Having led MDI Ventures to clock five exits in a single year last year – a feat bettered by none in Indonesia’s VC game, Nicko Widjaja says he is “chasing his own ghost” as he looks to emulate a similar level of success at his new firm BRI Ventures, the VC arm of the country’s largest state-owned bank Bank Raykat Indonesia (BRI).
“At MDI Ventures we maintained a healthy 35% IRR and liquidity from seven exits. BVI must do the same, or even better because people expect me to do better than I did at MDI,” he said in an interaction with DealStreetAsia.
Following two in the first time three years of its debut fund launched in 2015, MDI Ventures, which serves as the VC arm of Indonesian state-owned telco firm Telkom Indonesia, hit jackpot last year when it scored exits from five portofolio companies, namely Whispir (ASX:WSP), Red Dot Payment (acquired by PayU), Wavecell (acquired by 8×8), ObserveIT (acquired by Proofpoint), and another unannounced exit.
These exits count as returns from the firm’s $150 million first fund, which was fully derived from the balance sheet of Telkom Indonesia. Understandably, the achievement attracted plenty of LP interest and has prompted MDI to set up multiple parallel funds, including the $40 million joint fund with Telkomsel and another joint fund with South Korean counterpart KB Investment, as well as separate seed and later stage funds slated to be launched this year – all roping in external LPs.
Widjaja said that making sounds investments and landing solid returns with its first fund will be essential for BRI Ventures, not only for the benefit of its parent company but also in order for it to be able to later raise money from external LP – something the firm is likely to start doing in around five years’ time.
Among Indonesian CVCs, the move towards a regular LP-GP structure, and away from the typical single LP balance sheet fund, was pioneered by MDI Ventures and followed recently by Mandiri Capital Indonesia, the VC arm of state-owned lender Bank Mandiri. According to Widjaja, such a trend is natural for CVCs given the increasingly competitive VC landscape, not only in Indonesia but also globally.
“If we’re looking at the global trends in CVC, more and more of us are starting to raise from external LPs, for instance, SAP’s Sapphire Ventures, BBVA’s Propel Ventures, and even SoftBank are doing this. It is beyond just the size of the fund, but it is a validation for us all to be able to raise from external LPs, whether you’re a CVC or a VC, the line is blurring between the two,” he said.
For its first fund, which was launched in July last year, BRI Ventures is eyeing a corpus of up to $250 million (IDR 3.5 trillion), to be raised over three years. The firm had been given an initial fund of $100 million from its parent company last year, followed by an additional $36 million two months ago.
Widjaja stressed that the fund, which will target growth and later-stage startups, will not merely focus on collaboration or financial returns alone, but a combination of both.
“MDI Ventures nailed both synergy and financial returns. Here at BVI, we’re improving our thesis, balancing between quick wins and strategic wins as we keep validating our findings along the way. We believe in real value creation. The principle is ‘value over valuation’ meaning startups must work their way to creating real value, rather than pushing high valuation,” he observed.
Source: Deal Street Asia | 7 February 2020