The Yak goes one on one with…
…Bali Investment Club (BIC) – Bali’s first, professionally-run investment fund which recently launched at a laid-back soirée “Gotong Royong” in Canggu. The Yak, having been invited, wanted to catch up with some of the partners…I gather there are over seven diverse professionals on the “Board”…
What is Bali Investment Club and why did you create such a club?
Over the past two years, Bali was heavily affected by the drop in tourism on which the island’s economy was built. As a result, most of the people here, both locals and foreigners, have been seeking new ways to reinvent themselves. For us, being entrepreneurs at heart, we saw a growing need to pioneer an investment vehicle to support this new wave of activities in Bali. Bali Investment Club was created to help the change-makers of tomorrow get the support they need to change the way Bali and its surrounding islands are perceived and create value. This mission is crucial to building a sustainable environment not only for the people living here, but also to maintain the beautiful landscapes we all love.
What is the New Paradigm?
The New Paradigm refers to a new way of seeing and doing business. We live in a world of finite resources, and every action we take has an effect on our peers and nature. As humans, we have a responsibility to do right by the world that surrounds us, and so we define the New Paradigm as a way to engage with our environment that helps restore the fine balance between societies and our planet. It’s about making sure we all play our part as stewards of our world.
Could you give us a quick, personal intro of what each of the BIC partners does within the Club?
Sure, our organisation is broken down into three main circles, the Management Team, the Board, and the Investment Committee. In the Management Team, Nicolo and Tom act as Managing Partners and run the shop, meaning they make sure everything happens at the right time, and to the right standard. The Board includes the active shareholders (Thierry, Hugo, Okki, Nicolo, and Tom) of BIC and spends time discussing strategy and mapping out the Club’s next moves. Finally, the Investment Committee focuses on the pipeline and portfolio. There we review incoming applications and decide on the best way forward. Of course, there’s a bit of overlap between the three and we invite you to check out our team page for more info on each member. Our team is growing fast and we are about to bring on new partners in the coming weeks.
What are BIC’s investment criteria?
We don’t just invest in businesses, we invest in the people that run them. However, while we’ve seen hundreds of great ideas and passionate go-getters over the past year, not all projects can be backed by us. Investments have to generate returns to be sustainable, which is why we put in place the below checklist as a first step in our filtering process. Once they fit our mandate and tick the first boxes, we set up a chat to dive deeper.
- Indonesian Company
- Clear Impact
- Revenue Generating
- Profitable Business Model
- Great Pitch
We see impact investing as more than a smart way to invest money, but also where we must invest our time and energy. Impact is no longer a nice-to-have, it’s a necessity.
I gather you have some amazing news that you would like to share?
Yes! We have recently fully funded our first pipeline project BukaPO, which has developed a digital marketplace to support Indonesia’s millions of micro-entrepreneurs, namely women. They are starting with the local foods segment and aim to grow into other services and crafts in the near future. So far, they have been able to create a large following in Bali and our common goal is to help them get ready to enter the broader Indonesian market. Co-Founder and CEO, Olaf Purvis, has been a pleasure to work with and we foresee huge success for the company. We also feel blessed to have gotten a strong investor backing for this project and have already pre-secured capital for the upcoming round in the next year. Lookout for BukaPO on a mobile phone near you 😉
You recently presented this particular investment opportunity at your own launch back in June? That was quick. Can you tell us how BIC goes about funding projects that match the investment criteria?
Actually BukaPO was only approved by us just after the event! Once an incoming project ticks our initial checklist, it gets presented to the BIC Investment Committee. If the committee approves it, we’ll create a Deal Sheet and start conducting legal, accounting, and operational due diligence. Once this process is successful, we start with the onboarding phase where we help the entrepreneurs refine their financials, strategy, and marketing collateral for funding. At this point, we advertise the opportunity firstly to our members and then across our broader networks. From our current experience, it can take more time to successfully onboard a company than to fundraise. It took us around two months to fundraise BukaPO, but we’ve been in conversation with them since January. To us, selection and timing is key.
Once you raise the needed capital for a company, what happens next? Do you give ongoing support to your investees?
Absolutely! BIC not only invests in companies but actively supports and mentors them. We believe this is a win-win strategy for every stakeholder within the BIC ecosystem. In many cases, we get a board seat as well to help guide the company as it grows. Together we can achieve so much more.
What projects do you currently have in your investment pipeline?
Currently we are fundraising for Atmosfera Wellness Resort, a sustainable living experience in Uluwatu that aims to shift how hospitality evolves in Bali. The business model was designed to remain financially sustainable during pandemics and will be built using more sustainable materials, as well as support the local communities that surround it. According to our legal team, giving part-ownership to the land-owners is a first.
The resort includes 15 short and long term villas, organic fine dining restaurant (all the food will be grown within the land), 2-floor co-working space, wellness center, yoga & retreat spaces, and more. The co-owners of this project are Balinese Architectural & Hospitality Management Group Manguning (Shoreamora, Amora Ubud, The Saren, The Tiing and Luwak) and the team of Sa’mesa will be running the restaurant.
We see Atmosfera as ‘the new place to be” in Uluwatu that will set an example for New Paradigm hospitality across Indonesia.
Next up will be Sama Sama Seaplanes, a seaplane company that will help connect the mainland to remote locations across the archipelago. We are also in conversation with a few entrepreneurs to bring them on to the BIC ecosystem. Keep an eye on this space, we’ll be making the announcement soon!
Do you only focus on funding Indonesian projects?
Yes, we are solely focused on this since BIC’s mission is to support the Indonesian economy. If you are asking whether we only back Indonesian entrepreneurs, the answer is no. What matters to us is that the company operates and creates impact in Indonesia.
You launched as a Club. How can someone become a member?
There are three ways you can become a “member” of the Club. The first is to invest in one of our pipeline projects, which will give you exclusive investor rights for all future deals along with other perks. The second of course, is as an investee. If your project goes on to being funded, we give you all the support you need and exposure to our network to help your venture flourish. The third is something we created from speaking with excited members of the community, which we call “ambassadors”. BIC Ambassadors help us broker deals or find new companies to fund, and so we’ve put in place a reward system for people who can’t invest or don’t have a start-up to still be part of our ecosystem and add value in their own way.
What are the club benefits?
The key value in becoming a BIC member is that the money you are investing is supporting impact-driven entrepreneurs across Indonesia, managed by global investment and venture experts. Joining the Club will also expose you to our growing network of like-minded investors, change-makers and thought-leaders. But for us, it’s really about knowing that you are part of a movement and that your investment will create tangible positive change, on top of good returns. Other benefits include First Right of Refusal on our new opportunities, access to exclusive events, and ongoing support with personal and professional services.
Who are the current members’ profiles? What is their nationality?
Most of the BIC members that joined our latest round (BukaPO) are top business people and angels from Indonesia, mainly based in Jakarta. The next members we are onboarding include investors from Western Europe, mainland Asia, and Australia. Our goal is to have members from every continent. What we discovered matters most to our network is their level of connection with a project and how they perceive impact. So we are working to offer deals that each investor wants to back as we support the Indonesian impact agenda.
If I had an amazing idea that needed funding how would I go about connecting and what should I present?
We don’t usually invest in ideas since we want the entrepreneurs to take the first step (MVP validation) using their own resources. So, if you have a registered business already generating revenue (no need to be profitable yet), you can apply on our website through our ‘Get Funded’ section, making sure you tick our checkboxes. Sometimes, exceptions can be made if the team has a proven track record or already signed client contracts. We can then look at other lines of funding, like trade finance if working capital is really the only thing holding you back. Generally, it takes more than money to scale, which is why we sit with the leadership team to see if we’re a good fit.
We’re putting in quite a bit of time to help entrepreneurs best prepare for pitching, and add new articles regularly to explain each checkbox we use to maximise your chance of making it to our final selection. If it’s a ‘no’, don’t worry, we’ll give you actionable feedback to keep you going, and will be happy to review your case again in the future.
Is there a minimum or a maximum amount of investment/funding the club can source?
Our minimum contribution is USD 20,000. As for our current tickets, it varies from USD 100k to USD 2mil. This lets us provide backing to a wider range of entrepreneurs and to also match investor needs with the right tickets.
If I was an investor with a lazy portfolio, or wishing to diversify and invest into Indonesia, what steps and conditions would I need to fulfill to join one or more of the investments?
We’d invite you for a coffee / green juice to get to know you better and understand what you are trying to achieve with your capital. We can then explore ways to hedge your investments with BIC to give you an ideal mix of impact vs returns. Once we have a plan in place, it’s a case of final legal checks to ensure money flows are clear and that each party is protected by the contract we sign.
From my understanding, investing in early stage companies is quite risky. How do you go about the risk related to those types of investments? Which sort of returns can you expect when investing through BIC?
Risk management starts with the initial selection process, which is why we’ve taken time to set up structured vetting and due diligence. However, we invest in people first and so for us, it’s not just the numbers that matter. It’s whether we believe the entrepreneurs have what it takes to push the dream forward.
When it comes to deal making, our main way to hedge risk is to sign a deal that works for all parties involved (think fair company valuation, rewarding anchor investors, cash-flow conscious royalty finance, etc.). This way investors get returns that match their level of risk, while investees get funded on terms in line with their growth needs.
Because our capital mainly comes from private investors, we only present the strongest candidates, which we also personally invest in. Putting in money, not just time, is our way to show we believe in the projects we back. Of course, we don’t just stop there, and work together with each investee to ensure successful growth.
With regards to returns, our hurdle rate target is 10%, which means we aim to provide returns that grow at that rate yearly. This roughly equals to doubling the investment in a 5-year timeline, but this really depends on the nature of the deal.
What legalities, agreements and guarantees does BIC have in place for an investor’s peace of mind?
All our contracts are 100% compliant with Indonesian law and with all legal systems that include multiple countries, like Australia, Singapore, etc. To avoid headaches for our investors the legal structure is that BIC is the intermediary between investors and investee, meaning we manage the investment as well as monitoring the invested company.
What is your company currently envisioning for 2022 and beyond?
Our vision for the new year is to become the first-ever fully licenced Venture Capital firm in Bali and to create a physical accelerator space where we can help nurture a growing generation of local and foreigner entrepreneurs.
Is there any other information you think I would like to, or need to, know before committing funds?
This is mainly a question to yourself. Do you want to foster positive change in Indonesia? If that’s a yes, there’s a place for you here at BIC.
Last but not least, do you have any upcoming events?
Yes, our upcoming event will be on Thursday 21st of October for an exclusive investors dinner at Sa’mesa in Canggu. We only have 10 open seats for non members of the Club, so make sure to RSVP soon. You can subscribe to our newsletter to receive details or stay posted on our Instagram account (@baliinvestmentclub).
This has been hugely insightful – thank you for your time, for opening an investment platform here in Bali and for introducing us to the New Paradigm!