MDI Ventures, the corporate venture capital (CVC) arm backed by Telkom Indonesia’s major telecom operator, is said to be in talks to raise USD 100 million (over 1.4 trillion Rupiah) in its third fundraising.
Foreign investors involved as a potential limited partner (LP) include Kookmin Bank from South Korea, Kenneth Li, MDI Ventures‘ head of investor relations, told DailySocialin an interview. Though the details are yet to be finalized.
Kenneth also couldn’t confirm whether Telkom would be involved in the new fundraising, or if the third fund will only be backed foreign LPs. However, he did mention that his team is now looking for LPs from the Middle East as well as some of the SEA countries, such as Thailand and Singapore.
Kookmin Bank, one of the largest banks in South Korea, made its debut in Indonesia when they bought 22% stakes in Bank Bukopin last year.
“Kookmin is one of the latest investors of our investment; it’s still finalizing. In this round, we’re targeting USD 100 million investment as we made in the first one,” he told DailySocial last Friday.
This will be the first time for the fund to open its gate to foreign investors. Its first fundraising was backed by Telkom’s USD 100 million, followed by Telkomsel Mitra Inovasi (TMI)’s 40 million dollars in last May for its second fund. TMI is the investment arm of Telkomsel, which is the network provider of Telkom.
By raising from the South Korean automakers, MDI Ventures is also helping foreign investors understand more about a market that is both known for having the biggest crop of unicorns in the region of Southeast Asia and not easy for outsiders to expand into.
The automakers duo, according to Kenneth, will be following SoftBank’s investment approach in Indonesia. SoftBank first uses its own fund to invest in local tech companies, then help them grow and mature so they could raise bigger fundings from other global investors.
Kenneth also believes that managing a fund backed by all foreign investors, even though it’ll be the first time for his firm, won’t be a big issue. On the other hand, the firm’s proven track record and background also help gain trust from the investors when it comes to funds management and returns guarantee.
To date, MDI Ventures manages 35 portfolios across ten countries with five exits. Some IPOs took place overseas, such as Geenie in TSE (Japan) and Whispir (Australia).
Future plans
Telkom, as the parent company, has approved MDI Ventures’ fundraising plan to explore growth outside the country. The company could not only raise its parent Telkom, while external resources are also needed.
That said, the fund’s investment strategy still hinges on its portfolios’ tie-up with Telkom Group for growth opportunities. The plan also fits into Telkom’s digital transformation push, as the firm is eager to take off the label of just being a telecom operator.
“Telkom is growing beyond just a telco. We still have a shared responsibility, to find potential startups for Telkom’s future plan, it includes collaboration,” MDI Ventures’ GM of Investment, Aldi Adrian said.
As the CVC arm of a state-owned enterprise, one of the privileges MDI Ventures enjoy its bank-backed compatriots is that it has much more freedom in terms of choosing which startup and trend to invest, while the bank-backed CVCs are heavily governed by regulations.
“We’ve become more agile to enter all business segments, therefore we offer more added value than other CVCs,” said Kenneth.
MDI Ventures’ next investment will be coming from the fintech sector, Kenneth told DailySocial in the interview, one of the most attractive but also highly regulated sectors in the country’s startup world. The new portfolio is founded by a former local unicorn employee.