to be rushed by time to market,” he said.
Although valuations across all stages have fallen by about 30% to 40%, Li also sees positives in the market environment, including the quality of entrepreneurs.
“What’s great about this type of period is that entrepreneurs focus a lot more on quality metrics and product-to-market fit before they start scaling their business,” he said. “I think over the last year when capital has been easy, probably a number of companies chasing earnings growth have scaled up prematurely, and that’s never been the most efficient use of capital.” He’s just trying to grab market share and get to the next round, so I think times like this are good for both entrepreneurs and investors.”