A Kaleidoscope of Strategic Corporate Actions Throughout 2019

The real disruptive era is not only driven by the startup industry. In fact, a number of large-scale corporations have taken part in the development of the digital ecosystem in Indonesia in recent years.

However, the development of innovation in the corporate or corporate innovation will again refer to its main goal, namely business continuity for the long term.

The year 2019 marked a number of strategic steps with various instruments, ranging from incubation of internal innovation, collaboration with startups, to the formation of venture capitalists.

DailySocial summarizes various interesting corporate actions from several industrial sectors throughout 2019 below:

Massive synergy of BUMN e-money

2019 begins with the transformation of e-money services Telkomsel, Tcash, be LinkAja. This transformation is referred to as the initiation of former SOE Minister Rini Soemarno who wants to combine all e-money owned by state-owned companies into one platform.

Tcash was considered to have the most prepared ecosystem at that time compared to other SOE e-money so that Tcash was designated as an "embryo" for the LinkAja platform. This decision is certainly quite surprising considering that in mid-2018, Tcash plans to become an e-money agnostic service and spin-off from Telkomsel.

Meanwhile, LinkAja was announced and operated in February, but it was only officially launched in the middle of the year because it was waiting for the integration of all BUMN e-money to be completed.

What needs to be underlined is that LinkAja is the result of a joint venture of a state-owned company whose shares are currently owned by Telkomsel by 25 percent, Mandiri, BRI, and BNI each controlling 20 percent, BTN and Pertamina 7 percent, and Asuransi Jiwasraya 1 percent.

Since the beginning, LinkAja positioning itself as e-money to meet daily needs. Therefore, this partnership--and will increase with the entry of other shareholders--is considered to strengthen acceleration use case prepared by the company, such as transportation and purchasing gasoline.

Collaboration and innovation

Innovation and collaboration between corporations and startups colored the news throughout 2019. This indicates that a number of business sectors have realized the importance of inclusiveness for digital business development in Indonesia.

Example Gojek officially partnered with Indonesian Railways (KAI) to support the integration of digital ecosystems and railroad services through the implementation of orders and payments in one transaction. In this case, Gojek be a provider first mile and last mile, while KAI as the provider middle mile.

Then BRI hit the market through its collaboration with Traveloka through the launch of a credit card "PayLater Card" Cooperation co-branding This allows users to transact at merchants offline and online spread over 53 million locations worldwide and accepts VISA payments.

At the end of 2019, BRI again added to its digital service portfolio by launching a virtual credit card BRI Cheers which provides loans ranging from Rp. 500 thousand to Rp. 1 million. This application-based service only targets BRI customers in the segment underbanked.

From the telecommunications sector, Telkomsel also made a new breakthrough by launching the first digital application-based mobile service product by. U. Called digital because all purchasing, registration, and usage activities are fully carried out in the application.

Incubated internally and developed on an MVP basis, the by.U service becomes a strategic "weapon" Telkomsel to win the market in the digital age. So it's no wonder, by.U targets Generation Z who are considered digitally literate and don't want to be "regulated" in choosing packages.

The most shining Corporate Venture Capital

The year 2019 highlighted the aggressive formation of Corporate Venture Capital (CVC). According to our records, there are four new CVCs established to capture the huge opportunities in Indonesia's digital industry. They include Amatil (Coca Cola Amatil), Telkomsel Innovation Partner/TMI (Telkomsel), BRI Ventures (BRI), and Papua Venture Facility (BTN).

Then, DailySocial also highlights the move Nicko Widjaya from MDI Ventures to lead BRI Ventures. Nicko's appointment as CEO is expected to bring a new success story in the coming year.

Broadly speaking, each CVC has a different business vertical target, depending on the needs and values ​​that are targeted for the company's business development. Similarly, the stages of funding. For example, TMI is currently aiming for early stage and BRI Ventures will focus on startups in growth and late stage. 

In addition to the establishment of the CVC, the Telkom Group recently also increased its managed funds by establishing a Centauri Fund. The new managed fund strategy is the result of the telecommunications giant's joint venture with KB Financial Group, one of the largest banking companies in South Korea.

Looking forward to the next strategic move in 2020

Through the summary of various corporate actions above, we can draw a common thread that inclusiveness will be the main key for players – whoever it is, corporations and startups – in encouraging the development of digital ecosystems in the future.

Collaboration will be more aggressive and innovation will keep coming. A number of corporations in Indonesia have realized the importance of innovation and digital transformation. Some of them, such as BRI and Telkomsel, has prepared itself to start a new chapter in 2020.

On the other hand, as the startup ecosystem matures, VC industry will be more selective in selecting funding. The investment climate is predicted to improve. However, we are likely to see a reduced focus on early-stage funding.

Either CVC or VC will start to focus more on targeting funding growth and late stage for a number of reasons. In addition to minimal risk—learning from experience in previous years—startup must have traction, plan scale up, and clear monetization.