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Big businesses 'rush' to invest in more start-ups to boost growth
Major Indonesian companies are actively seeking to invest in start-ups to boost innovation and to ensure the steady growth of their businesses
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span>Major Indonesian companies are actively seeking to invest in start-ups to boost innovation and to ensure the steady growth of their businesses.
For example, publicly listed PT Astra International plans to invest in more tech start-ups over the next few years through its corporate venture capital (CVC) firm, PT Astra Digital Internasional.
Astra International corporate strategy manager Andi Suwandi said on Nov. 14 that the diversified conglomerate was keen to invest in tech start-ups that could bring synergy to its business lines, such as automotive, financial services and agriculture.
Aside from investing in start-ups like Gojek, he said, Astra Digital had also established its own tech start-ups to develop innovations for the business lines of its parent company.
Astra Digital's self-established start-ups include Seva.id, an online automotive marketplace, and Movic, an online car rental platform.
Although Astra already had a strong portfolio, Suwandi said the company would also look to other start-ups for new
opportunities.
“We’re particularly interested in financial technology [fintech] firms that can collaborate with our business,” he said on the sidelines of Nexticorn International Summit 2019 in Jimbaran, Bali on Nov. 14 to 15
He added that fintech companies could provide better financial data that could prove useful to Astra International in getting to know its customers better.
The Salim Group conglomerate is also actively investing in start-ups that can help strengthen and grow its many
businesses, and has established two business incubators, Block71 and Innovation Factory, for this purpose.
Innovation Factory portfolio manager Edmund Carulli said that the group had invested in "seed stage" start-ups that could support its main business lines and help them to grow, particularly its Indofood Group and Indomaret retail food businesses.
One of the main reasons the group is keen to invest in and nurture start-ups, Edmund said, was because they could help accelerate growth.
“In big companies, innovations are usually made through research and development, but start-ups can help innovate more rapidly,” he said.
Edmund said that the company was not restricting its investment to tech start-ups, and would also invest in non-tech start-ups that could add value to the conglomerate’s existing business as it had with Warunk Upnormal, a coffee shop, and restaurant chain.
Aside from private conglomerates, state-owned enterprises (SOEs) and their subsidiaries are also investing more in start-ups.
SOEs like Bank Rakyat Indonesia (BRI) and Telkom, through the latter's cellular network subsidiary Telkomsel, have even established their own venture capital firms to identify and fund start-ups that could produce innovations to support their businesses.
BRI Venture investment vice president William Gozali said on Nov. 15 that the firm was looking to invest its $250 million funds in the right fintech companies to bring more value to BRI.
William added that the firm would start investing in non-fintech start-ups next year.
“We’re particularly interested in investing in agriculture and maritime start-ups, as this is in BRI’s DNA,” he said, referring to the bank’s lucrative microcredit program program that has made it the most profitable bank in the country.
Meanwhile, Andi Kristianto, the CEO of Telkomsel Mitra Inovasi, Telkomsel’s newly established CVC, said the firm was not restricting its investment to start-ups in a particular sector.
“We primarily look at start-ups that can be a new source of growth and provide breakthrough innovations that can benefit our company,” he said, explaining that the company was looking to participate in Series A funding for start-ups that could bring synergy to Telkomsel.Economist Bhima Yudhistira of the Institute for Development of Economics and Finance (Indef) told The Jakarta Post on Monday that investing in start-ups could boost the companies' growth as well as provide solutions to their internal problems.
However, he reminded that a careful approach to investment was needed to ensure that the start-up would offer the greatest benefit to the investing company, and that investments should not be made just to prove its ability to keep up with today’s rapid digital transformation.
