East Ventures races in a perfect storm: 2022 recap & 2023 outlook
2022 has been a challenging year for the tech industry, exacerbated by global issues and geopolitical conflicts. Despite these obstacles, we have managed to navigate through the crises and close the year on a positive note with a lot of significant and impactful endeavors.
In mid-2022, East Ventures successfully raised a total of US$ 550 million in the final close of its multi-stage fund, with allocations of US$ 150 million for early-stage deals and US$ 400 million for growth-stage deals. The fund remains focused on Indonesia and Southeast Asia startups.
In terms of total investment and sectors, East Ventures delivered larger numbers than last year: a total of 105 deals closed, with 85 new portfolio companies and US$ 211.59 million disbursed to our Seed and Growth portfolio companies. The investments were streamed into several sectors, such as E-commerce, Direct to Consumer (DTC) and Retail, Fintech, Internet software & services, B2B, Supply chain and logistics, as well as Agritech.
Aside from the investment activities, East Ventures continues to bring impact to our ecosystem and beyond. This year, we supported two world-class sport events: VANS Bali Pro World Surf League and Indonesia Open 2022, because both sports share a similar philosophy with our investment thesis.
To help narrow the digital competitiveness gap among provinces in Indonesia, East Ventures released the annual East Ventures – Digital Competitiveness Index (EV-DCI) 2022, an index and report that highlights the digital capabilities of each city and province in the country. The report aims to be a guide for stakeholders in developing the digital competitiveness of Indonesia.
In April 2022, East Ventures launched the first Sustainability Report, which outlined the Environment, Social, Government (ESG) frameworks and impacts of our firm and ecosystem. Recognizing the growing demand for ESG integration, we have started deploying the necessary resources to help the firm and our portfolio companies in their ESG efforts.
In addition, we introduced the Women with Impact program to address the challenges that women face in the workplace and provide a platform for them to connect with other professionals. East Ventures also participated in the launch of the Ministry of Health’s Biomedical and Genome Science Initiative (BGSi) to support the advancement of the healthcare industry in Indonesia.
Last but not least, through the fourth initiative of Indonesia PASTI BISA, Maju Terus Pantang Mundur, East Ventures provides a platform for the talents impacted by the wave of layoffs over the past year. The initiative consists of a job board, where talents can navigate over 700 job opportunities available in the East Ventures ecosystem. We also held a coaching and hackathon program that drew a total of 270 submissions from 551 participants from 50 cities. There are 30 selected team champions who received a total funding of IDR 7.5 billion (around US$ 500,000).
Prudent and skillful amid an uncertain 2023
The year 2023 will greet us with high inflation in the US and Europe, which will affect investment rotation in Indonesia, still-rising interest rates, and falling growth expectations. With geopolitical tensions, financial stresses, and COVID-19 still adding to uncertainty, it’s no secret that the global market is tough on startups. The tech industry has been hit particularly hard over the past year, with what we might call a “perfect storm” of crises.
However, the best drivers can still race even in a perfect storm. Strong rains and lashing winds will not change Southeast Asia’s strong fundamentals.
Racing in the perfect storm illustration
Southeast Asia’s young, connected population, and high propensity to embrace technology make it a source of resilience amid the global growth slowdown. This is particularly true in Indonesia, which has seen its internet user population grow from 30 million to 200 million in just 13 years. These strong fundamentals have allowed the region’s top digital economies to grow faster than expected in 2022, with a total value of transactions set to reach US$ 200 billion this year, according to a report by Google, Temasek, and Bain & Company.
The strong fundamentals of Southeast Asia and Indonesia maintain the same paved road that we have been navigating since the beginning. Our vision and confidence in Southeast Asia’s potential remains the same. We know what turns to take, and we will continue to race in this perfect storm.
We will talk to the founders, map and understand their specific situation, and give them advice accordingly. Regarding the funding winter, as many would call it, our suggestion to the founders is to be more prudent and skillful with their business decisions.
Our focus has always been the founders. We believe in the right founder, the right driver who knows how to scale the business and use their abilities to remain competitive even in challenging times. Recession might be imminent, as the cycle has just started in 2022. This condition will probably lead to a challenging economic situation in the next couple of years. Hence, for startups which are able to adapt through the challenging short-term conditions, the challenges of 2022 should give way to longer-term opportunities ahead. This long-term perspective will be the focus of our investments.