Indonesia’s Telkomsel launches $40m VC fund targeting early-growth stage startups

Indonesian mobile operator Telkomsel, a subsidiary of state-owned telecom firm Telkom Indonesia, has officially announced the launch of its VC fund with an initial corpus of $40 million as it looks to accelerate its digital transformation.

DEALSTREETASIA first broke the story on the proposed venture fund in December last year.

According to a statement from Telkomsel, the fund aims to find, strategically fund and work with early-growth stage tech businesses, and will look to co-invest with MDI Ventures and Singtel Innov8, which are the VC arms of the company’s two stakeholders, Telkom Indonesia and Singtel.

The GP of the fund will be a fully owned subsidiary of Telkomsel called Telkomsel Mitra Inovasi (TMI).

“Recognizing that Southeast Asia is fast-growing region, our partnership with Telkom’s MDI Ventures and Singtel’s Innov8 through TMI will allow Telkomsel to proclaim a more agile and reliable engagement model to startups seeking access to our strategic capital yet to offer better user experienceby forging lasting symbiotic alliance,” said Telkomsel president director Ririek Adriansyah.

TMI will be responsible for investment activity along with synergy and collaboration in Telkomsel’s various business units to forge ahead with digital transformation aspects to accelerate the development of new services, improve customers’ experience and business process optimization.

“We work closely with startups to establish strategic and operational plan to maximize long-term value. We always look for ways to leverage the scale and put Telkomsel assets to work in a different way. Many market insights we can provide from both enterprise and consumer perspectives in Indonesia. It also gives a leg-up in terms of corporate awareness in a digital business ecosystem,” said TMI CEO Andi Kristianto.

The establishment of TMI follows the launch of an innovation centre called Telkomsel Innovation Center (TINC) last year to provide Internet of Things (IoT) laboratories, as well as mentoring and boot camp programmes for startups, developers and system integrators with related industry players.

Founded in 1995, Telkomsel is a joint venture between telco giants Telkom Indonesia and Singapore’s Singtel, with the former owning 65% stake in the company, while the latter holding the remaining 35% stake.

The Jakarta-headquartered company is Indonesia’s largest telecom operator with 172 million customers as of 2018.

By setting up a VC arm, Telkomsel becomes the latest corporate in Indonesia to officially venture into tech investment through a dedicated fund and entity.

The first to do so among state-owned companies is Telkomsel’s parent company Telkom Indonesia, which established MDI Ventures with a fund of $100 million in 2015. This was followed by state-owned lender Bank Mandiri, which set up Mandiri Capital Indonesia in 2016.

Another state-owned lender is Bank BRI is in the process of setting up its venture capital unit named BRI Ventures.