CREATIVE INDUSTRY’S STARTUP:
HOW CAN INVESTORS INDICATE IMPORTANT FACTORS TO FUND IT?
Nora Amelda Rizal, Jurry Hatammimi, Nurlita Wahyu Isnaeni
0 100 200 300 400 500 600 700 800 900 1000
525.26 581.54 638.39
708.27
784.87
852.56
922.59
1. Creative economy contribution to the national GDP continuous to grow
2010 2011 2012 2013 2014 2015 2016
In trillion rupiahs
In 2015 to 2016 increased by 8.21%
PHENOMENA
The creative economy is an economic activity based on creativity, skills, and individual
talents to build creativity and creative power
of individuals who have economic value and
influence to the welfare of society
2. The creative economy is driven by the industrial sector called the creative industry The creative industries are the industries that emerge from the utilization of creativity, skills and individual talents to create welfare and employment opportunities through the creation and utilization of the creativity of these individuals
PHENOMENA
Venture Capital Bank Loan Business Actor
0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00%
0.66%
24.44%
74.90%
0.00%
3. The difficulties faced by the creative industries actors are to get funding Access to creative economy capital in 2015
PHENOMENA
Literature Review
1. Cunningham et al. (2008: 81) said that the funding model for the creative industry would have different parameters in each country depending on where the funding was given and the requirements of the banks owned by each country. He shared the factors that influence the funding of creative industries in developing countries into 2 variables including requirements for loans, credit and funding and; organizational and institutional.
2. Stankeviciene and Zinyte (2011) propose a new business evaluation model by weighting several key criteria including, investment period, financing model, and portfolio of company’s profile
3. Choi (2013) states that endorsement and time to IPO are important factors in making investment decisions
4. Dumitrescu (2014) states that in order to obtain thematic funding opportunities, small and medium enterprises need to present sustainability, transnational, and value added.
5. Kuschel et al (2016) stated that the business stage and network are the main category that influences funding for an technology- based startups
6. Shah and Shah (2017) state that market feasible and innovation concepts are the main attraction for success in obtaining funding
7. Botric and Bozic (2017), the valuation aspect used in his research on access to funding is positive expectation 8. Cooke (2017) states the importance of having the Intellectual Property Right for what is found or created
9. Hatammimi and Rizal (2018) discuss the indicators that influence funding for creative industry startups in developing countries through a literature review grouped into the variables by Cunningham et al (2008) by adding indicators obtained from studies 2 to 8
Significance
Cunningham et al. (2008: 81), and Hatammimi and Rizal (2018): funding in creative industries startups in emerging market
Stankeviciene and Zinyte (2011), Choi (2013), Dumitrescu (2014), Kuschel et al
(2016), Shah and Shah (2017), Botric and Bozic (2017): important factor and
indicators that influence funding in startups
Contribution on This Paper
To provide knowledge and insight about the indicators used by investors before investing their funds in creative industry startups in Indonesia
Research Question
Does variables and indicators found are indeed suitable to be applied in Indonesia Research Objective
To confirms indicators that affect funding the creative industry startups in
Indonesia
Research Method
This study used explorative qualitative method, a deductive approach is
carried out using existing theories to find out whether the indicators
contained in existing parameters can be implemented in Indonesia
Research Method
Triangulation was used to achieve validity and reliability of the data, the steps can be seen as : 1. Interview
Using non probability sampling method called convenience sampling, there are three selected respondents. The sample are investors under Indonesia’s Creative Economy Agency (Bekraf) under criteria:
• Investors under Indonesia’s Creative Economy Agency (Bekraf) that coming to the Go-Startup Indonesia event on October 26, 2018 in Bandung
• Investors must have the experience investing in creative industrial startups especially the subsector of application and game developers
• Agreed to be interviewed within 2 weeks since first contacted
WHY BEKRAF?
• The Creative Economy Agency (Bekraf) is an institution responsible for the development of the creative economy in Indonesia
• Bekraf manages 16 sub-sectors of the creative economy
• Bekraf has several investors who are
collaborating in facilitating access to funding
for creative economic actors
Why Aplication and Game Developer Sub-sectors?
This subsectors hold intangible assets which means its difficult to calculate the credit risks that need to be known to get funding from banks or other financial institution
In 2020 digital startups are have the potential to
increase by 6.5 times larger from 2017, which is 2000 digital startups. Supported by predictions that 40% of the total population in Indonesia has used the
internet
Source: BEKRAF
Triangulation
“The main point is to gain good understanding from different prespective of an investigated phenomenon. That should not necessarily mean cross checking data from at least two sourches or methods and confirming it is correct or not. It’s more to increase the level of knowledge about something and to strengthen the researcher’s standpoint from various aspect”
Alan Bryman (Social Research Method, Oxford)
Source: www.researchgate.net
Research Method
2. Verbatim Transcription
The results of interviews in the form of audio will be converted into text or commonly referred to as verbatim transcription
3. Coding data
The data will be reduced and put into category according to the research objectives.
4. Intepretation
Data that has been reduced and presented systematically will be concluded and verified.
5. Conclusion
The researcher gives his views and perspectives on the research findings
Research Variable and Indicators
Variable Indicator
Loan/Credit/Funding
Business Stage Investment Period Financing Model
Research Variable and Indicators
Variable Indicator
Organizational &
Instiutional
Positive Expectation Network
Market Feasible Idea Concept Innovation Endorsement
Time to IPO Sustainability Transnational Value Added
Intellectual Property Right Portfolio Company's Profile
Result and Analysis
Variable Indicator Research Result
Loan, Credit, and Funding
Business stage Respondent 2 agreed that the business stage is an influencing indicator when valuing a startup before making an investment, this is suitable with the research of Kuschel et al (2017)
Investment period Respondent 2 and Respondent 3 agreed that investment period is an influencing indicator when valuing a startup before making an investment, this is suitable with the research of Stankevičienė and Žinytė (2011)
Financing model Respondent 3 agreed that financing model is an influencing indicator
when valuing a startup before making an investment, this is suitable
with the research of Stankevičienė and Žinytė (2011)
Result and Analysis
Variable Indicator Research Result
Organizational &
Institutional
Positive Expectation Respondent 2 agreed that positive expeectation is an influencing indicator when valuing a startup before making an investment, this is suitable with the research of Botric and Bozic (2017)
Network Respondent 2 agreed that network is an influencing indicator when valuing a startup before making an investment, this is suitable with the research of Kuschel et al (2017)
Market Feasible Idea Respondent 2 and Respondent 3 agreed that market feasible idea is an influencing indicator when valuing a startup before making an investment, this is suitable with the research of Shah and Shah (2017)
Concept Innovation Respondent 2 agreed that concept innovation is an influencing indicator when valuing a startup before making an investment, this is suitable with the research of Shah and Shah (2017)
Endorsement Respondent 2 and Respondent 3 agreed that endorsement is an influencing indicator when valuing a startup before making an investment, this is suitable with the research of Choi (2014)
Time to IPO Respondent 1 and Respondent 3 did not agree that time to IPO is an influencing indicator when valuing a startup before making an investment, this is suitable with the research of Choi (2014)
Result and Analysis
Variable Indicator Research Result
Organizational
& Institutional
Sustainability Respondent 1 and Respondent 3 agreed that sustainability is an influencing indicator when valuing a startup before making an investment,
this is suitable with the research of Dumitrescu (2014)
Transnational Respondent 2 and Respondent 3 agreed that transnational is an influencing indicator when valuing a startup before making an investment,
this is suitable with the research of Dumitrescu (2014)
Value Added Respondent 1 and Respondent 3 agreed that value added is an influencing indicator when valuing a startup before making an investment,
this is suitable with the research of Dumitrescu (2014)
Intellectual Property Right All three Respondent agreed that IPR is an influencing indicator when valuing a startup before making an investment,
this is suitable with the research of Cooke (2017)
Portfolio Company’s Profile Respondent 1 and Respondent 1 agreed that portfolio company’s profile is an influencing indicator when valuing a startup before making an investment, this is suitable with the research of Stankevičienė and Žinytė (2011)
