Saudi Arabian Government Ready to Invest in Indonesian Startups

The Saudi Arabian government through the local Ministry of Communication and Information Technology together with the Nexticorn Foundation has established a synergistic partnership to fund startups unicorn and soonicorn(centaurs) in Indonesia. This is cooperation business-to-government (B2G) which is marked through the signing of a memorandum of understanding to form a joint fund (joint funds). 

The signing of this memorandum of understanding was carried out by the Chairman of the Nexticorn Foundation, Rudiantara and representatives from the Center of Digital Entrepreneurship of the Ministry of Communication and Information Technology of Saudi Arabia in Nusa Dua, Bali (2/9). 

For information, startup unicorn and soonicorn each categorized as a startup with a valuation of up to $1 billion and close to $1 billion. Currently, Indonesia already has 14 unicorn. 

Meanwhile, this investment commitment aims to encourage startups unicorn and soonicorn expand its market, not only in Indonesia, but also to the Middle East through support from Saudi Arabia.

"We will eventually have a multinational [startup] company, but in the digital field. New economy is through digital. One of them is J&T Express, which is now in Saudi Arabia," said Nexticorn Foundation Chairman Rudiantara when met after the MoU.

Meanwhile, the Nexticorn Foundation will act as organizer in this investment activity. Meanwhile, the capital will still come from venture capitalists (VC). He declined to specify the value of the investments disbursed, but the figures ranged from hundreds of millions of dollars to 50:50 each. 

"Hundreds of millions of dollars for sure. We'll see. soonicorn or nexticorn Karena nexticorn will not stop funding-his. Before this, we promised this to be concrete. For the realization of the investment, they had asked for it quickly, within one year the capital had already entered. So, next year, we will invest in startups," he said.

Investment vertical

There are five verticals that will be the focus of investment, including umrah, logistics, education, finance, and health. This investment commitment can be used as a launchpad for startups unicorn in Indonesia to enter the Middle East.

In his presentation, the Minister of Communication and Information Technology of Saudi Arabia Abdullah bin Amer Alswaha assessed that the potential for digitization in the logistics sector is very large. He believes that Indonesia can become a global hubs considering that as much as 20%-30% of Indonesia's GDP comes from logistics.

Indonesia has a great generation of women and young people who can solve challenges in this sector. He gave an example of how Saudi Arabia's position is close to the Red Sea, which is the location where 10% of global trade activities occur. "As you perfect the South East Asia global hub for logistics, that's a parallel that we could work together," he said.

Furthermore, the funding will not only be aimed at the Indonesian market, but also Saudi Arabia as a company hub for the Middle East and North Africa (MENA). According to him, the Saudi Arabian market is very open in following trends from financial inclusion, healthcare, to EdTech.

"We want to explore and see how we can see this success in the Middle East. I mean, Indonesia has 14" unicorn, while the Middle East with a total population of 400 million, only has six unicorn, surprising isn't it. But it shows our potential."

It emphasizes utilizing expertise and experience in developing joint innovations. According to him, this partnership is an opportunity as well as a challenge to reskilling and upskilling.