AC Ventures (ACV), a venture capital firm focused on early stage startups in Indonesia and the rest of Southeast Asia, has reached the first closing of its fifth investment fund (Fund V). The fund is targeting $250 million and has raised 65% of that capital so far, mostly from limited partners who have invested in ACV’s previous funds. Fund V has already made five investments, including SkorLife, IDEAL and Atma.
The last time TechCrunch covered apple cider vinegar was in December 2021, when it closed its Fund III. (His fourth fund is Malaysia-focused and managed by a separate team).
Founded in 2014, ACV’s portfolio now includes more than 120 investments in Indonesia and the rest of Southeast Asia. Some notable companies include Xendit, Carsome, Stockbit, Ula, Shipper, and Aruna. Its team has grown to 35, with most based in Indonesia, but ACV has also recently opened offices in Singapore and Malaysia. Half of ACV’s leadership team is made up of women and across its entire portfolio, that figure is 40%.
VAC recently hired Helen Wong as Managing Partner. Wong previously worked at GGV and Qiming Ventures and served on the boards of startups like Tudou and Mobike.
The company is industry agnostic, but many of its investments are in fintech, logistics, e-commerce, MSMEs and consumer tech. Fund V will also focus on new themes, including climate technology. The company check amount in start-up companies is usually $2 million, and it reserves a large portion of each fund for follow-on investments.
“Overall, we are investing in the digitalization of Indonesia and the Southeast Asian economy,” Adrian Li, co-founder and managing partner of ACV, told TechCrunch. “Last year, Indonesia’s digital GDP was $70 billion and it is expected to grow to over $350 billion over the next five to six years. Through our investment experience on past funds, we have also developed expertise, particularly around business opportunities, fintech and micro and small businesses. Each of these thematic areas represent very deep potential revenue pools and we see many ways in which digital adoption can really make things more efficient, less costly and create value for all stakeholders in these verticals.
In addition to Southeast Asia, Fund V’s LPs 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 that it is a maturing market, with the successful IPOs of unicorns like GoTo and Bukalapak, a capital raise at a later stage and more side releases.
Focusing on start-up companies, ACV is often the first institutional investor in startups.
“Our fund plays to a successful strategy that we have continued to refine to focus on early stages,” Li said. “It means supporting businesses to a point where we can be really valuable in forming a business at the as they build it, and also to a point where we can be significant investors in partnership with them. We typically invest in 30-35 companies per fund and reserve a deep, 20-1 trailing ratio to invest in companies that execute 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 Public Relations and Communications, and Alan Hellawell as Senior Advisor and Venture Capital Partner.
Added business value includes working with founders to hire key talent and sharing talent playbooks. Li said ACV likes to invest early because as teams grow, it can help startups establish culture foundations, retain talent and communicate. He also helps companies with compliance and governance, including ensuring they have functioning boards and a good set of advisors.
Another part of its value creation initiatives are partnerships with conglomerates and commercial players in Indonesia that can help startups accelerate their business growth. For example, it helps fintech companies work with banks or access capital they can use for loans.
Li said ACV typically invests in 10 to 12 companies a year across its funds, and that continues despite the global downturn in venture capital investment. “At times when the money is easier, we can try to move a little faster, and at times like this, we can try to move a little slower, but fundamentally what we’re trying to do is underwrite for the right companies, and so we don’t want to be pushed around by when the market moves,” he said.
Although valuations at all stages have fallen by around 30-40%, Li also sees upside in the market environment, including the quality of contractors.
“What’s great about this type of period is that entrepreneurs focus a lot more on quality metrics and product market fit before they start scaling their business,” he said. . “I think last year when capital was easy, a number of companies looking for revenue growth probably scaled prematurely, and that’s never the case. “Most efficient use of capital. It’s just about trying to grab market share and get the next round, so I think times like this are good for entrepreneurs and investors.”