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Indonesia’s state investors in Bukalapak show increased confidence in local startups

Written by Ursula Florene Published on   2 mins read

As Indonesia’s tech unicorns race toward their IPOs, state-owned firms are looking to cash in.

Bukalapak’s USD 234 million funding round led by Microsoft, which was first reported by Reuters on Wednesday, also included undisclosed investments from BRI Ventures and Mandiri Capital, the VC arms of Indonesia’s largest banks, state-owned Bank Rakyat Indonesia (BRI) and Bank Mandiri.

Both firms are eyeing Bukalapak’s network of 13.5 million offline merchants, most of which are micro, small, and medium-sized enterprises (MSMEs). As a part of a new partnership, Bank BRI will provide digital banking and lending products to the e-commerce platform’s merchants and customers. “BRI Group can also offer support to any small business in the country,” BRI Ventures CEO Nicko Widjaja told KrASIA.

Indonesia has around 64 million MSMEs, which make up 99.9% of all operating businesses in the country, according to official statistics. They contribute 60.34% of the nation’s GDP and absorb 58.18% of the total investments.

Bank Mandiri already cooperates with Bukalapak on multiple financial products such as mutual fund investment service BukaReksa, auto loan providers BukaMobil and BukaMotor, and mortgage service BukaRumah. Bukalapak users can also open Mandiri accounts through the app. The e-commerce firm hired Mandiri Sekuritas for a potential listing on Jakarta’s stock exchange.

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Indonesia’s state-owned enterprises have become more active in engaging with the country’s startups, either through partnerships or investments. The entrance of BRI and Mandiri into Bukalapak’s club of investors is a strong sign of confidence for Indonesian unicorns. It could also carry a large payout once the e-commerce firm lists, whether that will be in Jakarta or New York, said Bhima Yudhistira Adhinegara, a researcher at the Institute for Development of Economics and Finance (Indef).

In addition, mature companies such as Bukalapak already have almost complete ecosystems, loyal user bases, and proven business models. Adhinegara said that state firms used to be wary of startups due to the high risk. That has changed now. Aside from Bukalapak, Mandiri Capital also backs ride-hailing and payments company Gojek.

Bukalapak could also benefit in the payments space. While Shopee has its e-wallet ShopeePay and Tokopedia has Ovo, Bukalapak still lacks a dedicated fintech solution. So far, the only e-wallet available on the platform is Dana.

Mandiri and BRI both support e-wallet LinkAja. “They could integrate LinkAja into Bukalapak’s ecosystem,” Adhinegara said. The banks could also offer loans or pay-later services through this channel, he added.


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