MDI Ventures, the venture arm of state-owned telecom firm Telkom Indonesia, has closed a new $500-million tech investment fund to bolster the digital transformation agenda of Indonesia’s state-owned enterprises (SOEs).
In an interaction with DealStreetAsia, the firm said that the new fund is fully derived from the balance sheet of Telkom Indonesia. It will be cutting checks from $5 million to up to $30 million to back later-stage companies.
MDI Ventures expects to seal its first deal as early as next month.
In an official release, MDI Ventures said the fund will be used to scale the existing agenda of Telkom Group, but with a couple of “mission-critical updates”.
MDI Ventures will use the fund to invest in Indonesia-focused companies. It will then seek to plug its portfolio into not just one state-owned parent company but all SOEs in the nation.
The government claims the push as part of an ambitious goal of building out a full-fledged, state-owned digital ecosystem.
As part of this effort, Telkom had roped in former Bukalapak president Muhammad Fajrin Rasyid to lead its digital business operation before recently appointing him as chairman of MDI Ventures.
With the new fund now at its disposal, MDI Ventures says it is on the lookout for tech startups with strong growth promise and meaningful traction that not only aspires to dominate the Indonesian market but also help traditional – and largely offline SOEs – join the nation’s thriving digital economy.
“To maintain their strong foothold in the market well into the future, our SOEs know they need to embrace digital business models more profoundly than ever before. By allocating this fund in accordance with the government’s bold mission and by partnering with local tech innovators, Indonesia’s SOEs will be ideally positioned to thrive for generations to come,” said MDI Ventures CEO Donald Wihardja, who joined the firm in May from local peer Convergence Ventures.
In recent years, Indonesia has been transitioning major SOEs into a fully digital paradigm. State-owned banks, for example, had released various tech innovations since 2018 and some even launched their own online and app-based lending platforms for SMEs.
A couple of SOEs have also followed Telkom’s lead by setting up VC arms, namely Bank Mandiri through Mandiri Capital Indonesia and fellow state-owned lender BRI, which formed BRI Ventures last year.
The newly raised fund makes MDI Ventures the largest corporate venture capital (CVC) firm in Indonesia with more than $790 million in assets under management.
The firm forayed into venture investing in 2015 through the now-fully-deployed $100-million balance sheet fund. This was followed by the Centauri growth fund with Korean firm KB with a target corpus of $150 million, and a $40-million fund with Telkom subsidiary Telkomsel.
Both funds are still in their investment period and will be managed in parallel with the new $500-million fund. Additionally, MDI Ventures is understood to be finalizing the close of a seed-stage fund.
In 2019, MDI Ventures booked five exits from its debut fund, including Melbourne-based Whispir’s IPO on the ASX, Naspers’ acquisition of Red Dot Payment at a valuation of $65 million, and the acquisition of Singapore-based cloud communications platform Wavecell by US-based 8×8 in a deal worth approximately $125 million.
