CREATIVE INDUSTRY’S STARTUP: HOW CAN INVESTORS INDICATE IMPORTANT FACTORS TO FUND IT?

1. CREATIVE INDUSTRY’S STARTUP: HOW CAN INVESTORS INDICATE IMPORTANT FACTORS TO FUND IT? Nora AmeldaRizal, JurryHatammimi, Nurlita Wahyu Isnaeni

2. PHENOMENA In 2015 to 2016 increased by 8.21% 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

3. PHENOMENA 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

4. PHENOMENA

5. Literature Review • 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. • Stankevicieneand Zinyte (2011) propose a new business evaluation model by weighting several key criteria including, investment period, financing model, and portfolio of company’s profile • Choi (2013) states that endorsement and time to IPO are important factors in making investment decisions • Dumitrescu(2014) states that in order to obtain thematic funding opportunities, small and medium enterprises need to present sustainability, transnational, and value added. • Kuschelet al (2016) stated that the business stage and networkare the main category that influences funding for an technology-based startups • Shah and Shah (2017) state that market feasible and innovation concepts are the main attraction for success in obtaining funding • Botricand Bozic (2017), the valuation aspect used in his research on access to funding is positive expectation • Cooke (2017) states the importance of having the Intellectual Property Right for what is found or created • Hatammimiand 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

6. Significance Cunningham et al. (2008: 81), and Hatammimi and Rizal (2018): funding increative 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

7. 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

8. 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

9. Research Method Triangulation was used to achieve validity and reliability of the data, the steps can be seen as : • 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

10. 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

11. Why Aplication and Game Developer Sub-sectors? 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 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 Source: BEKRAF

12. 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

13. Research Method • Verbatim Transcription The results of interviews in the form of audio will be converted into text or commonly referred to as verbatim transcription • Coding data The data will be reduced and put into category according to the research objectives. • Intepretation Data that has been reduced and presented systematically will be concluded and verified. • Conclusion The researcher gives his views and perspectives on the research findings

14. Research Variable and Indicators

15. Research Variable and Indicators

16. Result and Analysis

17. Result and Analysis

18. Result and Analysis

19. Indicators in parameters Organizational & Institutional: Positive Expectation Sustainbility Network Transnational Market Feasible Idea Value Added Concept Innovation IPR Endorsement Portfolio Company Time to IPO Profile Indicators in parameters of Loan, Credit, and Funding: Business stage Investment period Financing Model

20. Conclusions There are two (2) variables indicated in this research, first of all, parameters of loans, credit and funding and second of all; organizational, and institutional parameters. Based on the result, data processing and discussion in this study: • In parameters of loans, credit and fundingall three (3) indicators were approved by the respondents which is business stage, investment period, and financing model. • On organizational, and institutional parameters, only ten (10) of the eleven (11) indicators were approved by respondents. These indicators are positive expectation, network, market feasible ideas, innovation concepts, endorsement, sustainability, transnational, value added, intellectual property right and portfolio company’s profile. Time to IPO is considered not to be part of the consideration in assessing new startups or businesses when investing.