Aryo Prakoso Ariotedjo (Alumni – S1 Business conc. Finance Prasetiya batch 2006)
Source : Forbes Indonesia Magazine | Forbes Indonesia Online
Aryo Ariotedjo was 24 when he started Grupara Inc., a venture capital firm investing in Internet startups, at the end of 2011. Being young and innovative is his selling point. In 2012 he managed to convince several big investors such as the energy group Medco to invest $10 million in his startup. Aryo declines to disclose other investors, but it is said that tycoon Tomy Winata has also put money into the venture.
Grupara is considered one of the most active local venture capital investing in Internet businesses in Indonesia. Last year Grupara invested around $1 million in five startups and this year the venture capital firm is helping some of its startups get global reach by setting up in New York.
Grupara focuses on seed to early stage investment. Its seed investments can go as high as $50,000 while early stage could go up to $1.5 million. It also helps its startups look for outside investment. Grupara has a policy of taking a maximum of 30% equity in a startup and then hopes to exit after four to five years.
At first, the Internet didn’t interest Aryo. He worked for a while at a startup incubator in 2011 but decided the industry was still immature and that the real money was in coal trading, a job that his father also did. But that was before he read the book “Free: The Future of a Radical Price” by Chris Anderson. It was a book about digital businesses that offer free products and services but that can actually generate plenty of income.
“It opened my mind. I knew that local startups had difficulties in finding investors and funding. I was thinking that I know many people with money and I could connect them,” he says. “Being an entrepreneur you have to be brave and try new things.”
One example is when Medco provided Grupara with a 120 sqm office space at the Medco building, Aryo came up with the idea to share the space with startups for free, naming it Freeware.
Any startup needing office space can send a proposal to Grupara, which gives free space to those which Grupara thinks has potential. When it comes to investing, Aryo evaluates both the entrepreneur and his business model. Last year 17 startups were at Freeware, of which five got investments from Grupara. Aryo says he usually takes three months to evaluate the startup before making any investment.
So far all five startups are performing, says Aryo. Lolabox is one example. Started by ex-employees of Rocket Internet, Lolabox sells subscriptions to beauty boxes, in which each month subscribers receive a box filled with samples of cosmetics and makeup (a service that is already a proven success in the U.S. and Europe). The service now has 3,000 members paying Rp 145,000 a month, which gives the firm monthly revenue of over Rp 400 million. The service is so popular that there is now a waiting list of 5,000 who want to join as subscribers.
“On average each of our start-ups generates Rp 50 million to 200 million a month in revenue. Some could make profit but I would rather use it to grow the company further,” Ario says. Starting last month, Aryo has been commuting between Jakarta and New York to work on a Grupara investee firm Projectshoe. The startup sells customized shoes online. Customer can design their own shoes from scratch : such as the design, material, and accessories. Professor at the Fashiom Institute of Technology and New York University are consultants to the site. It also offers free worldwide shipping.
Aryo says he also plans to bring another startup, fashion site Mascoolin, to the US Market. “We have more opportunity if we start in the US. Some Indonesian startups actually have great concepts — Koprol was launched almost the same time as Foursquare. The guys at Mascoolin made Rokto, which is similar to Flipboard. Koprol was acquired by Yahoo, but it might have had a different end if it had started in the US,” Aryo says (Yahoo closed Koprol in 2012).
Interestingly, one of Koprol`s co-founders, Fajar Budiprasetyo, is now working at one of Grupara`s startups, Blinc, a mobile app for discount and loyalty cards.
However, despite new start-ups emerging in the contry, Aryo says those with a fundable concept remain hard to find. In 2013 Grupara had S10 Million to invest, but it ended up investing only $1 million.
“I think even foreign venture capital is having the same experience,” he says.
There were a reported 30 investment in term of funding and acquisitions of Indonesia`s startups in 2013 and some of those were not a first-time investment. Aryo feels the hype is over for now. Despite having 70 million accessing the internet, Aryo says that the purchasing power of that group is likely lower than the 7 million Internet users in Singapore.
Thus the investor and the investee have to be aware of local conditions. Last year Aryo was one of the founders of the Association of Venture Capitalist in Indonesia, which is a forum for internet venture capital and incubators. As for Grupara`s investment plan this year, Aryo says his firm still has money to invest but he prefers to work with existing firms. “We don’t want to disappoint our investors and I don’t want to give myself a headache,” he jokes.