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Francisco Widjojo, an Indonesian venture capitalist, believes that technology and innovation will be one of the catalysts that will assist in propelling Indonesia to be a top-5 global economy by 2050. How he aims to contribute to the amazing growth story of Indonesia is through his firm Arkblu Capital.
Mr Widjojo is one of two Managing Partners at Arkblu Capital, a multi-asset private investment firm that has a primary focus on the venture capital asset class in Indonesia. The firm is part of an affiliate group of companies with interests in the consumer goods, health and manufacturing industries.
Arkblu Capital was established in 2019 and adopts a twofold venture capital strategy of taking direct interests in early-stage tech companies as well as LP interests in venture capital funds. Some of the firm’s notable startup investments include Wahyoo, R Fitness and Inspace.
Mr Widjojo is also the New South Wales Secretary of the Australia Indonesia Business Council (AIBC), the peak, a non-profit business association involved with the promotion and facilitation of trade and investment between Australia and Indonesia. Here, Francisco has assisted a growing number of Indonesian companies hiring directly from or setting up operations on, Australia’s shores.
Mr Widjojo holds a double degree in Laws and Business from the University of Technology in Sydney.
In an exclusive interview with AsiaTechDaily, Francisco says:
Professionally, I firmly believe that to be motivated every day continually; their ambitions must transcend above and beyond themselves. Furthermore, I also firmly believe that for one to be continually motivated every day that their ambitions must be such that they will transcend beyond their lifetime; in this regard, what drives the person is the process of fulfilling their ambition, as opposed to the result of the ambition itself.
Our mission at Arkblu Capital is to identify, invest in, and support the most ambitious founders building the best early-stage companies serving Indonesia’s rapidly growing middle class. With founders being inducted into the ecosystem every day, this is the mission that keeps me motivated every day.
Professionally, I want to be remembered as someone who significantly contributed to the growth story of, and the fabric of, the Indonesian economy in the twenty-first century.
Read on to know more about Francisco Widjojo and his journey.
Francisco Widjojo: From the outset, Arkblu Capital is a private investment firm. The firm is part of an Indonesian business group where its affiliate companies operate in the consumer goods, health and manufacturing industries in Indonesia. Arkblu Capital leverages the domain expertise and network of its affiliate companies in its value creation activities. The firm’s domain expertise centres on these particular industries and FMCG distribution and offline marketing.
Francisco Widjojo: The genesis of Arkblu took place at the beginning of 2019 during brainstorming sessions in one of our affiliate companies that operate in Indonesia’s consumer goods, health and manufacturing industries. Those discussions revolved around how we could better adopt technology in that particular company’s general operations but then evolved quite a bit from technology adoption to technology investment and what that could look like for us.
Fast forward around 8 months after those initial brainstorming sessions and Arkblu Capital was born as a free-standing private investment firm with a clear investment strategy, laser-focused investment thesis, and A-start team and committee of advisers.
Francisco Widjojo: Arkblu Capital’s portfolio of startups is all tech or tech-enabled startups covering the direct-to-consumer, fintech, travel, consumer health, SME tech and deep tech (VR) sectors.
Francisco Widjojo: We are sector agnostic in the investments we make – they don’t necessarily need to have strategic value for our affiliates companies. Arkblu Capital is more akin to a family office, which is why we use the term “private investment firm” as opposed to “venture capital firm”.
Essentially, the reason why we identify ourselves as “venture capital investors” (and not a “venture capital firm”) is because we have a twofold venture capital strategy: we have a direct investment strategy, where we acquire equity or equity-related interests in early-stage tech companies, but we also have a fund of funds strategy, where we acquire LP interests in venture capital funds that have at least a significant focus on Indonesia. By doing this, we can achieve substantial diversification across the venture capital asset class. However, it also allows us to understand the ecosystem by a better understanding better what GPs are doing from a broader perspective than only making direct investments. In this respect, our investment strategy is being replicated by other family offices in the region that have exposure to this asset class.
For us, the way that we see it is that venture capital, inherently, is an industry that requires a lot of collaboration. By making direct investments and fund investments, we can better enhance the quality of our portfolio, whether it’s through co-investments alongside GPs or follow-on funding for our startup portfolio.
Francisco Widjojo: We make initial investments of up to US$500,000 per investment. Stage wise, we focus on pre-seed to Series A.
Because our operations are more akin to a family office, we have the luxury of deploying patient capital. Thus, we do not set a benchmark in terms of the number of investments we must make in a particular year, which GPs must do due to the mandated investment periods enshrined in funds’ LPAs. If the founder and company satisfy our criteria, then we will invest. For reference, however, we made 6 direct investments into startups in the 2020 calendar year and 1 follow-on investment. We adopt a concentrated portfolio approach at Arkblu instead of a “spray and pray” approach. We believe such an approach, where a robust can be placed on each portfolio company, yields better returns for our portfolio companies’ founders and us.
Overseas headquartered startups can get funding from us. Still, they must currently have Indonesia as their primary target market or aim for Indonesia to be a significant target market in the future.
Francisco Widjojo: We don’t use blanket metrics to measure the performance of our portfolio companies. Each startup will have different metrics/KPIs that we refer to, depending on the business model. We will say that when we conduct our initial due diligence of a startup because we mainly invest in early-stage, the most critical components of the startup are the founder, founder dynamics, and quality and cohesion of the founding team.
Francisco Widjojo: During the peak of the COVID-19 pandemic, we shifted our focus from deal flow generation to portfolio monitoring. There was a lot of uncertainty during this time, and so we prioritised our focus on our currently existing portfolio companies and helping them navigate the pandemic.
Investment-wise, we raised the bar when it came to new investments. The reason for this included the fact that it was challenging to meet founders face-to-face and conduct operational due diligence as a result of PSBB (Jakarta’s lockdown measures). Thus, we only properly took a look at startups that were referrals from our trusted, internal network. The interaction between founder(s) and us as an investor is one of the most important factors we consider when deciding to invest.
Another factor we considered when analysing startups for new investment was how such business models would fare post-pandemic. We believe that the COVID-19 pandemic has changed how we work or how we do business and consumer behaviour at its core.
Francisco Widjojo: Based on our experience in meeting with a significant number of GPs across the region, anyone looking to start a fund should have an anchor LP, or several LPs with big cheques, secured before creating the fund and raising from other LPs. It is the number one question we ask first-time GPs, “Who is your anchor LP?”. It won’t be easy if you are new in the investment space (particularly the VC space) and are attempting to fundraise without knowing or having connections with potential LPs without a solid track record. We have seen some GPs approach us in their fundraising efforts and the end, failed to get their fund off the ground as they were unable to secure an anchor LP.
Francisco Widjojo: They are too proud of their product and their ability, particularly from founders with a “great CV”.
Francisco Widjojo:
Francisco Widjojo: We see that the most successful startups that expand internationally are the ones with products or business models that are “turnkey” in nature. B2B SaaS businesses are what comes to mind for us, such as Atlassian and their Jira and Trello products. You are creating a single product that can be used globally, without much modification to the geographic market.
When local startups consider international expansion, they need to analyse whether their product is suited for their target overseas markets. Not all products are suited for overseas markets, primarily due to differing consumer behaviour or the business or industry’s underlying infrastructure.
Francisco Widjojo: The COVID-19 pandemic saw the acceleration of the adoption of technology by both consumers and businesses. In Indonesia, e-commerce and the online delivery of food is growing because more people are purchasing things virtually without going to a physical store. People are learning/being forced to train to be more adoptive of tech on their smartphones because sectors that were in “hibernation” before/during the pandemic, i.e. the sectors of the future, are becoming the sectors of the present. Examples include health tech, travel tech, and sub-sectors of e-commerce such as purchasing groceries online and cloud kitchen.
Francisco Widjojo: Angela Duckworth’s book Grit: The Power of Passion and Perseverance is a book that I commonly reference in my conversations with those around me. Ms Duckworth’s book teaches us a valuable lesson that can be universally applied: grit (and not so-called ‘talent’) which is the common factor amongst those at the top of their field. This lesson, and how grit can be deconstructed and cultivated, is important not just for those in business but also for those in the military, educators, and present and future parents.
Chin-Ning Chu’s book Thick Face Black Heart was recommended to me by a good friend of mine several years ago, and it is a profound read. The book blends both Eastern and Western philosophy to provide a framework which one can use when practising judgement in their day-to-day.
Finally, Ray Dalio’s best-selling book Principles: Life and Work. Mr Dalio’s belief of an idea meritocracy – i.e., an idea, not an organisation or person, that prevails – is a teaching that can also be universally applied in business and personally. Universally, one should strive to trust in their instruments (i.e. their principles/values), just like how a pilot trusts in their instruments instead of their instincts when flying, to ensure optimality in decision-making.
Francisco Widjojo: Professionally, I firmly believe that to be motivated every day continually; their ambitions must transcend above and beyond themselves. Furthermore, I also firmly believe that for one to be continually motivated every day that their ambitions must be such that they will transcend beyond their lifetime; in this regard, what drives the person is the process of fulfilling their ambition, as opposed to the result of the ambition itself.
Our mission at Arkblu Capital is to identify, invest in, and support the most ambitious founders building the best early-stage companies serving Indonesia’s rapidly growing middle class. With founders being inducted into the ecosystem every day, this is the mission that keeps me motivated every day.
Francisco Widjojo:
Francisco Widjojo: Professionally, I want to be remembered as someone who significantly contributed to the growth story of, and the fabric of, the Indonesian economy in the twenty-first century.
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