Indonesia's Biggest Fund Shares all About The Country's Startup Ecosystem Nicko Widjaja, CEO of MDI Ventures on what makes them invest in the best

It's the world's fourth most populous country, with an economy standing tall at 16th largest in the world. And now, Indonesia is fast developing a start-up ecosystem that could be of envy to others.

With four unicorns born out of the country already, Indonesia is readying itself for five more unicorns by the end of 2019.

What makes the Indonesian ecosystem so exciting and what's driving the investment scenario there? To decode this, we caught up Nicko Widjaja, CEO of MDI Ventures and Program Director for Telkom Indonesia's Indigo Accelerator.

Their Investment Spread

Widjaja, who has worked in the US before moving to Jakarta has had his share of the start-up experience by working in start-ups during the "dotcom era". Moving back to Jakarta he decided to instil the same spirit in Indonesia. But the investment scenario was slow and at an infant stage. He shared that back then, investors didn't know where to invest. Widjaja, however, has had a lot to learn having been involved in Indonesia's start-up ecosystem from the beginning. Today, he runs Telkom Indonesia's corporate venture arm MDI Ventures with a $100 million fund.

Their investment mandate is in tandem with Telkom Indonesia's interests. But the company itself is vast as it is the largest telecommunication carrier and a huge enterprise business in Indonesia. "Our business is pretty straight-forward. It has to be a synergy of resources considering Telkom has a massive infrastructure and users. When you talk about specific sectors, we invest in IoT, Big Data, AI & ML... basically technology that hasn't been popularised by current Indonesian businesses. We are also looking at e-commerce investments or a payment gateway that has made a huge entry into the country. We invest in Series A and above only," he said.

Currently, MDI Ventures has 27 investments in over 10 countries. While in numbers, Indonesia has the highest start-ups from their portfolio, they also have presence in US, Singapore, Japan, India and Philippines.

Building the Investment Scene in Indonesia

While they are looking at deep tech only, Widjaja shares an insight about the investment scenario in Indonesia. "I don't think investors in Indonesia are betting big at this stage," he said.

They are the biggest fund in Indonesia currently, although they are not the first corporate fund to arrive in the country. Talking about why funds dissolve, Widjaja shares that there are only few really good deals in the Indonesian ecosystem and the competition is high. He talks in reference to Indosat (one of Indonesia's telecommunications company) and Softbank's $50 million fund. "There are several competitors aiming for the same space. Also, these funds were run by top executives who maybe don't know how challenging it can get," he said.

While they are ready for the challenges, Widjaja admits that while their fund could be big in Indonesia but isn't one of the most popular ones outside the country.

What do They Look For?

For every investor, there are certain qualities that they look out for in the entrepreneur itself. No wonder then, that a lot of investments are founder-driven. However, Widjaja adds that they believe in the fundamentals. Ask about what they look for in the entrepreneur and he's quick to reply, "experience".

Most of the founders they have collaborated with, have had at least one exit in the past. "These are the serial entrepreneurs you want to collaborate with. We are a young fund, not an old one which has lots of experience in losing billions of dollars and knowing how to recuperate the money," he said.

They have already had one exit and are looking for another exit, which is not bad for a three-year-old fund. As they are representing a traditional company, they need to keep the company excited. "We have to keep them in the loop, make them experience exits, IPOs in other countries etc. Part of our strategy is to invest in collaboration with Telkom subsidiaries but unless they exit, they won't know how it is to work with a legit start-up," he said.

Bridging the Corporate-Startup Gap

Corporations often believe that a start-up is a small venture, that they need a big brother to see the world. But Widjaja says that it is not always the case. He points out that some of their portfolio companies have a bigger market share than Telkom in sectors like AI.

One of their exit strategies is to have M&A by Telkom Indonesia. They bring to the corporate potential acquisition targets. "By doing so, we are reducing risk and gaining access for them into other potential target areas," he said.

So, do they end up working as a corporate incubator, which transforms start-ups and makes them acquisition ready or exit ready? "That's our main objective. We work behind the scenes with accelerators and incubators, especially the ones associated with Telkom. We also mentor young start-ups to help them understand and know how to grow exponentially," he said.

(This article has been written by Sanchita Dash.)