http://www.demystifyasia.com/indonesian-conglomerates-involvement-startup-scene/
As the country with the highest population in South East Asia, as well has the largest number of internet users, the startup industry based in tech certainly has strong potential for tremendous expansion in the coming years. In an effort to remain on the forefront of of the startup lottery, huge investments have been made in the country, with the largest one for Tokopedia at USD$100 million. This investment was made by Sequoia Capital and Softbank, two top-tier investment groups that operate in the region. In addition to growth in investments, incubators and accelerator programs are also a driver of the growth of the technology startup ecosystem.
In Indonesia, a contributing factor to most of the startups are is the involvement of the Indonesian conglomerates; those who own large amount capital and whose businesses have been entrenched in Indonesia for decades. The next generation within the families of conglomerates are facing new challenges in doing business in today’s globalized-world. To remain relevant and retain their status, many next-generation-tycoons, are getting involved in the startup scene. Below are Indonesian conglomerates who are engaged in the startup industry.
Lippo Group
Lippo Group is an Indonesian company founded by notable tycoon, Mochtar
Riady. At first, it ran Lippo Bank which was renamed and changed
composition of its share into Bank CIMB Niaga. The company then also
managed property and real estate, operating across Asian countries such
as Indonesia, China, Hong Kong, Macao, Philippines, Singapore and South
Korea with total assets worth 11 billion USD. It is also listed on
various stock exchanges in Hong Kong, Indonesia and Singapore with at
least 15 subsidiaries. In addition to the property business, the company
is also involved in retail, telecommunications, news and media, and
various other types of businesses. Based on Forbes report, the Riady
family is the ninth richest tycoon in Indonesia. Total wealth of Lippo
Group is valued at 2.2 billion USD (around Rp 29 trillion) which derived
from those various business lines.
As the internet marketplace showed its lucrative growth, Lippo Group initiated an investment in e-commerce. With investments of 500 million USD, Lippo Group started operating e-commerce site Mataharimall.com in 2015 to compete with other big name such as Lazada and Tokopedia. This e-commerce platform actually is the online version of the existing store chains operating for decades, Matahari Mall, owned by Lippo Group that spread across the archipelago. The Lippo group recently partnered with Singapore based Grab, which was looking for support in Indonesia, to help with deliveries for Mataharimall.com.
“Online commerce is a US$100 billion opportunity. MatahariMall will be number one. There is nothing like it in Southeast Asia. Our vision is to build the most powerful ecosystem that brings together buyers and sellers to do business anytime and anywhere” said John Riady, the director of Lippo Group during the launching of mataharimall.com.
Recently, in March 2016, the grandson of Mochtar Riady, who is acting as Director of Lippo Group, John Riady, started to invest in venture firm Venturra Capital. The group’s capital is 150 million USD, or equivalent to 2 billion IDR. In the official statement, Venturra Capital will prioritize investments in startups from Indonesia and Southeast Asia. The startup targets range from e-Commerce, financial services, healthcare, and education. The firm, led by Stefan Jung, former founder and managing partner of Rocket Internet Southeast Asia; Rudy Ramawy, former country director at Google Indonesia; and John Riady, current director of Lippo Group.
“Our mission in Venturra is to provide capital, operational empowerment and market access to the founders of technology-based innovative business and internet has the potential to transform the industry,” wrote Venturra Capital.
Djarum Group
Djarum is cigarette producer based in Kudus, Central of Java, owned by
Oei Wie Gwan. After Gwan passed away, the company is now run by his son,
Robert Budi Hartono and Michael Bambang Hartono. Forbes named the
Hartono family the richest in Indonesia. With total assets reachig $
15.5 billion (around Rp200 trillion), Hartono family also owns majority
shares in largest private bank in Indonesia, Bank Central Asia (BCA).
Hartono successfully steered the company to be largest cigarette producer in the country. As the growth of the cigarette industry is quite stagnant, Djarum then diversified its business line into several lines. Djarum’s subsidiary, PT Hartono Plantation Indonesia, has oil palm plantations covering an area of 30,000 hectares (ha) in the Porcupine District, West Kalimantan. The company is also developing timber plantations in East Kalimantan, covering land area of 20,000 hectares.
Beside for investments in those lines, Djarum also owns blibli.com, an electronic e-commerce site with investments from Djarum amounted to 1 million USD yearly through its subsidiary, GDP Venture. Djarum created GDP Venture to invest in startup and internet business. Another successful project funded by GDP Venture is Kaskus, the largest online community based in Indonesia. To gain a better angle on upcoming startups, GDP Venture formed an incubator called Merah Putih Inc., a startup incubator which aims to provide capital assistance for innovative startup. The incubator’s successful portofolio includs Dailysocial, KrazyMarket, Infokost, Bolalob, Lintas.me, infokost.net, kincir.com and Mindtalk.
Sinar Mas Group
Sinar Mas Group is another wealthy tycoon in Indonesia who owns hundreds
of subsidiaries across the country. The company was founded in 1962 by
Tjipta Eka Widjaja. At the beginning, the company’s business portfolio
mostly focused on pulp, paper and palm oil producers. But as the company
grew, it began managing wide ranges of business lines including
agribusiness, property and real estate, mining, financial services
ranging from bank, multifinance, and insurance.
As the internet based technology began growing rapidly in Indonesia, Sinar Mas Group set up a venture capital in 2015 named Sinar Mas Digital Ventures (SMDV). SMDV together with Lippo Digital Ventures and RMK Sovereign Capital Ventures, on January 15, 2015 invested Serie A investment amounted to 2 million USD for Giftcard.co.id. Secondly, SMDV also invested in Female Daily Network value for 1 million USD. Then, under one of its subsidiaries, PT Dian Swastika Sentosa Tb, runs ecommerce business by purchasing point. In 2015, SMDV also invested in Series A Investment totalling 2.6 million USD for Omise, a Thailand-based payment gateway.
To fully commit to startup investments, Sinar Mas Group, through its subsidiary, Sinar Mas Land, recently announced plans to build an integrated smart digital city in Indonesia for startup companies, technology leaders and digital communities. As reported in Jakarta Post, the company’s CEO, Michael Widjaja, said that the construction would start in 2017 on a 25.86-hectare plot of land in BSD City, South Tangerang. The company has allocated Rp 2 trillion (US$151 million) in cash to develop the digital hub.
“It’s our dream to build this place, an equivalent to Silicon Valley in the US. We are not only inviting the companies but we want to build a self-sustaining community,” he said in Jakarta on Tuesday. This ambitious project will be finished in 10-15 years and plan to targeting research centers, institutions and educational institutions that have schools of technology and sciences.
Bakrie Group
Bakrie Group is a conglomerate founded by Achmad Bakrie in 1942. The
company’s business lines spread in in many areas, including Oil and Gas,
Real Estate, Infrastructure, Mining, Media, and Telecommunications.
Bakrie Group is one of the largest business groups in Indonesia, with 10
subsidiary listed on the Indonesia Stock Exchange. Currently, Bakrie
Group is chaired by Nirwan D. Bakrie (Chairman) and Indra U. Bakrie
(CO-Chairman). In 2004, Aburizal Bakrie retired from the Bakrie Group to
focus on his political career and now is the General Chairman of Golkar
Party, the second largest party in Indonesia.
In 2011, with a vision to expand the company line to include technology startups, the company established a private investment firm named Nusantara Incubation Fund. Bakrie Group’s CEO, Anindhya Bakrie stated in the interview that the investment firm aims to support local startups. The establishment of the investment firm was part of Bakrie Group BtelVision2.0 program to widely reach internet markets.
“We expect another kind of Kaskus and startup to emerge, but it must be owned by us. Although there will be others to invest, no problem. ”
In January 2014, a closed social network, Path, recorded getting C round of funding amounting to 25 million USD from Bakrie Group. The investment was deemed a significant move by Bakrie as Path users in Indonesia are the largest, with 4 million users in 2014. Currently, Bakrie Group is also working together with Converge Ventures, though does not have total control over the operations of the company.
CT Corp
CT Corp. (formerly known as Para Group) is a group of companies owned by
tycoon Chairul established in 1987. The holding company owns several
business lines including bank, insurance, retail stores, plantation,
news and media, mining, property and real estate, and restaurant chains.
One of notable CT Corp internet-based portfolio companies is detik.com, a highly popular online news platform in Indonesia. On August 3, 2011 CT Corp. acquired detik.com shares, value of 60 million usd or equivalent to 521-540 billion IDR. Before being acquired by CT Corp, detik.com shares were owned by Agranet Tiger Investment and Mitsui & Co. Agranet has a 59% share, and the rest is owned by Tiger 39%, and Mitsui 2%.
In February 2016, CEO of CT Corp. Chairul Tanjung announced that the company is preparing to launch an e-commerce company. “Currently we are preparing e-commerce so once it released, it becomes the champion. If we don’t become champion, it is better to not launch e-commerce because the line of our business is complete. There are hypermarket, department stores, airlines, hotels, food and beverages, and also entertainment. But we want everything is available in our e-commerce, “said Chairul.
Mitra Adiperkasa
Mitra Adiperkasa (MAP) is a retail company that was raised by Boyke
Widodo and his uncle Sjamsul Nursalim. Data from Forbes states that
Sjamsul has a fortune of $ 470 million (around Rp6.2 trillion) from
Gadjah Tunggal tire factory and retail MAP they have.
MAP is arguably one of the largest retail companies in Indonesia. Some well-known brands commonly found in malls such as like SOGO, Planet Sport, BANDAI, Starbucks, and others-are managed by MAP. With these foundations, MAP has recently officially announced their e-commerce site called MAP EMALL. The products are sold mostly in the form of fashion and home furnishings as well as what is offered by retail MAP.
Salim Group
Salim Group is another notable conglomerate in Indonesia. It was founded
in 1972 by Sudono Salim (Liem Sioe Liong) and has subsidiaries such as
Indofood, the world’s largest instant noodle producer. It also owns oil
palm plantations (approximately 1,000 square kilometers) and logging
concessions. Besides, it also manages property, real estate and
entertainment industry for about 30 years.
Now, the company is run Anthoni Salim. In an interview with Japanese media, Nikkei expressed his interest in investing in the e-commerce industry. “We are ready to participate in e-commerce in Indonesia, which has just begun. If you want to be successful [in e-commerce], logistics, transportation management and IT architecture must be very strong. ”
Though Salim Group doesn’t make direct investments to e-commerce company, its subsidiaries do. Philippine Long Distance Telephone (PLDT) Company, a Philippine based company with its largest shares owned by Salim Group, invested 455 million USD or equivalent to Rp 6.2 trillion) to Germany based tech company, Rocket Internet. Rocket Internet is the conceptor of giant marketplaces operating across Asia, including Lazada and Zalora. It is recorded that PLDT shares in Rocket Internet is equivalent to 10% of total shares.
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