BRI Ventures launched Sembrani Nusantara Venture Fund, the first Venture Fund in Indonesia, established under a Joint Investment Contract (KIB).
BRI Ventures has announced the establishment of the "Sembrani Nusantara Venture Fund," the company's first venture fund. This new fund will invest in early-stage entrepreneurs in non-fintech industries such as education, agro-maritime, retail, transportation, and health.
Although there are several key differences, Sembrani Nusantara's approach is comparable to MDI Ventures' Centauri Fund and South Korea's KB Financial Group as a non-CVC fund.
Sembrani Nusantara was chosen as a future symbol for the startup mindset. Sembrani, Batara Wisnu's riding horse in the Indonesian tradition wayang myth, is a depiction of a unicorn with local wisdom.
BRI Ventures hopes to raise IDR 300 billion at its initial public offering today (24/6). BRI has acquired a number of pledges from institutional investors as a Limited Partner and has invested in the fund as the General Partner.
Following a filing process that began at the end of last year, BRI Ventures has been approved by the OJK to manage venture funds. The venture fund is an investment contract agreement developed by the OJK between PMV and the custodian bank to encourage venture capital firms to participate in equity investments.
Until recently, the majority of local PMVs used profit-sharing financing, which is similar to what financial institutions do.
According to BRI Ventures CEO Nicko Widjaja, the intention behind the formation of Sembrani Nusantara was to prepare a broader investment climate, but with the rules of the game remaining on the radar of OJK supervision.
"BRI Ventures wants to create an environment previously dominated by foreign PMVs, and we weren't prepared yesterday." "The time has come for us to get started, which could revolutionize the ASEAN environment," he said.
Excessive taxes, which have been used as an excuse for many local PMVs to flee to neighboring countries, can actually be solved with a few tweaks. He explained that BRI Ventures had reduced management and other expenses.
"Why don't we change our minds instead of waiting for the rules to change?" We talked to the [BRI] group and changed the carry profit and management charge because we know we can't change it with the government. Through Sembrani Nusantara, we are attempting to reshape the Indonesian venture capital industry. We are changing [those two factors] to make the sector more competitive. It's similar to a startup that initially provides subsidies."
BRI Ventures will invest in the early stages of 10-15 non-fintech businesses over a two to three-year period, with a total managed capital of Rp300 billion.
According to Nicko, Sembrani will continue to evaluate its progress in the future because this is the first time BRI Ventures has raised and managed foreign funds. BRI Ventures has always been a single LP when it comes to investing in startups.
"Because there are so many investors, we need to communicate more, and most importantly, we need to provide education, which has been lacking so far."
The presence of Sembrani Nusantara is a breath of fresh air for the local startup sector, which is still dominated by foreign capital. People who have registered with the OJK are considered first movers because they promise to follow domestic legislation.
For the record, despite the fact that many venture capital firms have offices in Indonesia, their legality is based in Singapore due to the more favorable tax environment there. The paid-up capital limit is thought to be incompatible with the venture capital model, which primarily invests in technology firms and raises capital from outside investors.
Furthermore, due to the implementation of a high income tax, local investors continue to find it difficult to compete with international investors (PPh). According to PMK PMK No. 48 of 2018 concerning Tax Treatment of Venture Capital Company Equity Participation in Micro, Small, and Medium Enterprises, it is not considered friendly to adapt capital gains tax laws.
The capital gains tax is levied on PMV at a rate of 25% of the increase in equity value, as opposed to 30% for individual investors. Due to the large amount, foreign investors prefer to channel their funds through PMAs rather than local PMVs. Singapore, on the other hand, imposes a capital gains tax of only 5%.
The majority of local PMVs that invest in digital businesses and are registered with the OJK are housed by the bank's subsidiaries, Central Capital Ventures (CCV), BRI Ventures, and Mandiri Capital Indonesia. According to the regulator's mission, the three are more focused on assisting fintech startups in order to assist their parent companies.