Telkom and Dutch VC Finch Capital Launch New Managed Fund "Arise Fund"

Telkom Group through units CVC MDI Ventures launched its new managed fund "Arise Fund" in collaboration with Dutch VC partner Finch Capital. Contacted by DailySocialVP of Investments MDI Ventures Aldi Adrian Hartanto explained that the target is $40 million or around Rp568 billion for this new managed fund.

There are a number of reasons behind the creation of the Arise Fund. According to Aldi, most of the early generation investors who played in the seed, has now started to raise bigger funds and is starting to focus on series A funding and above.

As a result, startups in the pre-series A stage find it difficult to obtain any funding. From a number of reports, he said, total pre-series A funding has decreased by 20 percent throughout 2020 after being stagnant for the past few years.

This situation also makes it difficult for startups unicorn in the Southeast Asia region because they were only able to raise a third or a quarter of the funding in the previous round.

On the other hand, the Covid-19 pandemic has undeniably made uncertainty in various aspects even greater, including in building new companies/businesses. "This is another reason why we avoid investing in early-stage startups. Therefore, we are trying to fill the gap gap in stages post-seed to series A," said Aldi.

He believes that other business opportunities will emerge along with new problems that will arise after the pandemic. This phenomenon will also give rise to founder a new generation of higher quality. "The vertical we are aiming for is relatively agnostic. We focus more on the characteristics founder and the startup," he added.

Previously at the end of 2019, Telkom had launched the Centauri Fund which is a new managed unit, the result of a partnership with KB Financial Group from South Korea. The targeted funding stages are pre series A and series B.

Then in early March 2020, the Deputy Minister of SOEs Be Gunadi Sadikin had revealed that Telkom was preparing a new managed fund with a funding capacity of around US$ 300-500 million or Rp. 4,2 trillion-7 trillion (exchange rate of Rp. 14.000/US dollar).

MDI Ventures Head of Investor Relations & Capital Raising Kenneth Li also added that there would be two new managed funds this year which focuses on funding for segments growth stages and later stages.

The first new managed fund has been realized in August 2020 worth $500 million or around IDR 7 trillion, namely the MDI 500 Fund. Meanwhile, the MDI 500 Fund is a continuation of the MDI 100 Fund which was started in 2015. The announcement of the new managed fund coincided with the appointment of Fajrin Rasyid as the main commissioner.

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Furthermore, Aldi revealed that his collaboration with Finch Capital is expected to bridge the solution gap funding in post-seed to series A in Indonesia. There are several things to look for through this collaboration. First, VCs who have strong experience in investing in the stage startup ecosystem mature, both in Europe and/or China.

Then, MDI Ventures seeks partnerships with parties who have a strong understanding and position on the startup ecosystem in Southeast Asia, especially early-stage startups in Indonesia. In addition, his party is also looking for VCs who have a strong network in Indonesia limited partners (LP) and corporations in Indonesia to expand value creation-outside Telkom and the scope of state-owned companies.

"We are also looking for peopleteam who can master operational and or entrepreneurial background. After exploring a number of partners, Finch Capital is the only one who can fill all of them which encourages us to partner with them," said Aldi.

For your information, Finch Capital has 25 years of experience investing in two main markets, namely Europe and Southeast Asia. In the information on its official website, Finch Capital is aiming at the AI ​​business vertical, fintech, and IoT in Europe, while in Southeast Asia aiming for the agricultural vertical, fintech, education, and transportation.

Finch Capital Managing Partner Hans De Back said that the Covid-19 pandemic triggered the need to adopt more digital solutions. "Today, Indonesia has become the largest economic center in the region. With these supporting factors, Indonesia is ready to become the largest technology center in Southeast Asia by 2025." De Back said in his official statement.