32 | FORBES INDONESIA JULY 2019
AS EXPLAINED by In-
vestment 101 guidebooks,
there are many ways for
investors to exit from their
portfolio companies, but
maybe the most alluring
one is through an IPO. Talk
about the media attention
and prestige, we've seen
how much attention was
given to Facebook, Uber, and Luckin Coffee’s pub-
lic offerings. But is an IPO the best way to exit for
tech investors? For me, it doesn’t really matter how
you exit as long as the numbers are in your favor and
more importantly, it is the right step for the company.
People often ask me, “can Indonesian local start-
ups do an IPO?”, but I think the better question is
“should they do it?” It’s not a matter of ability, but
compatibility. For founders, before deciding whether
it’s time to go down the pre-IPO path, ask yourselves
the reasons you want to do it. Are you ready to under-
go the scrutiny and complicated procedures? Are you
sure you want to let go of control? Do you have a solid
plan for maintaining your performance post-IPO so
that the share price will not drop?
Then, when the “should you?” question has been
answered, there are questions of place, time, and price
to be discussed. Several local startups have chosen to be
listed on the Indonesia Stock Exchange (IDX). Some are
in talks to have dual listings or to be listed entirely on a
foreign stock market given their financial entity’s loca-
tion, the degree of complication, the liquidity of stock
trading, and even the spotlight it might attract. More
and more Southeast Asian tech startups are considering
following China’s Luckin Coffee’s step of listing on the
Nasdaq. Meanwhile, the IDX is also trying to persuade
local startups to go public through regulation changes
(i.e. startups no longer have to be profitable, they have
up to six years after listing to become profitable) and
starting an incubator to help startups grow and eventu-
ally go public. So, is listing on the Nasdaq better than
on the IDX? That’s a question only you can answer de-
pending on what you’re looking for.CAN (OR SHOULD) OUR LOCAL TECH
COMPANIES GO PUBLIC?
The next one is about timing. Some analysts
say that Uber’s IPO ‘failed’ because it waited too
long and raised too much investment, causing the
valuation to balloon beyond the market’s appetite.
Whether that’s true is still a mystery, but the key
lesson here is that you have to find the right time
when your company’s valuation is sizeable enough
yet still makes sense, your fundamentals are strong
enough, but not too late that its story is no longer
compelling enough to sell.
The last item to consider is price. The post-IPO
share price is often seen as an indication of a compa-
ny’s IPO success, but many adopt this notion prema-
turely. Prices during the early days of an IPO fluctu-
ate and it takes a while to stabilize. Some companies,
like Zoom, are lucky to debut at a higher price than
previously set. The stock price even reached $94 per
share by early June, compared to the initial price
of $36 and $60 in its first day of trading. Some, like
Facebook, took longer. Its price dropped to $18 in
August 2012 having opened at $42 in May, but Face-
book’s share price peaked at $208 last year. The key
lesson here is to not be discouraged by these fluctua-
tions or what the media says.
If you believe that it is the right step to take at
the right time, go ahead. Because in the end, it’s not a
question of whether you can, but whether you should,
and if so how to do it in the best way possible? FCHANDRA TJAN
CHANDRA TJAN IS THE MANAGING PARTNER AND CO-FOUNDER OF ALPHA JWC VENTURES.ADOBE STOCKGLOBAL VIEWPOINT