Wrapping Up

I’ve officially finished my internship and am headed back to the US today. Looking back, it’s been a great three months and I’ve learned a lot. I’ve gotten more experience with startup social enterprises and insight into impact, angel, and venture capital investing, development agencies, and a little bit of development consulting. I’ve managed to narrow my career focus a bit, and built up my qualifications to pursue it. I’ve gotten a strong understanding of entrepreneurship and social entrepreneurship in Indonesia, which I can hopefully leverage in the future. I’ve gotten to work with a few startups that have both clear social/environmental impact and a strong business proposition and (hopefully at least) helped them expand that impact.

I’ve met a lot of great people doing interesting things, had a lot of great food, and have explored a bit of Indonesia. All in all, a solid summer.

Borobodur Temple

Camping in the Thousand Islands

Cliff in Bali

Seminyak, Bali

Hiking through tea plantations in Puncak

Building the Entrepreneurial Ecosystem Part 2: Angel Investing

A major piece of the entrepreneurial ecosystem that has yet to be fully developed here in Indonesia is access to early stage funding. There is a gap between the funding provided by friends and family and the much larger investments most venture capitalists are looking for that causes issues for a number of entrepreneurs. Some VCs have been moving to earlier stage investments, but this comes with its own set of issues. Accordingly, one of GEPI’s biggest initiatives during my time here has been launching Indonesia’s first open angel investor network and two angel funds.

We had a big launch event in mid-July with 30-40 affluent prospective angels to teach them about angel investing, valuation, and structuring/negotiating a deal. Partially supported by the US State Department, we brought in two prominent angel investors from the US to hold a full-day workshop. It was an amazing learning experience and a great opportunity to see business tycoons go through a negotiation simulation similar to the ones in our MO class – I definitely still have a ways to go.

Panelists at the workshop

Pak Ciputra, the godfather of
entrepreneurship in Indonesia

I’ve also had the unique opportunity to structure two angel funds – one focused specifically on female entrepreneurs, and another more general one. Having no background in investing, it was really interesting to understand how an investment fund works, and then adapt that knowledge to an Indonesian context.

These angel investors are interested in all businesses, not just social enterprises. That being said, a number of the businesses in our pipeline that we’re preparing to pitch to our investors are social enterprises that have positive impact, but also compelling business propositions. I’ve prepared a workshop on presenting to investors,

Presenting to a group of entrepreneurs

 and spent my last day at GEPI working with 14 entrepreneurs on their investment pitches. The remaining challenge though for both investors and entrepreneurs is a lack of exit options. In the US, there is a robust IPO market and a lot of acquisition activity that lets investors earn multiples of what they invested to cover other startups that fail. However, here in Indonesia, an IPO is not a viable exit option and the lack of data on acquisition terms makes it difficult to determine whether it’s actually profitable to do angel investment. As such, entrepreneurs crutch together alternative investment terms that likely aren’t in the best interest of the business or investor (i.e. a 3-year profit sharing period with the full investment paid back at the end, almost like an income-based loan). I believe once this hurdle is overcome, the entrepreneurship scene here will grow even faster than it already is.

Building the Entrepreneurial Ecosystem Part 1: Business Incubator

One of the challenges GEPI (Global Entrepreneurship Program Indonesia) faces in having workshops, events, networking nights, etc is the effort and cost involved in renting a space. Entrepreneurs also don’t have a central place to gather in Jakarta and many entrepreneurs work out of cafes to avoid high office costs.

GEPI is aiming to address this by launching a business incubator/ co-working space a la The Hub where entrepreneurs can rent a desk, network with other entrepreneurs, and get access to mentorship and lower cost services (legal, accounting, etc). We’re partnering with Founders’ Institute Jakarta and Mandiri, the largest state-owned bank, and hope to have it launched in the next few months.

There are some similar spaces already, but most of them take an equity investment in the businesses and as a result are smaller. We’re aiming to house 50-100 entrepreneurs selected through an application process, hold regular workshops and events, and have a structured mentorship program to help them develop their businesses.

The goal of all this is to help bridge some of the major challenges of entrepreneurship here, specifically the lack of management knowledge and strong/ effective networks. In the past, entrepreneurship was the bastion of well-off individuals who could afford to take such a large risk and had access to knowledge and networks, but startups are being pursued by a much wider group now who need this type of support.

Organic Rice Farming

My internship is wrapping up this week, and I’m behind on my blogging! I’ll post on a few of the highlights
over the past months. 

Their product

My last post was a few weeks ago about our visit to a waste management business in Bali; just before that we went to visit a rice farming business on the eastern end of the island of Java. The company helps farmers increase their income by guiding them through the transition from farming conventional white rice to organic red rice and facilitating access to lower cost inputs and premium prices for their organic crop. The bulk of our time there was spent completing the due diligence with our investment partner by talking to the team and all of their stakeholders.

With the farmer's family

We met with one of their farmers/ farmer coordinators to talk about his experiences with organic rice farming and with the business. He was clearly passionate about organic rice and about the benefits of eating red rice instead of white rice (he specifically mentioned ‘keeping you regular’). It was great seeing his passion and how he had used his increased income to benefit his family.

The management team is a group of recent graduates from a top agricultural college here who are really sharp and committed to social impact, but could use help on the business side. One of the team members was in our car giving us some background on the board member we were about to meet. What he failed to mention, and what surprised us all, was the first line out of the board member’s mouth – that he was that team member’s father. The look of confusion and shock around the room were priceless.

Food wise, we had chicken and rice for almost every meal for 5 days – needless to say we were itching for anything else by the time we got to Bali.

With the team

One of their rice fields

Rice being dried

Rice milling unit

Work with a startup social enterprise in Bali? Yes please!

It’s been a busy few weeks, with the last 2 weeks spent making field visits to the 2 businesses we’re working with and the launch of our angel investor network coming up quickly next week.

Terraced Rice Paddies in Ubud

One of those businesses is a for-profit social enterprise that focuses on dealing with the tremendous amount of waste that is currently illegally dumped in Ubud (a mountain town popular with tourists) in Bali.  Tourism has boomed in Bali over the past years, but the infrastructure and practices to deal with it are lacking, and ingrained business practices make proper disposal of garbage even more complicated.  The norm now is for businesses to be paid for their waste by pig farmers who use the organic waste as feed, sell the recyclables, and dump the rest down the nearest ravine.  Trying to convince those businesses to switch to paying for proper disposal of their waste is an uphill battle as you can imagine.

Illegal Dump in Ubud

This 15m high illegal landfill
used to be a river bed...

Scavengers picking through the trash

My role in the visit was to help our investment partners (a social venture capital firm looking to make early stage investments to build a pipeline of deals) complete their due diligence to decide if they would invest in the company, and to identify specific areas we could address to help the business scale (decided to focus on data management and marketing).  We met with their management team, customers, and investors, and had practically every piece of garbage not in a landfill pointed out to us – I think Bali may be ruined for me forever!

The business's waste processing facility

From left to right: Representative from our
 investment partner, COO, CEO, and me

It was a great learning experience to get insight into both the entrepreneur and investor’s side of things, and to be able to voice the entrepreneur’s viewpoint in conversations that would have otherwise been internal to the investment firm.  We spent most of our time bouncing from meeting to meeting, but did manage to fit in some good food, massages, an afternoon at the beach, and drives around the most popular places in Bali – quite the tough life!  

One of our customer meetings was at a
5-star resort with this view - talk about roughing it

A nice break from one of our
trash tours...

More to come on the other part of the trip later…

Selamat Siang!

Hello folks!  I’ve been in Jakarta for just over two weeks now, and have been having a great experience so far.  When I decided to spend my summer with the Global Entrepreneurship Program Indonesia (GEPI), I never would have guessed how much exposure I would gain so quickly.

I’ve already had the opportunity to attend INSEAD’s Social Entrepreneurship Conference here in Jakarta where I met entrepreneurs and social entrepreneurs from Indonesia and beyond, sat in on a meeting with GEPI’s executive board consisting of prominent Indonesian business people, and met with the leadership of The Founder Institute Jakarta.  GEPI is definitely on the forefront of both the entrepreneurship and social entrepreneurship scenes here.  Its mandate is to promote entrepreneurship in Indonesia, and I’m excited to be able to contribute to that even for just a short while. 

GEPI’s three big initiatives are starting up an angel investor network, launching Indonesia’s first business incubator/co-working space focused on the creative sector, and supporting innovative social enterprises.  While I’ll be contributing to all of these, I’ll be spending the bulk of my time on this last piece.

I had the opportunity to meet with a member of the management team of one of the startups I’ll be working with, and am incredibly excited to be able to help them out.  The for-profit social enterprise is helping farmers transition to organic farming practices, allowing them to sell their rice at a premium while also benefitting the environment and consumers.  The team is a group of young, talented, and humble entrepreneurs who just need some help thinking about how to scale their business.  I’m hopeful that I’ll be able to use what I’ve learned at Ross so far to help them accomplish this goal.

Outside of work I’ve been spending my time getting acclimated to Jakarta.  I’ve learned enough Bahasa Indonesia to confidently tell a taxi driver where I want to go (until he responds or asks a question that is…).  There’s tons of great food here, and since all of it is Halal, I’ve been able to try out all sorts of food I can’t eat at home.  I’m planning on venturing out to other parts of Indonesia over the weekends, and will post some more pictures soon.