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Indonesia’s oldest bank taps veteran venture capitalist

[SINGAPORE] When Nicko Widjaja was hired to run the venture capital arm of Indonesia's biggest telecommunication services provider in 2015, corporate venture capital investing had a reputation for being slow, bureaucratic and generating lacklustre returns.

But in four years, he has made it work. The first venture fund of state-owned PT Telekomunikasi Indonesia, called MDI Ventures, has returned 40 per cent this year after a 28 per cent gain in 2018, according to the company. Mr Widjaja backed 32 startups through MDI Ventures and exited from five through sales and initial public offerings. They include Wavecell Pte and Red Dot Payment Pte.

Now PT Bank Rakyat Indonesia (BRI), the country's oldest and the most profitable lender, has tapped Mr Widjaja to lead its new corporate venture arm called BRI Ventures. The state-owned bank plans to allocate as much as US$250 million in three years to unearth promising startups, said Nyoman Sugiri Yasa, executive vice-president for technology partnership at BRI and a commissioner of BRI Ventures.

"Our aim is to create new growth opportunities and strategic partnerships for BRI," Mr Yasa said, adding that about US$100 million has already been allocated to BRI Ventures. At US$250 million, it would be the largest venture fund in Indonesia.

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Mr Widjaja said he will target growth-stage tech startups in financial services sector in Indonesia.

Jakarta-based BRI is the latest to jump on the VC investing bandwagon. It is also part of a larger trend in Asia as traditional companies seek to bolster returns and boost their digital presence.

Ayala Corp, the Philippines' oldest family holding company, has launched a US$150 million corporate venture fund, while Indonesian conglomerate Sinar Mas group has teamed up with East Ventures and an arm of Yahoo Japan Corp to form EV Growth, a US$200 million venture capital fund.

Corporate venture capital gives companies access to different startups amid the disruption happening in their industries, said Tan Yinglan, managing partner of Insignia Ventures Partners in Singapore. The firms may end up acquiring some of these startups, he said.

"Corporate venture capital also has more autonomy to invest and this is especially important in the context of today's competitive venture capital scene," Mr Tan said. Still, companies need to change fundamentally "for digital transformation to truly be effective", he added.

Mr Widjaja attributes his ability to spot good deals like online heathcare platform CXA Group and payments startup Instarem to his failures. Before joining as chief executive officer of MDI Ventures, he ran his own VC firm called Systec Ventures. After pulling about US$5 million, he started investing in early-stage startups in Indonesia in 2011. By 2013, the fund was closed down.

"It was a huge lesson," Mr Widjaja said. "Through that experience, I learned that you always have to invest based on data, not your gut feeling."