Indonesia, on Wednesday, officially launched a venture capital fund that will target local startups with a valuation of over $200 million.
The Merah Putih Fund, launched by president Joko Widodo — also known as Jokowi — aims to back ‘soonicorns’ or startups that have the potential to soon become unicorns.
“The market potential is big. Currently, we have 2,319 startups and it is increasing every day. We have one decacorn, seven unicorns, and so many soonicorns that will be pushed to the unicorn and decacorn clubs,” Widodo said at the inauguration of the Digital Generation Acceleration Movement in Jakarta. A unicorn is a startup with a valuation of atleast $1 billion.
The Merah Putih Fund will be backed by state-owned enterprises (SOE).
It will be set up in partnership with the venture capital units of Indonesia’s top SOEs including Telkom Group, Bank Mandiri, and Bank BRI. The fund will draw capital from the SOEs.
Widodo also invited private companies and the country’s sovereign wealth fund (INA) to join the new fund.
The criteria for startups to be eligible for funding from the Merah Putih Fund include being established by Indonesians, having headquarters in the country, and plans to list on the Indonesian stock exchange (IDX), explained SOE minister Erick Thohir.
The minister estimated that Indonesia has the potential to be home to 25 unicorns, and urged the INA to invest in unicorns so that they can eventually become decacorns. “Without funding, they could lose that potential… we also hope that all private companies can enter the funding system,” Thohir added.
DealStreetAsia had previously reported that Indonesia’s state-backed funds plan to invest in growth-stage funding rounds of Indonesian tech startups with ticket sizes ranging from $10 million to $50 million, according to MDI Ventures chief executive officer Donald Wihardja.
Besides the Merah Putih Fund, the country also launched the Indonesia Digital Tribe to prepare the infrastructure required for the digital economy.
President Widodo said Indonesia has to prepare a strategy to make the most of the global digital acceleration. “We have seen that our logistics industry has grown 60% due to e-groceries and deliveries. Everything is growing,” he said.