Eddy Chan has worked on venture investments in startups since the late 1990s, including PayPal, Palantir, and Affirm, and is currently a founding partner of independent Indonesia-only early-stage venture capital firm Intudo Ventures, which names Halodoc, Kargo, Pintu, and PasarPolis among its portfolio companies.

Part of Intudo’s model is to bring overseas Indonesian tech talent back home. What was behind that decision?

I think this is just history. I was born in Silicon Valley in 1979, and my parents are both tenth-generation Taiwanese. In the 1980s, Taiwan was heavily influenced by returnees: folks like Morris Chang who moved back to inspire, build out, and really unite the tech ecosystem. In post-1990s Taiwan, once you saw scale in-market, you had the next generation of founders, who maybe didn’t go abroad but had worked at some of these great companies. They came out of TSMC or elsewhere to launch their business. 

Later, in the 2000s, I saw this when I covered the Chinese ecosystem as a corporate mergers and acquisitions lawyer. If you look at China after 2005 — after Ctrip, Baidu, Tencent went public — the next generation of founders didn’t necessarily have to go abroad. In Indonesia, out of the 30 or so companies above a $100 million valuation, 92% of those founders went to school in the U.S. If you look at Gojek or Traveloka, for example, the early and emerging ecosystem invariably has some returnee influence. The next founders will come from these companies.

Why have you focused just on early stage companies?

In the past, in Southeast Asia, regional [fund] managers could win just by having capital. Today, you either have to have massive in-country expertise or a global brand name. We’ve yet to [find] any regional manager at an early stage that has a general partner from Indonesia. Would you ever back a manager in China that doesn’t have a general partner who speaks Chinese? Probably not. Why is that possible in Indonesia? Because of the false narrative that Southeast Asia is one region. It’s a myth. 

A lot of regional [fund] managers have gone on to launch multistage funds. But what they haven’t realized is that, without being hyperlocal, they’ve already lost to Lightspeed and Sequoia before they get on the court because those brands are too strong. We know our place in society. We take all the early stage risks until series B, and then we go to our global partners. That’s where the market is today.

You’ve spoken about how Southeast Asia is not a single market; Indonesia alone contains multiple markets.

We realized, as an early stage investor, that Southeast Asia as a region really is a fallacy. The different languages, family power structures, regulatory policies — it’s nontrivial to be successful in one market, let alone eight. Is Indonesia a 280-million-person market? I think it’s a lie. The “haves,” if you will — people with a per capita GDP of $135,000 — number 3.8 million. Then there’s the middle class, call it 54 million people, with $6,000 in GDP per capita. 

The aspirational next 120 million can be tough to reach. Realistically, you’re looking more at like a 60-million- to 180-million-person market. You have to dig deep and understand what type of business [you are growing].

*This 3 Minutes With interview first appeared in the Rest of World weekly newsletter. Sign up here.