Several Findings on the Merah Putih Fund
The excerpt of Interview with Eddi Danusaputro, CEO of Mandiri Capital Indonesia who is also one of the Merah Putih Fund committees
Randi Eka - 21 December 2021
The government recently announced the “Akselerasi Generasi Digital”, a collaborative movement to support the acceleration of digital potential, innovation, and startup development in Indonesia. There are three main programs, including the Merah Putih Fund, Indonesia Digital Tribe, and Microcredential.
Indonesia Digital Tribe is a 'skill and mindset' educational program that aims to produce the next generation of founders. Also, it is to fulfill talent requirements in the rapidly growing local tech industry. Meanwhile, Microcredential is an internship program for a hands-on experience in tech companies – synergizing with the Kampus Merdeka program initiated by the Ministry of Education and Culture.
The Merah Putih Fund is an initiative of the Ministry of SOEs to accelerate local startups with great potential to become unicorns. It will be focused on capital provision and business collaboration to generate synergies in various industrial sectors.
In order to find out more about this fund, we had the opportunity to speak with Mandiri Capital Indonesia's CEO, Eddi Danusaputro, who is also a committee member of the Merah Putih Fund.
First managed fund
In its first phase, the Merah Putih Fund (MPF) is to close $300 million or equivalent to 4.3 trillion Rupiah managed fund; supported by five SOEs including Telkom, Telkomsel, Bank Mandiri, Bank Rakyat Indonesia, and Bank Negara Indonesia. In the second phase, Eddi said MPF will invite other SOEs to participate – as well as several Indonesian based private companies, including the Indonesia Investment Authority (INA).
"I think MPF will focus on local companies and yet to raise funds from foreign [LPs or companies]," Eddi said.
Currently, the MPF is yet to run full operation, the President has just officially announced it. Once it started, this investment unit will be led by representatives from 5 CVCs who were involved in the initial formation, including Mandiri Capital Indonesia, MDI Ventures, Telkomsel Mitra Innovation, BRI Ventures, and BNI. Each will assign a representative to become a 'Co-Fund Manager'.
Eddi said that there was no quantity objective for startups of the first managed fund, the focus was on the quality of startups. In the aim to deliver new unicorns, MPF will focus on providing advanced funding, particularly for centaur or soonicorn startups – valued at over $100 million.
There are 3 main requirements for startups to receive MPF funding. First, the majority of founders are Indonesian citizens. Second, the company's operation [can be defined as the head office and main base] is in Indonesia. And third, planning a roadmap to go public on the Indonesia Stock Exchange.
"Regarding the sector, we are not targeting a specific industry. In fact, any field of startups can be invested. However, they must fulfill the three conditions above," Eddi added.
He also said, there is no certain amount of ticket size for the investment. It will depend a lot on the agreement and demand for each startup.
“It has been discussed from the beginning. Each of us operates CVC with a specific purpose. However, in terms of MPF, the resulting investment decisions are collective and based on the majority of votes, therefore, it will avoid conflicts of interest," Eddi said.
Later, the team involved in MPF will be actively searching for potential startups and creating opportunities for founders to pitch. However, there is no specific plan can be announced at this moment.
According to DailySocial.id's data, there are currently around 50 centaurs startups, some of which have valuation over $500 million – waiting for the last funding round to become unicorns.
The IDX go public roadmap will be highly emphasized. Eddi said, it is simply to create a healthy ecosystem – investment is used as a starting point, and exit through an IPO is the end point of an investment lifecycle.
"Several SOEs have CVCs and have its own ways, through the Merah Putih Fund, we unite the spirit and vision to create a digital economy and a healthy digital ecosystem in Indonesia," Eddi said.
–Original article is in Indonesian, translated by Kristin Siagian