Job-Like: Investing in a Startup Amid Pandemic, What is the Sentiment of Venture Capitals?
MAGAZINE.JOB-LIKE.COM — What should a startup do to save its business during the COVID-19 pandemic? Raditya Pramana, Partner of Venturra Discovery, a venture capital that focuses on investing in early stage startups in the ASEAN region, emphasized the importance of startups in extending their business runways.
Raditya said that the runway or startup age based on the existing funds must be sufficient for the next 18 months. Startups must be able to stick with the runway before investors decide to reinvest in funds. The problem is, the COVID-19 pandemic is forcing investors to no longer be as active as before in investing.
To Job-Like Magazine through Zoom’s communication, Raditya explained that venture capitals are in a position to wait for a signal to recover from the world economy. Of course, venture capitals don’t want to get caught up in investing in startups when many business sectors have been affected by the pandemic.
Although, Venturra Discovery explained by Raditya is still actively investing in startups with an investment of US $ 200,000 to US $ 500,000, the process is carried out more strictly and carefully. Venturra Discovery will ensure that their prospective investment is right on target. This means that even though the startup has also felt the negative impact of the pandemic, the impact is minimal.
“The current investment prospects are not good. Nobody knows when the situation will end. Everyone is still monitoring the situation. Without exception, many are affected, it’s just that there are minimal negative impacts, some are positive. Even if the impact is positive, we must choose the startup that has the most positive impacts from its competitors, “said Raditya.
“The investment process remains the same, only we will be more disciplined and careful. During the lockdown yesterday, we closed a deal in April. In fact, investing in the past 5 years and today is a lot different and quite drastic,” he added.
That is why startup runway ability is an important factor in the current period. To maintain the business runway, startup players must implement several policies, one of which is cutting the marketing budget. It should even be eliminated. Instead, the marketing strategy can be shifted by using organic channels.
The next policy that can be implemented is to rearrange monthly salary expenses. If this strategy is implemented, the largest cut will occur in the executive ranks, then narrowed to the staff. Maintaining the runway before investors return to investing in startups can also be done by renegotiating office space leasing, or implementing a full remote working system.
Raditya: “Looking for Investors is All About Chemistry, Like a Couple”
Raditya admitted investing in startups has a high risk. The reason is, there is a lot of uncertainty about the business journey of a startup. The contributing factor could be due to a business model that turned out to be incorrect, or an incompatible relationship with the founders. Raditya described the process of investing in a startup like having a relationship with a partner.
That is why it is important for investors to find founders with characters that match their views. On the contrary. In short, chemistry plays a big role. So, in order not to be mistaken for a partner, Raditya advised startup founders not to see the pitching process as just a stage to win investment.
“Looking for investors is not like winning a race, but like looking for a partner. Match and match, because the relationship will be long. We will work together for many years. So, when pitching, you should build communication to get to know each other. Don’t do one way communication like in front of the jury,” he said.
“Introduce your startup’s business model and vision to investors. Then, ask the investors back about their opinion. Investing in startups is very high risk. Opportunities do not match expectations. It could be because of the business model, competition, the founder, or as simple as timing, ”said one of the Young Leaders for Indonesia, according to McKinsey & Company.
Diving into the investment world that is is full of risks, Raditya enjoys his role as a Partner. According to him, a career in venture capital is an inspiring job. Every day, he has the opportunity to meet people from various professions and industries. Interestingly, Venturra Discovery, which focuses on technology startups, opens up opportunities to contribute to change through innovation.
“Actually, I accidentally got into this industry. I started in VC (venture capital) at the end of 2013, at that time the industry didn’t even exist. At that time I did an internship at a Japanese VC. From the beginning, experimenting, it turned out to be fun, ”he said.
“I saw many things and learned from different people. Today I can chat with startup A and then B, I have to be able to understand a lot of things with different types of people. Moreover, by investing in tech, you can become a part of change, “he said.
Together with IMJ Investment Partners, Raditya contributed to the investment process in startups Kudo, Fabelio, and Kata AI. In November 2015, he joined Venturra Capital as Investment Manager. Since September 2018, Raditya has focused on Venturra Discovery. Venturra has invested in successful startups in Indonesia, such as Ruangguru and Sociolla.