Telkom Sets $200m Investment for Indonesian Tech Startups

A man fixes a damaged gadget in his cell phone kiosk in Jatinegara, East Jakarta, in this August 2010 file photo. (JG Photo/Yudhi Sukma Wijaya)

By : Jakarta Globe | on 4:30 PM August 14, 2014
Category : Business, Corporate News, Featured

A man fixes a damaged gadget in his cell phone kiosk in Jatinegara, East Jakarta, in this August 2010 file photo. (JG Photo/Yudhi Sukma Wijaya) A man fixes a damaged gadget in his cell phone kiosk in Jatinegara, East Jakarta, in this August 2010 file photo. (JG Photo/Yudhi Sukma Wijaya)

Jakarta. Telekomunikasi Indonesia, the country’s largest telecommunications company, is setting aside $200 million in seed money to help finance local startup technology businesses.

The state-controlled company, also known as Telkom, has created Metra Digital Investama to help it in supporting innovation and new projects internally.

Metra Digital will operate under Telkom’s information and digital media subset Multimedia Nusantra (TelkomMetra).

“We hope that the CVC [corporate venture capital] development will help support the development of a nationwide creative industry, which eventually will contribute to the country’s economy growth,” said Arif Prabowo, vice president for public relations, in a statement on Thursday.

Telkom plans to use Metra Digital in spearheading innovative technology in the country while at the same time become an additional source of income for the group.

“We are currently scouting for which startup companies we want to invest in. We are also still discussing the targeted amount of startup companies,” Arif was quoted as saying by Investor Daily on Wednesday.

One of Indonesia’s well-known startups include online community forum site Kaskus.

Such liquid investment is often needed as a major helping hand for startup companies that are seeking financing to get their businesses up and running. Obtaining bank loans may be difficult for startups because they are viewed as high risk.

Private funding from companies like Telkom has also been the driver for research and development activities in the country due to the lack of funding for such activities from the government.

Government spending on research and development this year amounts to Rp 8 trillion ($684 million), or about half a percent of the state budget’s Rp 1,600 trillion. Experts argue that such a small portion is nowhere close as sufficient in supporting a strong and productive scientific community in the country.

Telkom already has two business incubator centers for startup entrepreneurs: Bandung Digital Valley, which is a partnership with local university Bandung Institute of Technology; and Jogja Digital Valley, which is a partnership with the Jogjakarta branch of the Indonesian Information Technology, Communication and Creative Industry (Mikti).

Telkom also said that it is planning to build another incubator center in Jakarta.

Every tech startup that enrolls in the program organized by Telkom’s incubators get to become a part of the company in developing digital businesses in the country.

Bandung-based Telkom said that it partnered with Silicon Valley-based venture capital firm, Fenox Venture Capital, to help Metra Digital in its operations.

“This initiative has made Telkom Indonesia become the first Indonesian company to expand to Silicon Valley,” Telkom said in the statement.

Founded in 2011, Fenox has invested in more than 37 startup companies globally, including free ridesharing services company Sidecar, technology news site TechInAsia and Singapore-based end-to-end property search website 99.co.

In Indonesia, Fenox has already allocated funds into such startup companies as online marketplace Bukalapak.com and online real estate market forum Urbanindo.com.

According to the statement, Fenox is keen to maintain investing in the country by also bringing in people from Silicon Valley who would mentor Indonesian entrepreneurs in developing their startups.

Telkom said in the statement that it will continue partnering with more venture capitalists from Silicon Valley — an area near the San Francisco Bay area that is home to many of the world’s largest technology corporations such as Google, Apple and Facebook.

“Learning how startups develop in Silicon Valley, there are several things to be learned by technology-based companies like Telkom. For instance, it needs innovation and must act like a startup to be able to continue growing. Telkom must explore to find new development sources in order to stay relevant and be the leader,” said Arif.

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