Indonesia is undoubtedly the largest digital market in Southeast Asia and a lucrative spot for investors to put their money in. BRI Ventures, the investment arm of Indonesia’s oldest bank, BRI, is one of them.
Equipped with a fund of USD 250 million, the venture firm doesn’t merely want to become a money supplier for startups, chief investment officer William Gozali told viewers of KrASIA’s Venture Matters TV on Thursday evening. Its mantra is “value over valuation.”
“We believe in real value creation and we aspire to be strong value-add investors for our portfolio companies,” he said.
Gozali explained that the firm prefers to invest in companies that reel in both growth and revenue. For example, if he has to choose between company A that promises tenfold growth with zero revenue or company B with fivefold growth and USD 5 million revenue in the same period, he would go with the latter.
“For us, revenue means validation. Someone values your goods and services, someone values your company, and they’re willing to pay. That’s real value creation,” Gozali said. “Sometimes valuation just reflects the perception of value, the future. But validation-revenue means the real value created now.“
Serving the greater good
The mantra affects how BRI Ventures curates its portfolio companies. Gozali disclosed that his firm focuses on fintech, education, agriculture, retail, transportation, and health. Until now, BRI Ventures has invested in agritech startup TaniHub, e-wallet LinkAja, P2P lenders Modalku and Investree, and SME-focused fintech PayFazz.
“We believe that every investment must serve greater good to the society,” he said. Fintech, for instance, gives Indonesia’s large unbanked and underbanked population financial products, which in Gozali’s view is key to improvement.
Combined with its parent’s vast banking network, especially in rural areas, BRI Ventures can leverage on the growth of its fintech portfolio. “BRI has the coverage and we have the technologies, we have access to new opportunities like credit scoring,” he said. “There is non-traditional data that we can leverage and enrich.”
More access to financial products will also help the country’s small and medium enterprises (SMEs). As most of them are not eligible to apply for traditional bank credits due to lack of collateral, fintech provides an option for them to raise capital for scale and growth.
Another factor that is important to BRI Ventures is the social impact of its portfolio companies. Gozali mentioned that the companies are tackling problems for those at the “bottom of the pyramid,” and also “the missing middle.” He expects the company to have a snowball effect on society, such as job creation, improving life quality, and changing behaviors. It doesn’t stop with the balance sheet, Gozali said.
Collaborating and competing
As the Indonesian startup ecosystem grows, foreign investors start to flood the market. Many of the country’s tech giants are receiving money from big names, such as Gojek with investments from Google, Facebook, PayPal, and others. When asked if BRI Ventures saw these foreign players as a competitor, Gozali had a mixed view.
“On a micro level, I consider them as competitors. Competition pushes players to be better,” he said.
However, on a macro-level, they are collaborators. “Eventually in one way or another we collaborate. In these cases, even in China, you see two investors investing in one company, and in another portfolio, they compete head to head,” he said. It is still early days in Indonesia, but at the end of the day, consolidation will make more sense, he argued. “It really depends on a case by case basis.”