Merah Putih Fund gets OJK permit, seeks $300m in Q1 2023 – Tech

State-controlled venture capital outfit the Merah Putih Fund has received an operating permit from the Financial Services Authority (OJK) and is looking to collect Rp 4.44 trillion in the first quarter of 2023, with more funding rounds to follow.

The permit was issued by the OJK on July 18, behind the targeted first quarter of this year. 

Introduced in late December of last year, the Merah Putih Fund coordinates venture capital entities of state-owned enterprises (SOEs) Bank Mandiri, Bank Rakyat Indonesia, Bank Negara Indonesia and Telkom Indonesia as well as the latter’s subsidiary Telkomsel.

Merah Putih Fund aims to invest in start-ups valued above $100 million – also called centaurs – and involve them in the SOE ecosystem in a bid to help them grow into unicorns, or firms with valuations exceeding $1 billion.

Bambang W. Budiawan, who heads the OJK’s nonbank supervision department, said the permit obligated the Merah Putih Fund to report its venture fund activities every three months.

“Earlier this week, the firm was also ordered to meet the minimum requirement of having Rp 1 billion in assets under management,” he was quoted by Kontan as saying on Friday.

Preparation

Meanwhile, the head of the Merah Putih Fund’s project management office (PMO), Eddi Danusaputro, told DealStreetAsia that the fund was aiming to collect a first $300 million in the first quarter of next year and another $300 million by the end of 2024.

The first funding round, he said, would be managed by five venture arms of the abovementioned firms: Mandiri Capital Indonesia (MCI), MDI Ventures, Telkomsel Mitra Inovasi, BRI Ventures and BNI Modal Ventura.

“For the second round, other SOEs and strategic investors are also welcome to participate, while the third round will be open for private firms as well,” he continued.

Through his LinkedIn account, Eddi elaborated that most big Indonesian start-ups were backed by foreign venture capital, despite the fact that the country had introduced more than 10 unicorns.

“This is because [foreign investors] pour in more capital than our local investors,” he said, while noting that the concept of state-owned venture capital was not aimed at barring foreign investors from injecting money into local start-ups.

Instead, he continued, Merah Putih Fund was aimed at strengthening local investors’ role in the domestic start-up ecosystem by providing funding of $10 million-$50 million for “soonicorns” or medium-sized start-ups that were a step away from becoming unicorns.

“Hopefully we can start investing in the second quarter of 2023,” he said, adding that the funds would prioritize start-ups in the sectors of food, agriculture, financial services and mining.