Bukalapak Aims to Dominate E-Procurement Market through BukaPengadaan

Bukalapak shared an ambition to dominate the e-procurement market through his vertical Open ProcurementD because it has a market share that is not inferior to the consumer business (b2c). Seen from the success of overseas b2b players such as Alibaba Business and Amazon Business, both grew bigger from the b2c platform.

BukaPengadaan’s Director, Hita Supranjaya said the optimism backed by the changing of Indonesian consumers’ behavior in terms of digital. Innovations, such as e-commerce, digital payment, and logistics has shifted b2c behavior significantly.

He thought the change encouraged B2B companies to make adjustments by increasing competitiveness and speed in serving customer needs. On the other side, the challenge for B2B companies in facing global market competition is that it takes a long time to develop technology and costs a lot too.

“Bukalapak through BukaPengadaan seeks opportunities to answer the challenge, backed by the proven experience in developing tech-based e-commerce c2c/b2c for ten years,” Supranjaya told DailySocial.

In order to be the leading e-procurement, BukaPengadaan is quite lucky to be integrated with Bukalapak marketplace and Quasi Retail. It connects the platform with five million sellers offering more than 80 million products.

As a result, BukaPengadaan is capable to fulfill all procurement from corporations, both business and government, quickly and at competitive prices. In terms of ecosystem, it’s comprehensive for companies and vendors, including closed ecosystems for registered users, provision of goods and services, online approval systems, monitoring of goods orders, payment and e-invoicing.

“It gives our customers an advantage in procurement, faster and closest to the sellers, resulting in competitive price. We also help managing lists of vendors and SKUs, therefore, customers can focus on things that are more important than just administrative matters.”

Since it was founded in 2016, BukaPengadaan has acquired more than 1500 users, around 80% are companies, and the rest are SMEs and government institutions. On a monthly average, 150 companies actively transact through BukaPengadaan.

Last year, there are 500 users registered, 5 thousand purchase orders, with an average transaction of Rp150 million. Within seven months, BukaPengadaan has recorded a 30% transaction growth. Also, in the last three months, the average income growth has increased by three times per month.

It is said there are new categories and vendors joined every month. Not only retails and supply chain, but also virtual products managed into a one-stop platform. “It allows us to reach almost the whole categories of small, middle to large-scale b2b company essentials,” he added.

Large business-coverage, b2b players are solving specific issues

Based on McKinsey & Co report, Indonesian e-procurement has potential worth of $125 billion by 2025. It was estimated from global corporate services ($18 billion), b2b marketplace (76 billion), and b2b services ($36 billion).

Meanwhile, Indonesia’s leading players still the b2c marketplace (Lazada, Tokopedia, Shopee, Bukalapak), transportation, travel, and hospitality (Traveloka), and mobility (Gojek and Grab).

The brand awareness rate in this segment might not as tight as the consumer products. However, according to 2018’s DSResearch, some players are familiar to the respondents, including Bhinneka Bisnis, Bizzy, and Mbiz.

In terms of growth, the players are not limited, there is also Ralali, Ekosis, TaniHub, and Zilingo. Each platform has its own market share. Ralali, for example, entering the agency segment to target b2b consumers.

Ekosis has its way with connecting businessmen to get various agribusiness, livestock, and mining products. As for TaniHub, plays role as a supplier for b2b consumers come from supermarket, horeca, F&B, retailers, and startup players.

Zilingo, on the other hand, provides cloud-based fashion manufacture products from all over the world for all brands and businessmen can take benefit from it.

The various kinds of b2b e-commerce have shown potential market share to be further explored in order to solve the issues within the b2b players. Moreover, Indonesian SMEs digital transformation has only reached 8% or 3.92 million of the total 59.2 million existed players.

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Original article is in Indonesian, translated by Kristin Siagian

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In the Hype of “Sharing Economy”, Gigel Introduces Baby Equipment Rental Marketplace

It begins with Muhammad Syahdani and Putri Arinda experience as a married couple, they are then founded the baby equipment rental named Gigel. The platform offered lists of products for young couples with newborn children, such as baby walker, stroller, toys and many more.

The CEO, Syahdani told DailySocial, the high demand and big potential of this business has made its services quite popular, particularly in the Greater Jakarta. Earlier this year, Gigel also aggressively expanded its service coverage and rental marketplace business model. Currently, it’s not only baby’s products but they also rent such items as winter jackets, travel luggage, and cameras.

“We present all items by partnerships with merchants across Jabodetabek. We also have a strategic partnership with GoSend for shipping and payment using GoPay digital wallet,” Dani said.

Gigel claims to have 500 partners, 30 thousand registered users, and 15 thousand active users. It’s currently available in the Greater Jakarta, this year Gigel has plans to expand services to other large cities.
“Currently, we are still preparing things to expand to Bandung. Our target for Gigel to launch in Yogyakarta, Surabaya, and Bali this year,” he added.

Challenge for rental marketplace

One reason to create Gigel is that there are no local players dominating the business model. While the trend among millennials who prefer the concept of sharing economy and smart buying, become a great opportunity to be further developed. In addition, there are other rental services, such as Cumi.id, and Sevva which was renamed into nyewain.com.

Arinda’s thought as the CMO, is that there is countless problems in purchasing goods for the needs of mothers and children, that could end up useless and costs money. With the rental concept, Gigel offers users the freedom within a certain period of time to use a product.

“We currently have angel investors and have no plan to raise funds. Still focusing on traction and serving more users, it is expected this year to add more products for users,” she added.

Most (60%) of the products rented are Gigel’s personal inventories. However, to grow the business and reach more users, they decided to add a variety of products from partners interested in renting goods. Gigel also requests a deposit with all user requirements and agreements are determined by the merchant.

In terms of future consolidation with other players or be willing to be acquired with a larger marketplace, is possible, it all depends on the current conditions and agreements. For now, Gigel, with 30 of its team, is still focused on developing the business and expanding.

Part of Gojek Xcelerate’s third round

As part of the effort to develop business, Gigel is incorporated with Gojek Xcelerate acceleration program. In accordance with the program’s current theme, which is daily consumer innovation, it is expected that Gigel to gain more insight as well as open access to Gojek’s ecosystem network.

“We see the program and speakers by Gojek Xcelerate very compelling, practical and fit the needs in developing startups at this early stage,” Dani said.

Inviting mentors from Gojek’s internal team and curriculum specifically created for this accelerator program, Dani also realize the insights from during the program were similar to the conditions of the current Gigel business.

“I think one of the important and useful lessons for me and Gigel is the strategy planning and problem analysis taught by the McKinsey consulting team,” he added.

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Original article is in Indonesian, translated by Kristin Siagian

Hukumonline Secures Series A Funding, to Develop Technology for Legal Practitioners’ Essentials

The legal-tech startup Hukumonline, yesterday (2/3) announced series A investment. Funding was received from private equity focused on media company, Emerging Media Opportunity Fund (EMOF). The value is still undisclosed, but the previous investors also participated in this round.

The capital injection is to be focused on developing new products and improving the current services.

Hukumonline‘s CTO, Arkka Dhiratara spoke further details with DailySocial, the new variant will complete the legal content which relevant with legal practitioners’ requirements, either law firm or in-house counsels. An innovation that was previously released is the chatbot feature named “LIA”.

“We are to continue making innovations focused on new products using the latest technology. Some products have been developed and to be further improved, including document management systems, compliance solutions, and litigation tools. We expect these products can facilitate research and legal analysis,” he said.

Hukumonline was founded in 1999 by a group of legal practitioners, including Ibrahim Assegaf. Aside from being an information portal, they are now running two subsidiaries in the same sector with different services.

First, there is Justika, a consulting service for various legal cases. The concept is a marketplace, it’ll connect clients with attorneys. In its debut, Justika received pre-series A investment from Assegaf Hamzah & Partners.

Next, Easybiz was developed to help businessmen took care of legal stuff. As an example, to set up a Limited Company, tourism business license, foundation establishment, and others.

Justika.com's CEO, Melvin Sumapung and Hukumonline's CTO, Arkka Dhiratara as ASEAN Legaltech ambassador for Indonesia — Justika.com’s CEO, Melvin Sumapung and Hukumonline’s CTO, Arkka Dhiratara as ASEAN Legaltech ambassador for Indonesia

Although running differently, Arkka said the business still related to each other. He explained, “As for example, one of our biggest pageviews is the Klinik Hukum (people who clicked on legal question), we’ll set up a CTA (consulting with the experts) on Justika.com in the page.”

In terms of Hukumonline, the business model is freemium. The company claims to gain 20% premium user growth in two years. Most of the users come from lawfirm, in-house counsels, government institutions, and universities.

“We feel lucky that Hukumonline considered as the earliest media with the subscription model, while the other media rely on advertising. We have been using this business model since 2002 and will continue to do so. As a knowledge company, in which our main product is dynamic legal content, this is the most suitable business model for now,” he added.

In Indonesia, legal-tech startup has been listed under association, such as Indonesian Regtech and Legaltech Association (IRLA) and ASEAN LegalTech. Based on research, there are 88 legal-tech startups around Southeast Asia. Singapore and Indonesia are the most dominant countries with 25 and 21 startups.

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Original article is in Indonesian, translated by Kristin Siagian

East Ventures Introduces Triawan Munaf as Venture Advisor

Today (2/4), East Ventures announces Triawan Munaf to join boards of leaders as Venture Advisor. He will be occupied to help the company explore the best potential of Indonesia’s startups and hands-on to help the business perform regional expansion.

“Mr. Munaf shared the same value as East Ventures. As for his experience and capabilities, we expect to develop Indonesia’s digital economy better and faster,” East Ventures’ Co-Founder & Managing Partner, Willson Cuaca said.

Entering the second decade, East Ventures aims to list more companies on the portfolio and expects to create a greater impact on the currently growing Indonesia’s startup ecosystem.

East Ventures’ managed funds, consists of early-stage fund and growth fund, have advanced into US$1.2 billion assets. The company also participated in 20 exits within the last decade.

“I’m happy to join the leading venture capital with aligned vision with mine, it is to build a sustainable business ecosystem and create a more inclusive digital economy for the better nation,” Munaf added.

Aside from East Ventures, the former Bekraf’s executive is also appointed as Garuda Indonesia’s President Commissioner. He’s also trusted as the Honorary Advisor to the Minister of Tourism and Creative Economy in the merger of the Ministry of Tourism and Bekraf.

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Original article is in Indonesian, translated by Kristin Siagian

Transfez Introduced as a Local Online Remittance Startup

The remittance business is still lucrative to this day. Especially startups that touch this niche are still a handful. A brand new startup named Transfez appeared trying to reap a fortune in the remittance business.

Transfez CEO Edo Windratno said that the initiative to establish a startup appeared in 2018. The experience of sending money in conventional remittance services that takes time and high costs is the reason Windratno makes similar services more efficient. In December 2019 Windratno and his team finally released the Transfez application on Android and iOS.

“Our goal is to make cross-region transfer in this country as easy as a domestic transfer,” Windratno said when being interviewed at his office.

Even though it has been only a month, Transfez developed quickly. The remittance services now reach 37 countries across Asia and Europe. This service is claimed to have sent money of up to 220 billion with users mostly come from students and importers. However, Transfez is currently available to send money from Indonesia abroad.

As a reference, TransferWise is the most popular global remittance startup that currently supports sending funds to Indonesia, including various local e-money platforms.

Mechanism

Fast and cheap are the two things that Edo highlighted from Transfez. The average time required for Transfez to transfer funds is around one day. However, for some destinations, such as South Korea and India, they only need 5 minutes. While the cheap factor is due to transaction costs they charge starts from Rp 50,000 to Rp 100,000.

In each destination, Transfez holds at least one financial or banking institution as partners. The Transfez system requires users to send to their account first. Next, their partners will send money with an equivalent value of the nominal transferred.

“We eliminate various parties involvement which applies in conventional remittances, therefore, we can compete in terms of speed and price,” he added.

Transfez gains income from every transaction that occurs. The inclome also comes from margin exchange as well as the remittance business in general.

Target

Transfez has obtained a license from Bank Indonesia (BI), and its ambition is to expand to 80 destination countries this year. They are targeting some areas, such as the United States, South America, and Africa. In terms of features, they are determined to facilitate sending money from abroad to Indonesia.

Eventually, Transfez has passed the bootstrap phase, which indicates they’re moving towards a funding round. Nevertheless, they are yet to reveal more about this. “There is [plan], but can not be revealed,” Windratno said.

Opportunities in the remittance market are currently wide open in Indonesia. The World Bank (2018) noted that the amount of remittances to Indonesia has reached US$ 11 billion or around Rp150 trillion. While the amount of remittances out was around US$ 5 billion or Rp68.5 trillion. With a relatively small number of players, the opportunity to reap profits in this business is wide open for Transfez.

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Original article is in Indonesian, translated by Kristin Siagian

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Bremble Furniture Arrives in Indonesia, to Provide Augmented Reality Based Product Browsing

Was founded in 1991, Bramble Furniture officially expands to Indonesia. The US-based furniture company has placed a fabrication center in Indonesia. For better customer experience, a new showroom was built in Jakarta. However, something’s unique with its debut in the local market, in order to improve the customer experience for product awareness, the company developed an Augmented Reality (AR) based app.

Using a combination of showroom and technology, it’s expected to help customers to directly see the products. Bramble has also formed a local team in Indonesia to help market penetration.

Bramble Furniture’s Director, Jeremiah Bramble said Indonesia is an ideal market for the company. Not only focus on B2B but Bramble is currently targeting middle to upper-class consumers with lists of luxury design products available online and offline.

“Despite providing definite benefits, the B2B market makes it difficult for us to build direct relationships with customers. With the launch of the showroom and the AR-based technology in the platform, it is expected to increase the number of new customers,” he added.

AR technology implementation

In the app development, Bramble collaborates with Ars.App. In particular, Ars.App helps brand and designers to share interactive content digitally through AR. Using the developed app, users can directly see the designed furniture in detail.

“Only by downloading the Ars.App application on PlayStore, users can directly select all Bramble furniture products. This method is to facilitate customers with easy transaction while enjoying a unique experience when purchasing products online,” Ars.App’s Co-Founder, Jonathan Aditya said.

Every digitalized product in 3D format by Ars.App always based on Bramble data on customer’s interest obtained from their activities in the e-commerce platform.

“Currently, not only millennials capable of using kinds of technology like AR but common people are also using it. It certainly makes it easier for us to promote this feature to customers to facilitate them for purchasing by virtually see the products in its original form,” Aditya said.

In addition to the AR technology, Bramble and Ars.App will collaborate to implement Virtual Reality (VR) technology into the platform. In the development process, VR technology is expected to help customers while providing opportunities for companies to collect relevant data also acquiring new customers using technology.

“In the future, I can see the AR and VR technology not only through smartphones but also through glasses or smart contact lenses in which currently being developed in the United States,” he said.

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Original article is in Indonesian, translated by Kristin Siagian

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GoFood Aims for Expansion and Profitable Business in 2020

First launched in 2015, GoFood is now one of the services that builds up the Gojek’s “super app” ecosystem and contributes the most for the company. Currently, the food delivery service provides around 12 million menus from 500 merchants in Southeast Asia, 96% are SMEs.

Based on the company’s internal data, as of the end of 2019, GoFood has acquired 75% market share in its operational areas. It is also said GoFood users are 1.5 times exceeding competitors. While the total transactions have reached 50 million per month.

Gojek’s VP Corporate Affairs Food Ecosystem, Rosel Lavina told DailySocial that GoFood’s mission this year is to add some new features backed by the most advanced technology, in order to facilitate easy transaction.

“We stick to Gojek’s pillars of speed, innovation and social impact. Then, we realize that innovation is the key to aligning the user’s demand. Therefore, it is very important for GoFood to continue learning user’s demand that is getting complex in order to create new innovations as solutions to answer all those.”

The public’s high demand for food delivery is a promising opportunity for platforms, such as Gojek, to further develop GoFood as one of its core services in the ecosystem.

Previously, Gojek Group’s Chief Food Officer Catherine Hindra Sutjahyo mentioned, all investors’ support has led GoFood to a business model that is in line with its aims for profitability. GoFood benchmark has developed over time along with its achievements, starts from transaction number to gross transaction value (GTV), and now revenue.

“We are now on the right track, the progress gets along with our plan. That (information) is what I can share, for now,” she said.

GoFood’s rapid growth is actually nothing compared to similar industries in China. The food delivery industry there has reached 13% -15% of total consumption, while in Indonesia it is still far below that. As a result, various innovations implemented in the sleeping giant country often become a reference for food delivery players.

GoFood focus in 2020

(left-right) Gojek's Chief Corporate Affairs Nila Marita, Ban-Ban Co-Owner Wenny Chen, and Gojek Group's Chief Food Officer Catherine Hindra Sutjahyo at GoFood's launching of latest technology — (left-right) Gojek’s Chief Corporate Affairs Nila Marita, Ban-Ban Co-Owner Wenny Chen, and Gojek Group’s Chief Food Officer Catherine Hindra Sutjahyo at GoFood’s launching of latest technology

In order to improve services and increase profits from GoFood, the company has introduced four new innovations earlier this year. Among those are GoFood Pickup, GoFood Turbo, GoFood Plus and collaboration with Google Assistant for users to order food through voice commands.

There are now more than 40 GoFood Kitchen corners and the GoFood Festival as their flagship program, with plans to continue for more locations. In the future, these locations can provide merchant partners with low cost and risk to expand the network of outlets due to the infrastructure that has been provided.

In case GoFood has plans to spin off or being independent outside the Gojek ecosystem is not mentioned. However, GoFood is to focus on developing three things as its long-term business strategy, which is prioritizing customer satisfaction, business expansion, and innovation.

“Through the reliability of GoFood technology, we also offer services to make it easy and fun for culinary lovers and GoFood customers when ordering food. The development of GoFood technology and facilities for driver partners is also expected to benefit the driver partners to provide maximum service to consumers,” Rosel said.

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Original article is in Indonesian, translated by Kristin Siagian

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Airy Talks Future Plans After Appointed New CEO

Airy as an accommodation network operator (ANO) company, is officially announced Louis Alfonso Kodoatie as the new CEO on Monday (1/20). The succession followed by lists of targets, one is to improve its popularity among the accommodation industry, amidst the rapid development in Indonesia’s tourism sector.

The Airy team is confident to optimize the market’s momentum. They now have around 30 thousand rooms in 100 cities. New products keep coming, one of the latest is Airy For Business, a service that offers online service for management business trips.

Another new product is the Self Check-in Kiosk, a self-check-in machine to support receptionist. The service is to minimize time spent on queueing, especially the peak season. It’s better known as Airy Aura and it’s integrated with Airy’s property management Airy Ease to facilitate hotel for customer tracking.

Next, there is Airy Community. This service acts as a meeting place for the property owners and community partners. Airy Community will be the center for Airy Academy, a hospitality skills training for employees who work at Airy’s property partners.

“Indonesia has a potential market for the tourism industry, both foreign and domestic segments. Especially for the budget-friendly accommodation in which business is rapidly developed. Companies must be able to respond to the dynamic market. Technological innovation and network expansion are key. I expect to tighten Airy’s partnership with stakeholders,” Kodoatie said.

In Indonesia, Airy has direct competitors that also provide low-cost lodging services, RedDoorz and Oyo.

The new CEO considered this competition as a natural thing. He chose to focus on Airy’s improvement and growth strategies in various aspects.

“Airy is to focus more on what has been and is being developed. One of those is by improving quality and to guarantee a comfortable space with high standard, therefore, it can support the growth of low-budget accommodation,” he added.

Airy also intends to grow with property partners in terms of growing the tourism sector in Indonesia.

“In order to make it, technological innovation and network expansion are key. Airy continuously strives to create and develop various technology-based innovations to support our services, of course providing benefits and convenience, both for users, property partners, and other stakeholders,” he said.

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Original article is in Indonesian, translated by Kristin Siagian

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HiPajak Offers a New Way of Understanding Tax and Payment Through Smart Assistant Platform

HiPajak was developed into one-app tax assistance to help users for tax report, calculation, return, and consultation. Appears in a form of website and application, the platform was made of AI-based chatbot. Although it’s robot-assistant, it was designed with a lay language for easy understanding.

It’s not a random decision, the service was developed based on the founder’s experience to manage taxes. She believes other people sometimes have difficulty to manage their taxes.

“It starts when I help a family business, we had some issues with tax payment. It’s a simple matter, we lost the bill and got charged, although we’ve paid the tax. I thought, how can this country get further with this kind of unresolved issue. After that, I come up with the idea to develop HiPajak,” HiPajak’s Co-Founder and CEO, Tracy Tardia to DailySocial.

In practice, after downloading and login into the app, users will be required to answer several questions. Moreover, the system will analyze the tax position and provide further assistance. Next, reporting, calculating, payment and return can also be processed in the platform.

“As the one-app tax assistance, we provide administrative assistance such as filling out documents, consulting to tax planning. All consultants are certified,” Tardia said.

Business model and features

The founder’s aware of some similar digital services in Indonesia. It includes OnlinePajak, KlikPajak, Pajakku, MitraBijak, and others. There are also other tax consultants running a non-digital business, either an individual or as a group.

For this reason, HiPajak relies on business models and features in the application. Aside from chatbot as the main differentiation, they also rely on the freemium model, they also offer free and subscription packages. Automation also expected to provide quick answers and recommendations to users. They also claim to be a low-cost service while still providing personalized recommendations to each user.

Since the soft-launching on November 5, 2019, the HiPajak application has been used by around 500 users. Paid features that are currently the most used by users for tax consultations. Currently, it is still in the process of filing to become an official partner of the Director-General of Taxes.

“In the first quarter this year, we focused on non-employee personal income taxes such as freelancers, Youtubers, SMEs, content creators and others. Next, we will soon make a campaign for #satujutaSPTbaru. Further product development is to submit a proposal for PJAP to DGT and develop corporate income tax and regional tax features,” she added.

Tardia, with two other co-founders in HiPajak, Sukmanegara (CTO) and Enda Nasution (CMO). In its debut, they still running the business in bootstrapping.

Digital tax services in Indonesia

Considered as a SaaS category, a platform to assist tax management has quite large market share in Indonesia. Not only for a large number of workers, but there are also approximately 31 million taxpayers each year, the government intends to maximize tax revenue.

Due to large opportunities, digital players are tightening strategy to win the market. Towards the end of 2018, OnlinePajak secured Series B funding worth of 379 billion Rupiah. The additional capital is to be used for the development of AI-based features and blockchain.

While another platform, KlikPajak chooses to consolidate with other SaaS startups, such as Talent, Sleekr and Journal. They are now present as Mekari, providing comprehensive services to help SMEs manage their business digitally.

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Original article is in Indonesian, translated by Kristin Siagian

Corporate Venture Capital as an Answer to the Disruption Era

In June 2010, UberCab has launched in San Fransisco for easier access to book a cab. Soon, the platform was getting popular in the area, although the fare was higher. Users are willing to pay more for efficiency.

Five months later, the company received seed funding worth $1.25 million from several investors. The brand changed into Uber following its decision to include other transportation besides taxi. In early February next year, Uber announced Series A funding of $11 million.

Settled with $60 million valuations, they finally had its grand launching in New York. The public expressed their enthusiasm with the new innovation, the big apple later become the early biggest market share in the US. Some taxi provider companies have issued an intervention, asking for the business legal.

In late 2011, Uber secured $32 million Series B funding, including Jeff Bezos. The international expansion begins, aimed at Paris. User’s feedback, on the fare and availability, has encouraged the company to release some variant products, including UberX for more affordable service.

Halfway to 2014, Uber made expansions to India and Africa. Along with the Series C investment worth of $258 million. Valuation exceeds $3.76 billion and the company is officially a unicorn. Next, they secured another investment worth of $1.2 billion in July 2016 and took the company to a decacorn valuation at $17 billion.

In brief, with the current business dynamics, including expansion, downsizing business, and follow on funding, they finally had an IPO in May 2019 in NYSE with a market capitalization reached $75.5 billion.

Based on the business journey, there are some points to be highlighted: (1) a rapid growth business, (2) disrupted business, (3) business with fantastic valuation growth.

“Disruption” term as a barrier

Uber business model is getting replicated by others, including Gojek with the local wisdom – in this case, ojek (two-wheeler) transportation. After running a business in a semi-conventional way since 2011, they finally launched the first app on the Android and iOS platforms on January 7th, 2015. It used to provide only transportation, instant courier and groceries.

Welcome to the future of GO-JEK! Download aplikasi mobile GO-JEK di App Store or Google Play http://t.co/rQm1ISvVS9 pic.twitter.com/LoTgVY091S

— Gojek Indonesia (@gojekindonesia) January 7, 2015

Similar to Uber, the offered services are in high demand. Traction rise up now and then, as well as financial support from investors. It applies to the rejection issue, both the motorcycle taxi drivers and transportation companies had a hard time. Sometimes, the “pressure” comes from regulation, due to no legal umbrella to accommodate the business model, at that time.

It’s from the ride-hailing sector, the truth is new platforms (e-commerce, digital wallet, SaaS, online learning and so on) are created as a way to replace traditional businesses and it’s getting the hype as the increasing number of smartphone users in Indonesia. Suddenly the term “disruption” became the main topic in various news, public discussions, to scientific publications.

Some companies have passed the term and feel encouraged to follow the existing trends, in order to not be eliminated. In the end, the jargon “digital transformation” turned into a campaign. Businessmen massively go-digital, trying to adopt the latest technology to accelerate the business model. From the simplest as creating a social media account for marketing and applying the concept of data science to business.

Technology holds an important role in the disruption era. Moreover, it has the right medium to connect a service to its user, the computing devices – including smartphones. If not through the mobile apps, maybe the growth of Uber, Gojek, Tokopedia, Moka, Bridestory and other startups won’t be that fast.

Strategic partnership through investment

Some of the large companies with high demand in market share were made flustered by digital startups. As the few shopping centers said to be empty of visitors – and some reduce the number of outlets – after the booming e-commerce services in Indonesia. “Natural law” in business seems to start showing results: adapting or slowly dying.

Some retailers are trying to change their approach, for example, Matahari Department Store which finally released an e-commerce portal. Other shopping centers are starting to optimize application-based services, such as the GetPlus loyalty platform at Grand Indonesia. Its vision is to improve the customer experience. So far, the consumer sector is where the disruption impacted the most.

There are two options, to develop independently or collaborate with existing startups. Each option comes with implications. First, if you choose to build a digital foundation independently, you must invest in a variety of resources including infrastructure and experts. As for the second option, a strategic partnership can be one solution and most likely to be effective.

Digital transformation should be fast. Even technology is dynamically evolving. While corporate executives stay focused on improving the core business, they don’t think there’s enough time to create digital solution experiments. Digital products require some process in order to reach market-fit – research, market validation, and others.

Corporates can adjust the synergies with business vision of both. As for the companies in the financial sector, they can collaborate with fintech startups which appropriate to support business development. Companies in the insurance field can start cooperating with insurtech startups to increase the presence and easy access to public services.

After finding a suitable startup and they have proven product-market-fit, further cooperation is required for a more exclusive stage. One way is by giving investments – acquiring a few percent of ownership shares – to related startups. Furthermore, if this soon become a concern to the corporation, they can create a new venture capital sub-company.

Indonesian corporate venture capital

Corporate venture capital (CVC) usually takes form as a separate business unit (subsidiary) that is focused on channeling company investment funds to startups. It involves a strong team to do analysis and screening, in order to find startups that fit the company’s requirements.

CVC is getting popular in Indonesia, along with its achievements – both in terms of strategic partnerships to increase business or exit (IPO or acquired with a higher valuation value) as a mechanism for investors to get financial returns.

The investment focus is simple, each company explores the sectors with the highest potential to strengthen corporate lines. As an example, Central Capital Ventura from BCA, it’s targeting startups which provides access to financial convenience for consumers and businesses. The derivatives are quite diverse, ranging from credit platforms, financial technology supporting businesses, to insurance. Apparently, Astra International follows the rule, the company focuses on startups that empower automotive products, around transportation and logistics.

A bigger chance for growth-stage startups

After previously debuting with up to 3.5 trillion Rupiah managed funds. Recently, BRI has re-injected additional capital worth 500 billion Rupiah for BRI Ventures. In addition to increasing the portion of share ownership to 99.97%, it is expected to accelerate the subsidiary. Quite a fantastic number for a business kick-off in the new venture capital business.

Another CVC, Mandiri Capital Indonesia (MCI) has invested in 13 startups by the end of 2019. The CEO, Eddi Danusaputro said to have 50 billion Rupiah ready to be invested in other fintech startups. Their latest lead is the investment to the Halofina financial planning platform in the pre-series A.

The large value poured by corporations into the CVC is not random. From the existing trends, they are usually investing in startups at the growth stage. In this phase, startups are usually have proven the traction of the targeted market. As with Telkomsel Mitra Innovation (TMI), which was recently formed halfway to the end of last year, they made a debut investment to Kredivo’s series C.

A deeper approach was taken by the Telkom Group by establishing the Indigo Creative Nation’s integrated incubation and acceleration program. MDI Ventures is involved to invest in the startups graduated from the program.

More CVC to come

Although it’s not explicit, several companies reportedly participated as Limited Partners (LP) in venture capital. Acting as an LP means that they entrust the designated party to channel funds to the right startup, instead of forming their own team or subsidiary in processing investments from top to bottom.

Digital startups with the success story in demonstrating competitive value in the market and support for the current industry, are believed to attract more corporates involved in the ecosystem, specifically forming CVC. Aside from local case studies, overseas even world-class companies have also intervened in the ecosystem.

The latest news is that several other state-owned companies are also interested in forming a subsidiary in the field of venture capital. BNI and Pegadaian are said to be finalizing an investment strategy to strengthen the company’s business line.

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Original article is in Indonesian, translated by Kristin Siagian