Indonesia’s Telkom Set To Build 20 “Digital Valleys”

Michael Erlangga - 18 September 2014

Indonesian telecommunication giant, Telkom, has planned to expand the number of digital valleys in Indonesia, after previously succeeded in establishing “Bandung Digital Valley” and “Jogja Digital Valley”. This is in line with the company’s vision, which is to have 20 digital valleys all over Indonesia in order to enable them supporting the national growth of IT-based creative industry.

The term Digital Valley itself refers to the Telkom-owned co-working space and startup incubator. Jakarta would be the next location of the next digital valley by Telkom. Detik reports that the area, which covers 1.200 square meters, would be sufficient to support up to 20 startups.

“We’ve established our digital valleys in two cities. This year, we plan to expand the number to 20,” Indra Utoyo, the Chief Innovation & Strategy Officer of Telkom Group, told Detik.

Other cities located in Java, like Semarang, Solo, Malang, and Surabaya, are included in the list. Interestingly, Telkom’s expansion plan doesn’t rule out cities outside main island of Java, as the company takes a serious look to establish its digital valleys in Sumatra (Medan, Pekanbaru, Padang, Palembang, Batam), Kalimantan (Balikpapan, Makassar), and Bali.

The growth of creative industry in Indonesia is highly fundamental. Besides opening new jobs, a digital valley may also jumpstart communities, build their network, which would in advance enrich their knowledge, as Telkom experiments with Jogja Digital Valley. Jogja Digital valley, which was launched in August 2013 and covers an area of 1.200 square meters, now is home for 10 startups. Meanwhile, Bandung Digital Valley, which was launched in December 2011, houses 20 startups.

These incubated startups have to get through a series of stages before they can official join the Telkom incubation program. The first stage is talent scouting, where startups can show off their creativity in designing their business plans. The next stage is creative center, where they can validate their products, customers, and business model. The last stage would be creative capital, where their validated capital and value would be assessed.

According to Indra Sutoyo, Telkom has increased their fund allocation to support the ecosystem at their digital valleys, from around Rp 60 million to Rp 90 million. This increase is seen as a strategic move, since Telkom’s plan to establish 20 digital valleys all over Indonesia may end up as the company’s gold mine, and better ecosystem means more cheques to cash.

Now, let’s see this from a business perspective. Once one of Telkom’s startups goes public or gets acquired by other companies, they would gain huge amount of profit, as they, reportedly, controls  10% of each of their startups’ shares. The budget might range from Rp 250 million to Rp 5 billion and would be given annually and gradually. According to Detik, Telkom has currently invested $156 thousands to 12 startups during their incubation period.

Previously, Telkom has reportedly funded a number of Silicon Valley’s startups through its Fenox Fund. By doing so, the company aims to apply Silicon Valley’s way of thinking to Indonesia’s local startups.

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