Southeast Asia’s East Ventures on female VCs, foreign investment, consolidation

Melisa Irenes path to becoming a partner at one of Southeast Asia's most esteemed venture capital firms is an unconventional one.

I always consider myself to be quite lucky," said Irene, who was promoted to be a partner at East Ventures in January 2019. At 25 years old, she was the Jakarta-based investment firm's first female partner.

During TechCrunch Disrupt's first online conference, I spoke to Irene about what she humbly described as a lucky" career, her experience as a young, female investor, the rush of American and Chinese VC money into Southeast Asia, and what the COVID-19 pandemic means to East Ventures . A video recording of the conversation is at the bottom of the article.

Partner at 25

Irene admitted that timing played a big part in her ascension in the VC world. The development of Indonesia's internet infrastructure came around relatively late - around 2010 - compared to more developed markets, but growth happened rapidly. In 2015, five years after East Ventures backed the Series A of Tokopedia, now an e-commerce leader in Southeast Asia, Irene joined the firm.

In those days, I didn't compete with a lot of investment bankers," said Irene, who majored in accounting in university and began as an intern at East Ventures. The capability that they looked for was how fast you can immerse in the ecosystem."

Contrary to popular belief, the Southeast Asian investment ecosystem is quite friendly" towards women. People rejoice the promotion of female professionals in this industry. It's not a rare circumstance to see females becoming a vice principal or principle in Southeast Asia," the investor said.

The support goes beyond simply checking the gender-diversity box and reflects a real demand for more empathetic investors in the tech industry.

Sometimes people like to talk as a business partner and sometimes as a friend. [Empathy] is something that can be seen as natural coming from females," she added.

However, the investor cautioned that the number of [female] decision-makers definitely needs to improve," though she foresees the local ecosystem is supportive of that."

SEA gold rush

In recent years tech giants from both the U.S. and China have been clamoring to get into Southeast Asia, a region home to about 670 million people and a fledgling internet market. They often begin by financing local upstarts, which, beholden to the investment, will provide directional advice to their foreign corporate investors.

Indeed, the familiar names have all bet on the region's rising stars. Alibaba invested in Tokopedia and its rival JD.com backed travel portal Traveloka, which is also in the East Ventures portfolio. Tencent, Google, Facebook and Paypal are all investors of Gojek, the Indonesian ride-hailing titan going neck and neck with SoftBank-funded Grab.

When offered big checks, startups must stay level-headed and think what's best for them, Irene advised. The thing is everyone has money. Companies need to decide which side to be on, what companies they want on board, and what companies are able to give them strategic advice."

It's not uncommon to see investors and founders clash over priorities. Some investors want a quick exit, while the entrepreneurial mentality is to build a business in the long run. That's why alignment is important," asserted the investor.

The future of tech in SEA

As unicorns and super apps" like Grab and Gojek emerge in Southeast Asia, concerns that incumbents can kill off competition grow. East Ventures has a unique insight into the region's competitive dynamics as an early-stage investor that has seen some of its startups like Tokopedia and Traveloa grow into behemoths.

Irene believed as Southeast Asia's internet ecosystem matures, there are actually a lot of opportunities for startups in upcoming sectors."

If you look at the unicorns, you see a lot of younger and smaller companies supporting them," she said. The point is that giants can't accomplish everything by themselves, and some of the more niche functions can best be tackled by smaller players with specialized focuses.

On the other hand, the investor believed consolidation is possible - and should happen - in areas that can benefit from scale and network effects.

People think of Indonesia as one country. We are not. We are the largest archipelago, which means there are very different infrastructures within different provinces. For example, it's expensive to set up a bank branch in a small island... That means a lot of things need to come into a collective effort and one big ecosystem to offer the consumers with different kinds of offerings."

Lastly, there's the inevitable question of COVID-19. Like many investors, Irene saw a silver lining during the dark times.

Before COVID, it was very difficult to assess the quality of companies. They all had a lot of money and the infrastructure was actually good... Now we suddenly can tell who makes good decisions, who makes it at what speed, and what is the outcome of those decisions. The way entrepreneurs respond to COVID can tell us a lot about their enterprises."