Indonesia’s BRI Ventures is looking to diversify its funding scheme for Indonesian startups by offering a mixture of equity and venture debt options. The company announced its plan together with the first closing of its Sembrani Nusantara (SN) fund this week.
“SN is going to be 80% equity and 20% venture debt,” BRI Ventures CEO Nicko Widjaja told KrASIA. The investment arm of the country’s largest state lender Bank BRI will partner with peer-to-peer fintech platform Investree, which is also an investor in the Sembrani Nusantara fund. The new option is called BVI Venture Debt and the initial offering will be as much as IDR 60 billion (USD 4.26 million).
Venture debt provides tech startups more funding options, especially to those that lack tangible assets or adequate cash flow that would make access to traditional debt financing instruments difficult. The benefits include more capital, less ownership dilution, and fewer governance requirements, according to Widjaja. The firm claims that not many VCs in Indonesia offer this debt financing option.
BRI Ventures further explains that companies eligible for debt funding must meet certain benchmarks. First, the capital must be dedicated to the company’s expansion. That means startups must already have a validated business model which they are now seeking to grow with related capital expenditures, asset acquisitions, market expansion, or other activities. Startups should also not have a concerning history of debt over the past 12 months. They must pass through risk assessment and credit scoring.
On Wednesday, BRI Ventures announced Sembrani Nusantara’s first closing, which amounts to more than USD 10.5 million, already locking in more than half of the fund’s IDR 300 billion (USD 21.2 million) target. Investors involved in this round include VC firm Celebes Capital, Fazz Financial Group, Indonesian business mogul Pandu Sjahrir, and Grab.
The fund will focus on local startups in the early to growth stage. BRI Ventures is specifically looking at companies that operate in education, agriculture and fisheries, retail, transportation, and health. Widjaja mentioned that the firm is preparing to make Sembrani Nusantara’s first investments in two local companies.
Sembrani Nusantara is BRI Ventures’ second investment fund. In July 2019, when the investment arm was established, it launched its first fund with a target raise of up to USD 250 million.