The scandal surrounding Indonesian aquaculture start-up eFishery has shaken investor confidence in Southeast Asia. But Wilson Cuaca, a co-founder and managing partner at East Ventures, still sees reason for optimism in the region’s improving cadre of founders and a growing trickle of liquidity from performing companies.

Investors – from Peak XV Partners to Temask Holdings to SoftBank Vision Fund 2 – pumped more than USD 300m into eFishery across multiple rounds. They now face wipeout following the emergence of a large-scale sales fraud. While the setback will make capital-raising harder for other start-ups in the region, Cuaca doesn’t expect widespread fatalities.

“We still see some assets as very interesting, they’re just not as attractive as when capital is cheap. So, it’s important for companies to adapt physically,” he said.

“About 70% of our portfolio is EBITDA-positive, so we are okay. We don’t need to force companies to raise money because they’re profitable and the ecosystems will sustain them. They can wait until the next market cycle or raise money from investors who understand their potential.”

Last month there was a demonstration of faith in the East portfolio as Coller Capital led a restructuring of Fund V, a 2015-vintage vehicle of USD 28m. One of few GP-led secondaries in Southeast Asia VC, the deal facilitated exits for LPs with distributions to paid-in of 2x, while allowing East more time to work on the likes of digital channel network IDN and logistics player Waresix.

Cuaca described it as a natural result of the efforts to seek the best solutions for stakeholders, with a core focus on maximising upside in the underlying assets. He is equally excited about another expected liquidity event as coffee shop chain Fore Coffee prepares for a Jakarta Stock Exchange IPO. The company will reportedly raise at least IRD 300bn (USD 18.3m) and debut as early as April.

Fore is unusual in that it was launched at East as an internal venture, before going on to raise external capital from investors such as Pavilion Capital. It has also demonstrated resilience, turning profitable in 2021 despite the pandemic and delivering compound annual growth of 200% over the past three years. EBITDA margins doubled in the 12 months to November 2024.

East has delivered more than 50 exits from its 300-plus investments to date. Most of these have come via M&A, starting with group-buying platform Disdus, which was sold to Groupon in 2011, and including online tuition platform Goroo, translation start-up Anydoor, and e-commerce and payments enablers Kudo, Loket, and MokaPOS. The last three were all acquired by Gojek.

Gojek ultimately merged with Tokopedia in 2021 and completed a landmark listing the following year as GoTo [IDX:GOTO]. East had exposure through its early backing of Tokopedia.

“We never hold a company until IPO; we hold it beyond IPO. You have to underwrite based on whether the potential of the company has been fully maximized,” Cuaca said. “Every company has its own time and capability to maximize the return. There’s no single formula to address everything.”

Strategy build-out

East was founded in 2009 by Cuaca, Taiga Matsuyama, and Batara Eto, who originally met socially and decided to launch an investment firm focused on Indonesia. Assets under management now exceed USD 1.5bn, with strategies ranging from seed to growth stage.

There are six seed funds in total. The first closed on USD 2m in 2010; the most recent – East Ventures 9 – closed on USD 150m in 2022. Ticket sizes start at USD 200,000-USD 500,000 and rise to USD 2m, including follow-ons.

In 2019, East raised USD 250m for its debut growth fund, operated under a co-GP structure with Sinar Mas Digital Ventures (SMDV) and Japan’s YJ Capital (now known as Z Venture Capital). The structure was dissolved in 2022 with East assuming full control and absorbing much of the staff, including SMDV’s Roderick Purwana, who is now a managing partner at East.

The growth strategy, which participates in Series B rounds and beyond across Southeast Asia, continues to thrive, with a second fund closing on USD 439m in 2022. A year later, East raised USD 250m for a vehicle dedicated to follow-on investments in existing portfolio companies.

Since then, the firm has launched a USD 30m healthcare fund and completed a first close on a Southeast Asia-South Korea investment corridor fund in collaboration with SV Investment. East is also on the ground in Japan, but it started much earlier, creating a standalone Japan fund in 2012. As of 2019, two funds were active in the market and a third was being raised.

“Given the inherently differing characteristics of the Southeast Asian and Japanese markets, we do apply a local lens to each market and make adjustments to our investment strategies,” explained Hwee Ang, director of investor relations at East.

The firm’s LP base has evolved considerably and now features sovereign wealth funds, fund-of-funds, development finance institutions, insurance companies, family offices, and corporates. Sinar Mas, the parent of SMDV, was an early backer. Other disclosed names include Temasek, Adams Street Partners, DEG, and Oppenheimer Generations Asia.

Indonesia upside

Indonesia remains East’s core focus given it accounts for 45% of the population across Southeast Asia’s six major markets. According to research conducted by Google, Temasek, and Bain & Company, the region’s digital economy generated USD 263bn in gross merchandise value in 2024, of which USD 90bn came from Indonesia. The country’s GMV could hit USD 360bn by 2030.

E-commerce is – and is expected to remain – the anchor component, although East has broadened the scope of its investments in line with the evolution of the economy. Rural-driven e-commerce, software-as-a-service (SaaS), financial technology, healthcare, and climate technology are now priorities for the firm, as well as artificial intelligence (AI).

Recent deals include participation in a USD 5m seed round for AI-enabled digital personas platform Bythen and the co-lead role in an investment in Nexmedis, which is touted as the GPT of healthcare.

Indonesia remains one of Southeast Asia’s more expensive markets, but Cuaca believes East has the bandwidth to unearth attractive opportunities. The firm has 65 people based locally, including 23 investment professionals. They review around 2,500 inbound proposals every year.

Indeed, East is known for moving quickly when it sees something it likes. The firm’s debut investment in Tokopedia closed after three meetings over the course of 48 hours in 2010. Four years later, Cuaca wrapped up an agreement to become the first external investor in private tuition marketplace Ruangguru within 15 minutes.

Underwriting of early-stage investments is largely based on founder quality, not revenue or market potential. An individual’s ability to evolve, adapt, and address expanding markets is essential to the governance aspect of deals.

“What I mean by adaptability is that you do different things at different stages. You assess people at the early stage. At the growth stage, people are still a big component, and you can assess their business. At the IPO stage, you access different things that are accessible – defensibility against competitors, sustainability of revenue, and growth,” Cuaca explained.

“The key question is whether a VC can actually develop all these capabilities throughout the lifecycle of a company – that has yet to be proven.”

Operational angle

East has a dedicated portfolio management team that helps companies navigate macroeconomic conditions and address operational challenges. For example, Ruangguru had overemphasised its online business, so East supported the pivot to a more balanced model – offline learning centres were rolled out post-pandemic while initial engagement remained largely online via YouTube series.

“We do work closely with founders and management, most of what we do is around giving advice,” said Purwana. “Our operational approach is more about problem solving than working too closely with them. Founders and management should be in charge during these processes.”

AI represents the latest operational challenge, with East acknowledging the impact of China’s DeepSeek on the perception of AI adoption costs. The firm is advising all portfolio companies to explore AI-enabled strategies while scouting for new investment opportunities involving AI-native start-ups.

Cuaca’s interest in the notion of entirely automated, intelligent solutions is tempered by uncertainty as to how to underwrite exits. However, this doesn’t mean East will hold back. Betting on the upside scenario is written into the firm’s DNA – and the inevitability of AI’s transformative potential, even at this relatively early stage, is clear in Cuaca’s mind.

“We have seen people analyse healthcare information to make predictions around the treatment of chronic diseases, while productivity gains from office automation are already apparent,” he said. “It’s just a matter of time before they create businesses of scale. This is only the beginning.”