As the number of cases and deaths from the new coronavirus increase, not everyone is just sitting and waiting for this all to be over. Jakarta-based seed investor East Ventures – known for picking some of the country’s most exciting unicorns – has mobilised its portfolio companies to deliver 100,000 COVID-19 test kits for the Indonesian public.
“In peacetime we use our skills for commercial benefit, but in times of war like this we repurpose them for the greater good,” East Ventures co-founder and managing partner Willson Cuaca told FinanceAsia in an interview.
The venture capital group is leveraging its fundraising skills to solicit $600,000 in donations to buy coronavirus testing kits developed by Nusantics, a deep tech start-up in its portfolio. While East Ventures usually looks for a monetary return on investment, in this case it hopes to be rewarded by protecting human lives.
Since launching a crowdfunding page this week via portfolio company Koinworks, more than $300,000 has already been raised by public donation.
Nusantics only recently joined East Venture’s stable of start-ups after raising an undisclosed amount in its seed round the company announced last week.
“[The] pandemic’s impact on a lifestyle business like ours is very severe,” Nusantics co-founder and chief executive Sharlini Eriza Putri said to FinanceAsia, leading the company to quickly pivot into developing test kits for the East Ventures initiative.
The genomics-driven company specialises in clean skincare products, which at face value is a far cry from epidemiology. And yet, the coronavirus lives in the same microbiome targeted by the start-up’s anti-acne creams and toners.
New Challenges
It’s unconventional, but East Ventures has a trackrecord of backing winning ideas. The venture capital group was a seed investor in several unicorns valued at over $1 billion including Tokyo-based online commerce store Mercari and Indonesia’s own travel platform Traveloka and e-commerce shop Tokopedia.
In the current market, building a unicorn will be even harder. Last week, East Ventures-backed restaurant ordering app Eatsy announced it would be quitting the Indonesian market from April first onwards, as the pandemic bites into the start-up’s bottom line.
“There is talk of a V-shaped recovery for the economy, but I don’t think that will happen,” Cuaca said. The seasoned venture capitalist foresees a mass extinction event for start-ups as the pandemic compounds pre-existing industry issues on top of reduced consumption.
Others in the Indonesian start-up ecosystem are also preparing for the worst.
Indonesian ride hailing unicorn start-up GoJek has instituted pay cuts for management to fund an initiative supporting hard hit front-line workers.
“This fund will support our partners who [...] have become a vital part of how cities will cope under reduced movement,” GoJek’s co-CEOs Andre Soelistyo and Kevin Aluwi wrote in a LinkedIn post.
East Ventures has approached the situation similarly. “We’ve made sure our existing portfolio companies have a long runway to survive,” Cuaca said. But will it be enough?
Support network
The capital freeze has prompted the venture space across Asia to hunker down for an extended winter. Globally, more than $28 billion in start-up investment is expected to be lost due to the pandemic in 2020, according to projections by Startup Genome.
Existing investors are stepping in to staunch the expected bleeding. “We are looking at existing portfolio companies and identifying the challenges that they are facing during this pandemic to help them,” said Douglas Abrams, founder and CEO of Singapore-based Expara Ventures in a recent interview with FinaceAsia.
Likewise, Singaporean fund manager TNB Aura has launched its Special Situations Fund. “We see an opportunity to support great companies which are facing near-term cash flow issues as a result of the COVID-19 black swan event,” the fund’s website says.
As a black swan event, the pandemic was largely unanticipated and will have an enormous effect now and in the future. Already, Cuaca says that “consumer and corporate behaviour is changing.”
In Indonesia, the pandemic’s effect on everyday life has spawned a variety of solutions. “Because of social distancing, nobody can go to wet markets anymore and sellers have had to become creative,” he said. “One merchant started a group on WhatsApp to take orders and deliver goods to homes.”
It remains to be seen how permanent these adaptations will become.
