Corporate venture capital (CVC) firm Mandiri Capital Indonesia (MCI) will inject up to Rp 200 billion ($15 million) into four to five startups next year, its president director Eddi Danusaputro told DEALSTREETASIA. The state-owned Bank Mandiri’s investment arm will be investing in financial technology (fintech) firms.
Danusaputro said ticket size will vary between Rp10 billion and Rp 30billion. All startups directly under MCI are those offering fintech services, as allowed by Bank Indonesia. MCI intends to stick to its fintech investing mandate until at least the end of next year, before it starts to venture into other sectors.
“We are not dismissing possibilities to invest in other startup sectors sometime in the future. But for now, we stick to Bank Mandiri’s instruction first. There are four to five companies, maximum six to eight, within the Southeast Asian region that we want to invest in 2017,” he said.
In the upcoming few weeks before year-end, MCI hopes to close two to three more deals. So far this year the company has invested about Rp 200 billion. Danusaputro also revealed that the firm planned to attract external funds in 2018.
MCI is a Corporate Venture Capital firm operated by the country’s largest financial institution, Bank Mandiri. MCI claims to act as a bridge connecting investors and entrepreneurs to the fintech sector, as technology and finance are becoming more advanced and “inseparable”.
More regulations in 2017
Commenting on the possible startups and venture capital trends next year, Danusaputro said players in Indonesia will see a lot more regulation, with tech ministry, trade ministry, Bank Indonesia (BI), and the financial services authority (OJK) taking a more active role in the scene. The trend has already begun in a number of sectors.
In the e-commerce sector, the Indonesian government has come up with a roadmap that covers funding, taxation, consumer protection, human resources, logistics, and cyber security to help accelerate the country’s digital growth. Meanwhile back in April, the ministry of transportation introduced rules for how traditional taxis, car rental services, and ride-hailing apps can co-exist.
The transformation in digital and technology sphere has affected Indonesia’s overall economic performance. According to reports, the sector has become Indonesia’s second largest contributor to GDP after financial and insurance (11.4 per cent) during 2016’s first six months.
By 2020, startups in Indonesia are predicted to increase more than six-fold, with spending in the tech sector expected to grow. A study shows that Indonesia’s spending on the tech sector climbed to Rp 214.4 trillion ($16.4 billion) in 2016, compared with Rp 199 trillion ($15.2 billion) in 2015. The rising trend is seen not only in large scale companies, but also in smaller businesses with a contribution of about 13 per cent.