Indonesia’s prominent corporate venture capital firms and conglomerates are seeking to tap into opportunistic bets in fintech, new retail, proptech and heathcare tech, according to panelists at the DEALSTREETASIA’s Indonesia PE-VC Summit 2019 summit held in January 2019.
Corporate venture capital, led by the region’s large conglomerate groups, is at the forefront of homegrown VC activity in Indonesia, partaking in some big-ticket funding rounds.
DEALSTREETASIA put together a panel – comprising Eddi Danusaputro, CEO, President Director, Mandiri Capital Indonesia; Roderick Purwana, Managing Partner, SMDV; Rudy Ramawy, Founding Partner & Managing Partner, Venturra Capital; Andya Daniswara, SVP, Business Development, Emtek; and, YC Ng, Founding Partner, Latitude Venture Partners (Moderator) – to delve into the various aspects governing this segment of venture funding.
It turns out that fintech is a sector that corporate venture capital firms are most bullish about given the opportunities that Indonesia’s financial service sector presents and the fact that areas like the banking, digital payments and remittance spaces are considered ripe for disruption.
“Everyone is bullish about fintech. The biggest is payment and the right time to focus on fintech,” said Andya Daniswara, SVP, business development of Emtek, the largest shareholder in online marketplace, Bukalapak a unicorn in Indonesia.
Indonesia has as many as 64 licenced peer to peer lenders and as many as 227 operating without a licence.
“I believe Indonesia will be in the forefront of P2P retail,” said Rudy Ramawy, founding & managing partner, Venturra Capital. He said the property market backed by technology is an area he trusts traction will increase.
The rise of fintech has forced traditional financial institutions like Bank Mandiri to invest in and collaborate with fintech startups.
“We have invested in 10 startups. For Mandiri to open one physical branch, it costs about 2 billion Rupiah. We can’t continue to do that. Every one is going to the mobile phone. We can scale up fast by developing mobile technology and even look to acquire these startups,” said Eddi Danusaputro, CEO of Mandiri Capital and president director of Mandiri Capital Indonesia.
How are CVCs different from other investors
Startups can face challenges like having a lack of independence or the perception of lack of independence as part of a CVC, SMDV’s managing partner, Roderick Purwana, observed.
Purwana said, while their growth fund is dedicated to take the startups to the next level, the fund provides an opportunity to at least offer the perception of independence. He said, partnership with firms like East Ventures enables them to do things they would not be able to do as SMDV alone.
Sinar Mas Digital Ventures (SMDV), the venture capital arm of Indonesia’s conglomerate Sinar Mas, has partnered with venture capital firm, East Ventures to form an independent growth fund to invest in growing digital companies in Indonesia.
For Venturra Capital, whose sponsor is Lippo Group and which has made investments in startups along side firms like Sequoia and UOB Venture, working with foreign partners has meant being subject to the same standard of openness and governance.
“As long as we view ourselves as venture investors first and strategic investors when needed, I think it should be fine,” said Ramawy.
On the other hand, technology startups also need support from CVCs to scale up faster.
“The most important thing a startup needs is customer acquisition. In Indonesia, 95 per cent is still using retail. While e-commerce and fintech is growing fast, to go beyond the share of 5 to 10 per cent, you really have to partner with offline companies,” said Ramawy.
“In the last three to four years, a lot of corporates are beginning to act like venture investors. Venture investors are also thinking along the strategic line as well,” said Ramawy.