Indonesia’s largest state-owned bank Bank Rakyat Indonesia (BRI) says it plans to allocate up to $250 million to a “multi-year and evergreen fund” to back growth and late-stage startups through its newly launched corporate venture capital unit, BRI Ventures.
To lead the operations of the new entity, BRI has appointed MDI Ventures’ Nicko Widjaja as the CEO of BRI Ventures. The CVC unit has already received an initial fund of $100 million from the balance sheet of its parent company, the lender said in a statement.
DealStreetAsia reported in May that BRI was in the process of setting up a venture investment fund of up to $100 million, assisted by MDI Ventures, the CVC arm of state-owned firm Telkom Indonesia, in setting up the structure and management team of BRI Ventures.
At $250 million, BRI Ventures’ debut fund is set to be the largest venture fund based out of Indonesia to date, and one of the largest in the region.
The establishment of BRI Ventures makes BRI the third Indonesian bank to set up a venture capital arm after fellow state-owned lender Bank Mandiri and private lender Bank Central Asia.
Unlike Mandiri which set up its VC organically, BRI chose to move into the VC space by acquiring an existing venture capital firm called Bahana Artha Ventura (BAV).
BRI initially acquired a 35 per cent stake in BAV back in November 2107 before gradually increasing its stake and eventually acquiring 97.61 per cent of the company in December last year. It obtained a business license from the Financial Services Authority (OJK) in April 2019.
Unlike its counterparts who are predominantly looking at startups in the financial sector, BRI Ventures, which claims to be an “independent entity with its own funding processes”, will target investments beyond fintech that focus on the rising new consumer ecosystem.
“So far, we are seeing that ‘offline’ is becoming the new sexy. Take, for example, the rise in Warung Pintar, Fore Coffee, Payfazz which have taken strides in the offline sector. Imagine the possibility to scale up fast with technology. I believe through BRI Ventures, we will see more verticals powered by fintech such as retail, education, and healthcare,” says Widjaja.
With four years of experience in corporate investments under his belt, Widjaja can be expected to hit the ground running in his new role, given his understanding of the demands and challenges of investing for a state-owned parent company.
Considered as one of the early movers in Indonesia’s VC industry following the launch of his own fund called Systec Ventures in 2011, Widjaja joined Telkom Indonesia initially as the director of the firm’s Indigo Incubator and later MDI Ventures in 2015 as CEO.
In less than three years, MDI’s $150-million inaugural fund has backed more than 35 startups and landed five exits from its portfolio. This included two IPOs on the Tokyo Stock Exchange in 2017, one on the Australia Stock Exchange in 2019, and three trade exits in just less than four years.
MDI Ventures claims to be one of the most profitable VC firms in the nation today with liquidity IRR at above 55% in the last three exits of this year.
Despite leaving his role as CEO at MDI, Widjaja will continue to serve as an advisor for the firm. His successor is to be named at the firm’s next shareholder’s meeting, as the fund under Telkom Indonesia plans to unveil a more aggressive plan for the year to come.
“While observable progress is being made, Indonesia is still playing catch up with the rest of the world in terms of its own digital economy,” says Widjaja. “Digital disruption is real and no industry is immune to it. We’re five years behind in terms of corporate venturing in the region, thus speed and quick execution is the key to learning more about what’s really possible in this game.”
While BRI Ventures will seek to scour the earth for growth-stage startups, MDI Ventures will also be looking at more mature deals with strong fundamentals. “We’ve learned that cash-poor companies are likely to yield poor collaboration results,” explains Widjaja. “In the meantime, MDI Ventures can be thought of as the ‘Citibank’ for aspiring young venture capitalists and technologists. We continue to invite enthusiastic people to learn and together shape the industry.”
At BRI Ventures, Widjaja is joined by former MDI head of investment William Gozali, who will take up the position of BRI Ventures’ VP of Investments.
According to local media, one of the first deals to be inked by the VC is likely to be an acquisition of Finarya, the company operating the newly launched mobile payment platform LinkAja. The company provides a server-based e-money service which merges the existing e-wallet platforms of telco firm Telkomsel, and lenders Bank Mandiri, BRI and BNI.
As many as six state-owned firms, including BRI, are set to acquire a stake in the company. Both Bank Mandiri and BRI are set to make the investment in Finarya through their respective VC arms, while fellow lender BNI is still said to be considering the option of setting up its VC fund.