Nazier Ariffin supercharges founders who are creating vital change through Telkomsel‘s strategic fund TMI and has almost 6 years of experience in tech, with more than 30 investments under his belt. He does walks-and-talks with radio podcast Startup Hour, shares ideas (re: memes) you won’t find anywhere else on his Instagram, is obsessed with jiu-jitsu, and treats himself to quiet Sunday mornings with an extra-hot chai tea latte.
Nazier Ariffin, head of strategic investment at Telkomsel
KrASIA (Kr): What do you expect the next few months of the local startup ecosystem to look like?
Nazier Ariffin (NA): I think we’re all exhausted from hearing the same things over and over about COVID-19 and people losing their jobs. Entrepreneurs are probably tired of hearing about how VC investment is slowing. These times can be quite frustrating.
Things have also been slowing. Longer sales cycles are a leading indicator. With travel curtailed, closing new customers requires selling over phone or video, and it’s harder to build trust, particularly for big deals over the phone. Bookings will be more volatile as a result. So, more pipeline is necessary to create consistency, but pipeline generation will be harder. Everyone will do this at the same time, increasing CPAs, CPMs, and CPCs and overflowing email inboxes with marketing materials. Response rates will fall.
Fundraising momentum will likely slow for the same reasons as slowing sales: It’s just harder to meet people. Valuations may be stressed for companies raising capital now with more conservative growth plans. If startups forecast slower growth, then valuations will fall, because growth rates are the highest correlates of valuation multiples.
Also, the uncertainty in the stock market may pressure valuations, particularly in the growth stage, though valuation multiples haven’t moved intrinsically. We’re still close to all-time highs, so this might be a bit more delicate than one would expect.
I’m hopeful that the uncertainty we’re seeing today will subside quickly. For this quarter, it’s [best to be] cautious and formulate a more conservative plan. Establish leading indicators that can make a change. Don’t just read about industry deities—take inspiration from the founders that surround you. You need to hear stories from the trenches that will keep you going.
Kr: Many investors have developed “themes” as shorthands to discuss the types of deals they like and trends for Indonesia.What are yours?
NA: Occasionally, themes are predictive and handy. More often than not, though, “themes” are simply content marketing for VCs and narratives for entrepreneurs. By the time there is a special purpose fund committed to a trend, it is probably too late to build a meaningful company in that space. That said, companies that start late aren’t doomed. Tokopedia made e-commerce a “solved problem” until Shopee created a mobile-first platform which found ways to fill niches and create billions in aggregate market cap.
Startups which come from a well of deep IP are the ones that tend to take off. This doesn’t mean having patents, but rather domain knowledge that is hard to assemble from places like Github. In the case of PrivyID, building an e-signature solution required a tremendous amount of infrastructure, software, and even legal matters that needed to be hammered out. Complex products give you an advantage.
During this pandemic, we should be clear-eyed about “why” this may be a great time for entrepreneurs: New use cases are popping up almost daily, CACs are at decade-long lows, the world has changed. There are no experts and VCs will be slow to overfund competitors. By all means, please aspire to make a positive “dent in the universe” by applying your talents to the biggest challenges we face. The old commercial playbooks no longer work, and new ones need to be written.
New entrepreneurs are also coming in. They have worked for unicorns before, or just came back from the United States or China. I see that there will be a fourth wave. Newer, fresher, and more exciting deals will rise after COVID-19, because we have to admit that the pandemic also accelerates many SMEs’ digital transformation process. Innovation and creativity have emerged in recent days. Hence, I believe that we’ll see more new kinds of startups.
Indonesia has incredible talent, a lot of ideas happening, and many chances for problems to be solved. And Telkomsel wants to give [these people] resources, access, and network.
Kr: You mentor several incubators and accelerators, host and produce Startup Hours, a radio program about the startup landscape, share news about startups and fundraising tips on social media. What have you learned from these experiences?
NA:I learned that many resources available to startups begin with what you do once you already have product-market fit. Imagine you want to be a world-class runner and go to the Olympics, is it better to learn how to negotiate your Nike sponsorship, or is it better to just train and get good at running?
So many founders are like, “how do you raise funding, how do you expand?” and skip over the earliest parts of the startup. If you have something that is actually taking off, investors will find you, journalists will find you—the world tends to find things that are taking off and push you toward success. If you feel that you’re constantly having to work on fundraising and PR and you don’t have the core of your product done, you’re going to have a very difficult time.
Another thing is that a lot of people think that the scorecard for who is successful is who raises the most money. This is not true. The amount of money you raised, and the press that you read about all this great stuff happening, doesn’t give you insight into if a product is working and attaining success. I would call fundraising a trailing indicator of the company hitting milestones. It actually gets harder every time you fundraise, because the stakes are raised and your company gets bigger. Sometimes it gets even harder to grow when you raise money.
Kr: What are some important things to remember about fundraising?
NA: Fundraising can be one of the hardest parts even though “fun” is right in the word. It seems like an open market, but it’s irrational and seldom fair. You will hear of founders who say, “Fundraising was easy. I walked into the coffee shop and people showered me with cash.” That’s the exception rather than the rule. Fundraising is a marathon that requires near-constant attention. The process can be more punishing and riskier than we might imagine. Prepare for a lot of rejection. A promising startup will get, on average, 17 to 20 No’s for every Yes.
You will hear reasons why your startup will not succeed, why your product is not a good one, why the opportunity you’re talking about is not real. Sometimes they’ll be right, too, but you should never believe that. The way you will survive is by being tough and resilient, and above all, by believing. No matter what you hear, you need to believe.
Proper preparation is half the job. You don’t want to get surprised by questions or lose momentum by taking too long to produce the requested information. Be prepared to move timelines. In these times, investment committees will need more time to get to a decision.
Kr: What is your opinion on “build your career or follow your passion”?
NA: Stop obsessing about finding your passion. You don’t find your passion, you build it. It is a discovery process, not a match made in heaven. If you have not found your passion yet, there are two possible reasons: You know what you want to do but you’re too afraid to pursue it, or you have not found your passion because you’re too afraid to explore. Both reasons are products of fear. YOLO.
Once you’ve found your passion, you face reality. You realize it will be hard. You find out how ugly it can get. That’s the time you get to decide: Are you willing to stay patient and fight for it? With our rapidly changing society, there will definitely be many changes and surprises along the way, so always try to adapt and treasure your network.
Disclaimer: This article is part of our “Tuning In” series, where we interview and chat intimately with thought leaders who are breaking the mold, pushing the frontiers of innovation and are trailblazing figures in their space. All answers reflect the personal perspective of the interviewee herself, and not KrASIA’s. If you’d like to contribute as a writer or nominate someone for our “Tuning In” series, you can email us at [email protected]