Dennis Pratistha: Mandiri Capital Indonesia to Form "Thematic Fund" in 2023

Mandiri Capital Indonesia (MCI) continues its mission to encourage value for the holding company Mandiri Group. According to Plt. MCI CEO Dennis Pratistha, his party is preparing several "thematic funds" and exploring investment opportunities in new sectors, such as constructiontech and Biotech.

Before occupying the post-appointment interim CEO position Eddi Danusaputro at BNI Ventures, Dennis served as Chief Investment Officer. Meanwhile, MCI currently manages three managed funds, namely managed funds sourced from the Mandiri Group, the Indonesia Impact Fund (IIF), and the Merah Putih Fund.

For your information, Dennis has been in the technology and telecommunications industry for a long time, holding the positions of Chief Technology Officer and Chief Operating Officer, such as at Redkendi, Ebizu, MNC, and Nusatel. In the investment field, he was also an Executive at Star Capital.

Has there been any change in MCI's investment thesis with the current position?

Answer: Currently we are still focused on investing in portfolios that can contribute to value for Mandiri Group. We have to have differentiators so that others can interact with each other co-exist and contribute. Just startups have it [value proposition]. If everything is the same, the one with the most money will win. We have to have different angles to bring to the table. Precisely in stamp table, we [VC] are harmonious.

Different VCs, different too value. There are strong VCs on the technology side, there are also strong VCs on the operational aspect. We are [strong] on the business development aspect. This is what allows us to sit comfortably and remain productive at the same table.

Water value proposition offered?

J: We have five value proposition. First, we are Corporate Venture Capital (CVC) belongs to the Mandiri Group. Second, Mandiri Group has tens of millions customer and 200 thousand MSMEs. Third, we connect to the BUMN ecosystem. Fourth, we can assist you in the process value in business development. We help expansion and synergy by connecting with many stakeholders.

Fifth, we connect [the portfolio] to a network of Mandiri subsidiaries, such as Mandiri Sekuritas. This [subsidiary] network can support startups to do so fundraising, mergers and acquisitions (M&A), or exit through an IPO. Previously, Mandiri Sekuritas was the underwriter (underwriter) on GoTo and Bukalapak IPOs.

Apart from that, we also have programs matchmakingXponent to encourage Mandiri Group to be able toexhibits to a more innovative digital platform.

What is the main goal of the Xponent program?

J: This program purely wants to help two parties, namely Mandiri to become innovative by leveraging digital platforms and platforms utilizing Mandiri to drive its business. This is purely an event matchmaking to close a business deal. No investment involved. We do not invite investors, but business units and startups.

Of course, MCI while looking to see which ones can be followed up. Therefore, I underline that MCI invests in startups that bring value. A lot of money out there, economy is a bit slow, so good deals not too much.

We realize there is shifting happen. We need to focus on startups that already have path to profitability or profitable. They have to grow, but not stop because they already have profitable. Already a startup profitable must replicate the business model to other areas or products. This means encouraging growth that has a positive impact on Bottom line. We want them to be a self-sustaining company. Growth is still being pursued, that doesn't mean it stops.

In the end, startups must find the right model, understand the business model, and expand. We will help you expand.

Are there any new portfolios to be announced next?

J: We will announce two portfolios in the sector aqua culture and FMCG supply chain leaders in this fourth quarter. Apart from that, we are also exploring opportunities in the sector autotech, proptech, construction tech, and Biotech. There are many angle [in this sector], what we are looking at is supply chain leaders.

Di constructiontech, we are also looking for models supply chain; from principals, building shops, contractors, etc. Supply Chain in Indonesia it is still inefficient, there is no transparency, and the process is complex. We want empower they become part of the ecosystem, but provide more efficient margins. Technology empowers business, not the other way around. We have to have a business first, then...empower by technology.

Then, Biotech. At the moment, [Biotech] in Indonesia is still in its early stages. We are studying use case and commercial viability. We learn from the players Biotech existing ones, from startups or technology companies. That doesn't mean we invest directly, in fact we learn from them. We first understand the industry and its challenges. Analyzing an industry must be comprehensive, let alone a spectrum Biotech very broad. There is microbe to DNA. We need to see, they can sustain with [use case] where first.

For autotech, there are some interesting things. First, supply chain leaders. Second, we are part of a conglomeration in the financial sector, Mandiri owns the company finance and banks. How, we can find out marketplace who focus on finance. We are interested in investing in multifinance marketplace. During this time data charging is slow here must be one by one, while filling in data on marketplace only one time. Marketplace more convenient for Dealer and finance. No need to contact each one.

What is the formation plan? thematic funds MCI next?

J: We can't yet disclose regarding formation thematic funds this, but this is different from Red and White Fund. The plan is that we want to collaborate with VCs or institutions. We are chatting with a few.

Why choose theme-based? We see a lot of [VCs] who focus on all fields or are sector agnostic. We want to focus on a specific theme. We want to be able to help their ecosystem. In the end, we have to create value. Hopefully, [thematic funds] can be realized next year.

How do you respond to the Indonesian startup industry in the current situation?

J: Basically, a startup is a business. [Startup actors] identified a problem with a fairly large market scale. Don't identify problems only at the sub-district or RT level. With that in mind, try to create a solution.

However, [creating a solution] is not as easy as,”I have an idea, let's develop full version”. Between idealismo and practicality, there must be disparities. Do trials, starting on a small scale with little capital, until you get results Minimum Viable Product (MVP). When the MVP is running, then develop it full-face product.

Once you have full-face product and reach product-market fit, meaning you have validated the problem. You tweak what the business model is, not just the product. For example, subscription, transaction, or usage-based models. Once you find the business model, you find product-market fit, you have profitability, and sustainability. That's what many people forget.

[Mindset] In the past, when conventional business people met, they discussed EBITDA, for example. Meanwhile, startups talk about how big their valuation is. Now, startups are starting to think about it sustainable growth, that's the key word. That doesn't mean putting the brakes on [business growth].

How do you see founder mentality from the beginning of the pandemic until now?

J: Pandemic—no discredit intended health issue, it's very unfortunate—driving faster digital transformation. During the pandemic, we have used many applications for various things, such as ordering food. Our mindset has shifted.

For founder leveraging digital opportunities [to create solutions]. Unfortunately, many [startups] are not ready [to respond] to that growth. They haven't reached yet product-market fit and the business model is not yet known. Indeed, they can get growth rates, but have sustainability without a proper business model.

Now, economic growth is starting to slow down. I don't want to say a recession or anything because the situation in each country is different. I am optimistic about Indonesia. The government is doing well in controlling this economic slowdown. It must be realized that Indonesia is a consumer country. Gasping and brake must balance.You want to control inflation but you don't want to stop growth.

So, how do you deal with an economic slowdown? This is something new. We don't know where we are going, what we need to do. Now, mentality must be changed. In [the early days of the pandemic] yesterday there were many opportunities for accelerated digital transformation. Currently, from this opportunity, we must try to make it a business sustainable.