Dutch early-stage fintech investor Finch Capital is planning to set up a joint venture capital fund by teaming up with Central Capital Ventura (CCV), the venture capital arm of Indonesia’s largest private lender Bank BCA, according to sources privy to the development.
The joint fund is said to be targeting to raise around $200 million. Both parties are currently in the process of applying for a fund management licence in Singapore, the people mentioned above added.
The move marks a shift from their earlier strategy when both Finch and CCV were exploring the idea of a co-investment arrangement to leverage each other’s strengths.
While Finch was looking to tap BCA’s ecosystem and deep local network, the Indonesian lender was keen to expand its reach through Finch’s network and deals. Both Finch and CCV were looking at a $75-million co-investment arrangement, as reported by DealStreetAsia in January this year.
According to sources, the earlier co-investment arrangement was initiated to anchor the LP commitments but now both parties are looking at the joint VC fund approach.
The joint fund will look at investing in fintech and financial services startups at the Series A and above stages. When contacted by DealStreetAsia, Finch Capital declined to comment while CCV has yet to respond to a query seeking more information.
Finch Capital, which has been actively investing in Indonesia, has backed bill payments platform Ayopop, reimbursement platform Jojonomic and regional super-app Grab. The investor also clocked an exit in 2018 when it sold its stake in fintech firm Cermati to local conglomerate Djarum Group, a shareholder in BCA.
CCV, on the other hand, has been investing from the balance sheet of BCA and predominantly in early-stage fintech companies. Its $15-million maiden fund has backed insurtech startup Qoala, payment company Wallex, and biometric platform Element. In late 2019, BCA injected an additional Rp 200 billion ($14.26 million) into CCV to pursue further investments in fintech startups.
Entrenched in the market
Apart from the CCV joint vehicle initiative, Finch Capital has also teamed up with MDI Ventures, the venture arm of state-owned telecom firm Telkom Indonesia, for a $40-million joint vehicle named Arise.
Last month, MDI Ventures and Finch Capital announced the first close of the joint debut fund. The fund had gathered commitments from third-party corporate investors, family offices, and high-net-worth backers. One of the fund’s backers is Indonesia’s publicly traded ICT firm PT Metrodata Electronics Tbk.
Based in Indonesia, Arise seeks to bridge the funding gap for early-stage tech companies. Going beyond writing cheques, the fund seeks to invest in startups early, even before the founders fully solidify their ideas and teams, provide access to strategic go-to-market partners via its corporate LP network and long-term capital through its affiliated sister funds, including MDI Ventures, Centauri Fund.
According to sources familiar with the matter, both Arise and the proposed Finch Capital-CCV vehicle will follow a different investment approach. “There will be no conflict or overlapping of interest,” they added.
Arise would mainly look at the post-seed to pre-Series A stage targeting broader sectors like logistics, healthcare. Meanwhile, the Finch-CCV joint fund would look at fintech play and invest at Series A and above.
With the joint funds, Finch Capital seeks to gain exclusive access to two unique ecosystems in Indonesia. With BCA, Finch can leverage Indonesia’s largest consumer bank while the Arise-MDI will tap into the network of the country’s largest telecom operator (Telkom).