Nobutake Suzuki, President and CEO at MUFG Innovation Partners
Late last month, Japanese conglomerate Mitsubishi UFJ Financial Group’s subsidiaries, MUFG Innovation Partners and MUFG Bank, established a US$100-million fund in partnership with Indonesia’s commercial bank Danamon.
Called MUFG Innovation Partners Garuda No. 1 Limited Investment Partnership, the fund aims to make strategic investments in local startups that have synergies with Danamon.
“We see Indonesia as one of the best attractive markets for tech investments in Southeast Asia or globally,” says Nobutake Suzuki, President and CEO at MUFG Innovation Partners.
e27 caught up with him to learn more about the new fund, its thesis, plans, and how the Indonesian startup ecosystem survives the current crisis.
Edited excerpts:
What are the key objectives of the fund? How can the fund act as a bridge between Japanese and Indonesian startups?
The key objective of the fund is to invest in startups that can collaborate with MUFG, particularly Bank Danamon. Startups can leverage Bank Danamon’s and MUFG’s assets and networks to grow, through which they would like to grow together.
Also Read: MUFG partners with Danamon to launch US$100M startup fund in Indonesia
We are not particularly missioned to act as a bridge between Japanese and Indonesian startups.
Can you share the investment thesis, ticket-size details, and focus verticals? Have you identified any startups for investment?
We are mainly looking at Series A or above companies with a first cheque size of US$3-5 million. We look for startups in lending, payment, wealth management, marketplace, vertical solution for embedded finance, SaaS/enablers, and ESG.
We have already started conversations with local startups.
How many startups does Garuda No.1 plan to invest in from this fund? Will it consider only startups that have synergies with Danamon?
It is still subject to change due to unforeseeable market conditions, but in principle, we would like to invest in around 15 companies in the next three to four years.
And yes, the synergy with Danamon is considered the prerequisite to investing in startups. It’s not limited to immediate short-term but mid- to long-term synergy.
What opportunities do you see for this fund in Indonesia? How will Garuda No. 1 address the funding gap (due to the winter)?
We see Indonesia as one of the best attractive markets for tech investments in Southeast Asia or globally. It is a high-growth market from a macroeconomic perspective.
At the same time, we cannot forget about the entrepreneurial mindset of people and the digital-savvy young population that fuels the digital economy growth.
We are not particularly designed to be created to address the current funding gap in Indonesia. Still, hopefully, our US$100 million Indonesian-focused fund can act as a catalyst for investors to be confident again and invest more in the market. Also, we aim to bring strategic value to the market other than capital.
How does the overall startup market in Indonesia performing in the recession? Are growth-stage startups struggling to raise follow-on funding? How do they cope with the situation?
We have started seeing the funding gap, especially in the growth to later stages. At the same time, activities in the early stage are surprisingly still vibrant in Indonesia.
In terms of the macro-economy, Indonesia is recession-resilient thanks to its demographic bonus and rich natural resources. These factors will especially give an advantage in this cost-push inflation world.
We believe Indonesia’s overall startup market appreciates these natural macroeconomic advantages and is better positioned to grow further than the startups in the other SEA markets.
Also Read: Mitsubishi arm injects US$200M investment into digital finance platform Akulaku
The funding winter, of course, is a hard time for everyone. However, it would also bring new opportunities for the startups, such as less competition, better hiring, and more time to focus on core product development and refinement. The startups surviving this winter must be stronger than ever before, and hopefully, we can back them up to weather the storm and emerge stronger together.
Given the current situation, will more Japanese companies and funds look to enter Southeast Asia, especially Indonesia?
Southeast Asia as a whole, or Indonesia in particular, are the fastest-growing economic centre in the world which naturally attracts investments and investors from all around the world. We are not in a position to talk about overall Japanese investors’ trends, but for MUFG, we have been actively investing in Southeast Asia and Indonesia.
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