OCBC NISP Ventura's Hypothesis Against "Beyond Banking" Investment Strategy

OCBC NISP Ventura (ONV), the startup capital arm of Bank OCBC NISP, confirms its optimism with its investment strategy towards startups "embedded finance", because it is believed that all business verticals (beyond banking) has aspects of financial needs in the framework of developing its business.

As of starting operations in 2020, the company has invested in 15 startups in various verticals, including proptech (99 groups, Dekoruma, Rukita), fintech (CashCloud, GajiGesa), online media (IDN Media, USS Networks), agritech (Eden Farm), and e-commerce enablers (Circlo).

"Some say we don't measure every investment. In fact, we have a strategy size [every investment]. Take for example, content creators are the next big thing but now they can't get it service equivalent bank. Media companies understand the world and can love it value income income them," explained Managing Director OCBC NISP Ventura Darryl Ratulangi when media briefings in Jakarta, (08/8).

He continued, "When content creators can collaborate with banks, banks will get segments market new. Ambition we can give service banking for the . like this. But it's impossible to build this alone, it's hard toassessher, that's why we have to collaborate."

Another example is the investment made by ONV for Edenfarm. Darryl explained that his aspiration was to simplify the process of applying for business loans to procure food supplies for the hospitality industry. You do this by pre-approval credit, through transaction historical data merchant Edenfarm will get an estimated income without them needing to enter any requirements.

"So there's no need apply for loans, the bank can provide loan so many million per merchanther, then just contact. So banking bisa seamless pattern. This we call embedded finance, financial products packaged in different forms and their distribution with channel different."

OCBC NISP Ventura invests in startups with early stages up to series A with nominal values ​​ranging from $1 million to $3 million (Rp. 15 billion to Rp. 45 billion). The form of funding can be through equity participation, purchase of convertible bonds, and others. So far, all startups have been funded through equity investments. ONV has only invested in startups from Indonesia.

Synergy value

Like CVC's mandate in general, which must always synergize with corporate groups, Darryl admits that the numbers have never been measured in nominal terms. He provides an example of the return on investment for AwanTunai. Not only equity investments, but also credit facilities (channeling) also given to the startup. It says, channeling AwanTunai contributes up to IDR 100 billion per month.

"Even though this nominal is still small, this is a good start for a startup. We hope that the synergy value of the entire portfolio can be even greater."

OCBC NISP Ventura participated in two funding rounds held by AwanTunai, on A2 series and pre-series B in 2021. In the previous year, Bank OCBC NISP entered as one of the institutional lenders for AwanTunai for facilities channeling. Apart from companies, other investors joining the two rounds include BRI Ventures, Insignia Ventures, and Global Brains.

Even in terms of profit that was achieved, according to him, it can only be seen in detail paper gain because the entire portfolio is still active and there are no steps yet exit selected by OCBC NISP Ventura. It is very likely that the realization of profits that the company can reap will only be seen in the coming 2025-2027.

"Due to the nature of our long-term investment of 5-7 years, new profits will be generated automatically paper gain. We just started in 2020, from 2025-2027 is when we can start realized in the portfolio [go into or loss], until that point has not yet come, will not yet realized be a profit."

Investment climate

In the report Deal Street Asia SEA Deal Review Q1 2023, it was explained that there were 195 equity funding agreements received by startups from VCs in Southeast Asia during Q1 2023. Even though this figure was higher than the previous quarter with a total of 187, the volume was 37% lower in terms of year-on-year (YoY).

Based on total capital raised in Q1 2023 of $2,08 billion, down 25% from Q4 2022 and 52% YoY from the same period last year. In Indonesia alone, signed 36 deals totaling $432 million or around 20,8% of the total value share of equity funding in the Southeast Asia region.

According to Darryl, the data above shows that Indonesia still has the biggest digital economic potential in Southeast Asia. Even so, the company still applies the precautionary principle in investing, no afraid out missing out (FOMO) injecting startups that are suddenly flashy.

"We don't have a sector focus and no target how much we have to disbursed this year. We see it as being opportunistic, when there are startups with good growth and the right price, then we will enter"

Moreover, Indonesia will soon enter the political year. According to him, a political year usually saw an increase in consumption due to the flow of money from the party.

Directly related industries, eg e-commerce, logistics, food, will feel the impact of this political year. "We always bullish with future economic growth.