Ministry of SOEs Launches Three Management Funds for Investment in the Biotech, Energy, and Agriculture Sector

The Ministry of SOEs inaugurated the launch of three managed funds consisting of the Bio Health Fund, Energy Fund, and Agri Fund which will become investment vehicles in the startup phase. early to growth in the related vertical. It is not stated how much the total initial investment commitment of this managed fund is.

The three managed funds will be injected from PT Bio Farma, PT Pertamina, and PT Pupuk Indonesia, each of which will target funding in the financial sector. Biotech, energy, and agriculture in Indonesia. Previously, BioHealth Fund already launched in May 2022 for $20 million or Rp292 billion.

Meanwhile, this launch was marked by the signing of a Memorandum of Understanding (MoU) at the opening of BUMN Startup Day, Monday (26/9), by Pertamina President Director Nicke Widyawati, Bio Farma President Director Honesti Basyir, and Pupuk Indonesia President Director Bakir Pasaman, as well as CEO MDI Ventures Donald Wihardja.

Erick Thohir said that there are two types of investment vehicles established by BUMN. First, managed funds Red and White Fund with an investment commitment of $300 million for startups soonicorn/centaur or a valuation close to $1 billion. The Merah Putih Fund is supported by five SOEs including Telkom, Telkomsel, Bank Mandiri, Bank Rakyat Indonesia, and Bank Negara Indonesia. Second, managed funds that are vertical-focused with the initiation of the early stages of the Bio Health Fund, Energy Fund, and Agri Fund.

According to Erick, the Merah Putih Fund is here to fill a funding void in startups growth stages. Meanwhile, the three new managed funds are an effort to transform SOEs in achieving resilience in the fields of food, health, and energy to boost Indonesia's economic strength.

In addition, the companies involved each offer strengths in synergies and ecosystems, not just investments. Bio Farma has go to market while Pertamina Power & New Renewable Energy (NRE) focuses on developing environmentally friendly renewable energy. Meanwhile, Pupuk Indonesia can encourage the expansion of the food business in Indonesia.

"Indonesia is a food-producing country, but the agricultural synergy is still quite low compared to other sectors. That's why we are trying to build a digital society, just getting into funding. We see that economic growth must be based on new economic growth. We should jointly build a knitted ecosystem by the private sector, MSMEs, and SOEs. This is just the first step," he explained.

Based on reports CB Insights, there are five reasons for startups to fail, including misreading market needs (42%), running out of funds (29%), inappropriate team composition (23%), losing competition (19%), and price or costs (18%) ).

Open access to innovation

Met after the event, CEO of MDI Ventures Donald Wihardja admitted that he had not been able to reveal the allocation of the managed funds. For now, both Bio Farma, Pertamina, and Pupuk Indonesia are still acting as the main Limited Partners (LP). However, it is possible to open access to other LPs outside.

"For us, what's important isn't it? capital gains, but whether they can bring synergies, new products, to the parent company. For example, the Bio Health Fund is for pharmaceutical products, already seen what products are marketed. This is all Bio Farma's efforts to find new product innovations," he explained.

"The investment [of the three managed funds] is targeting the seed until series B and C, but this vertical-focused yes. Unlike the Merah Putih Fund, which focuses on startups soonicorn. Currently I can't share, but there is one deal that wants to be signed with Bio Farma," said Donald.

Quoting Bisnis.com, Treasurer of the Indonesian Venture Capital and Startup Association (Amvesindo) Edward Ismawan Chamdani assessed that startups Biotech Indonesia has not been able to grow optimally due to a number of factors, such as complex regulations and lack of competitors.

Average player Biotech held by large corporations and conglomerates. While research-based startups take longer to go to market due to lack of funding and lack of certainty of income.