Saving the ‘Zebra’ Companies in Indonesia
Save the Zebras in Indonesia… – not every company can or should be a Unicorn (they’re supposed to only be mythical), yet to play the game, many have to pretend to be Unicorns to get VC attention. Zebras have stable growth (not hyper-growth) and face middle-gap funding challenges: too big for angels, too small for VC’s.
Stephanie Hermawan with Instellar Indonesia is trying to save the Zebras in Indonesia. From our conversation at The Global Impact Investing Network in Copenhagen for our micro-podcast series. Their “Z” Combinator (the opposite of Y-Combinator) is designed to help these impactful companies get innovative financing – combining foundation capital with a second layer of private.
Podcast Transcript
Jacob: [00:00:00] So we’re here with Stephanie Hermawan with InStellar at the GIIN’s Impact Forum in Copenhagen. Why don’t you do a quick introduction of yourself?
Stephanie: Hi, I’m Stephanie. So what we’re doing InStellar is Indonesian-based capacity building for social enterprise and also advisory and this year we’re building an investment arm that is focusing on saving the Zebras of Indonesia.
What we mean, the Zebras are non-unicorn, so they are sustainable growth. They are not hyper-growth, but they are making very good impact and they’re having a challenge on middle gap funding, which means they are not investment ready for the later stage impact fund or the banks or conventional institutions.
But they’re also too big for early stage, like angel stage. So, why we want to save them? Because a lot of them are experiencing, they have to [00:01:00] pretend to be unicorn to get the VC’s money. And these are companies that are making good impact in Indonesia. So we want to focus on Zebras that are in climate.
And also nature-based solutions and also agriculture, which is like the biggest challenge in Indonesia right now. So we’re building a Z Combinator with technical assistance. Also, Z Combinators is opposite of Y Combinator. So we’re doing innovative financing. We’re hoping to you guys to join us in this movement.
Jacob: What are you hoping to get from the conference?
Stephanie: So I’m hoping to understand the landscape of the Impact Investment and in the global scale. And I’m also trying to attract investors the right ones though.
Jacob: Yeah, what does the right one look like for you?
Stephanie: The right ones is the one that really believe in the values and the impact that we’re trying to do and the ones that want to Actually go into and support this Zebras in the [00:02:00] emerging market, especially Indonesia.
We’re very impact-focused. So Yeah, so that’s something that we want to find the right partner that really truly want to understand and support this cost
Jacob: Any other qualifications? I mean, are you looking for more family office or institutional or DFI? What sort of like,
Stephanie: So we have a multi-layer of the blended finance.
So the first layer will be for a first-loss guarantee. So that will work well with foundations or philanthropic money. And then the second layer will be a private capital also. DFI is definitely can be there.
Jacob: What’s a good example of like a case study?
Stephanie: There are two types of sectors that we’re looking at.
So one is agriculture and one is plastic collection, which is the most issues in Indonesia. A lot of recycling centers, but there are not enough plastic collection. So that’s one of the things that we want [00:03:00] to invest in. And the other ones is agriculture that is doing a fair trade and smallholder farmers.
This one is a coffee, coffee companies. So those are quite a few examples of the two things that we want to support in Indonesia, which is we’re big in, in those. And one more thing, we’re also building a carbon, carbon fund, actually to help the carbon projects in Indonesia, because Indonesia is actually the second largest lung for the world after the Amazon. We have to secure a lot of these carbon supply projects in Indonesia.
Jacob: What’s your biggest hurdle right now?
Stephanie: To get people to understand that these companies, they need a smaller ticket size not the usual big ticket size of the large institutional investment, right?
So we’re trying to find a smaller ticket size So we’re trying to [00:04:00] de-risk it with concessionary fund or philanthropic money Probably will be the first blended finance fund in Indonesia
Jacob: And so on the blended part you already have some government kind of
Stephanie: Foundations government Indonesia is not it’s another tricky thing, right?
And then we’re having a campaign year this year meaning political year. So we don’t know the power shift. So government is a tricky thing in Indonesia. We don’t really depend on them, but we welcome if the government wants to fund us, but we would like to get more consistent, sustainable fund source.
Jacob: Yeah, what’s one thing that a listener, the community could do to help you right now?
Stephanie: Really think about what can we do for the planet and the people, right? Like there are a lot of things that we can solve actually as normal people. Spread these kind of issues that we’re actually facing and change your [00:05:00] lifestyle maybe
Jacob: And what are you most excited about with the future going forward, especially with your project and what you’re trying to do
Stephanie: for me is actually for Indonesia itself, not just Indonesia. Actually, this is a global phenomenon, right? A lot of startups, a lot of companies. They want to make companies because they want to be a unicorn.VC’s money and this hot money is pressuring companies.
They are not supposed to be in that trajectory and then they’re having a lot of mission drift. I mean, it fits for certain types of companies, those kind, I’m not judging them, but there are Zebras that are pretending to be unicorns, so I think that is one of the things that I’m excited about if we are successfully in changing this landscape, we’ll be empowering a lot of companies that are doing a really good thing for the world.
But we’re also giving them the right bridge and then [00:06:00] graduating them to the right conventional institutions, right? Financing institutions so they can survive. So we’re just building a bridge for the Zebras to cross.
Jacob: So, if someone wanted to find you online, how do they contact you?
Stephanie: So it’s Instellar, it’s I N S T E L L A R dot I D, so that’s my website.
Jacob: Thank you so much.
Stephanie: Thank you so much.
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