A thesis of how Corporate Venture firms in Indonesia and SEA should position themselves in the market and how would they operate from 2019 and beyond

1. Corporate VC in 2019
and Beyond
A DRIVING FORCE OF CORPORATE DIGITAL TRANSFORMATION
Joshua Agusta
VP of Investments (Chief Investment Officer)
MDI Ventures

2. Global & ASEAN
Focus
Invest in Multiple
Tech Verticals
Strategic
Investment to
Support Inorganic
Agenda
National Ecosystem
Builder for Early
Stage Startups
Thought Leader in
Corporate
Innovation
Bridge to Global
Top Tier Investor
Snapshot: MDI Ventures

3. Background: MDI Initial CVC Thesis in 2015

4. Startup-Corporate
“Synergies”
Long-Term Investment
Horizon
The Magnitude of
CVC’s Capital Gains
OUR KEY LEARNINGS - 2016-2018

5. Key Learning 1: Good vs Bad Synergies
C H A L L E N G E S

6. V E N D O R I N G V E N T U R I N G
● Quick Win, yet fragile synergy type
● Telkom as tools / technology user / client
● Synergy contribute ‘Cost-Saving’ value vs. current solution
● During ‘Cost Leadership’ initiatives, Vendors are disposable
● Strategic Fit, yet time-consuming and might not be fruitful
● Startup help Telkom to grow business
● Synergy contribute ‘Revenue / Profit’ value
● New product, knowledge transfer, go-to market intangible value
● Successful synergy leads to potential M&A opportunities
E X A M P L E
Verification to onboard user
save physical document cost
Smart email marketing AI
save redundant email cost and reduce churn
Data management & Growth platform
increase stickiness and reduce churn
Digital goods - Merchant aggregator
Grow a company’s market in digital goods
Chatbot platform
upgrade a company's capabilities to automation
A2P Messaging platform
expand a company’s market size
Creating innovation requires both parties to commit and ready for a radical change. However, neither of the companies
are ready to embrace the huge change. Therefore, most synergy cases opted into vendoring, where both parties are safe,
resulting in a business-as-usual type of collaboration.
Key Learning 1: Good vs Bad Synergies
E X A M P L E

7. The typical venture capital horizon of 8-10 years is not effective for corporate VCs
Annual “quick-wins” are important to manage corporate LP’s
expectations as they need to consider an option to allocate the capital
to other subsidiaries
Main Drivers of the Mismatch
Key Learning 2 - Ideal CVC Investment Horizon
The Importance of “Quick-Wins”
“Mark to market” isn’t sufficient as 12-15% annual return is a
guaranteeBalance Sheet Investment
CVCs’ nature are mainly viewed as “digital scouts” with
exploration-based objectives. Their existence will become vulnerable
and highly questioned when the market is declining.
Market Risk vs Cost of Exploration
#1
#2
#3

8. Series A Startup
Investment: $500,000
Optimistic Equity Gain in 8 years
(20x money multiple)
$10 Million ???
Equity gain in early-stage investment does not bring substantial financial
impact to an enterprise corporation with a market cap of billions.
Key Learning 3: Low Magnitude of Investment Returns

9. Series A Startup
Investment: $500,000
Optimistic Equity Gain in 8 years
(20x money multiple)
Equity gain in early-stage investment does not bring substantial financial
impact to an enterprise corporation with a market cap of billions.
Key Learning 3: Low Magnitude of Investment Returns
$10 Million
Net Profit in 2017
$2 Billion

10. $100 Million
CVC Fund
A well-performed CVC Fund that produces returns of $500 million
in 5 years does not compete with Telkomsel’s Net Profit in 2017.
Key Learning 3: Low Magnitude of Investment Returns
Within 5 years
(IRR: 37%)
$500 Million
Net Profit in 2017
$2 Billion

11. CVC
=
Digital Value Creator
CVC
=
Investors
REDEFINING THE ROLE OF CVC

12. CVC Thesis - 2019 Onwards
CVC’s positioning as a
“value creation agent”
for corporations

13. Ideal roles of CVCs moving forward
CVC Thesis - 2019 Onwards
Driving corporate’s digital
transformation efforts and
enterprise value
Focused investment
strategy by aiming for larger
ownership per startup and
less deals per year
Evolving role as a
corporate strategist rather
than “just” an investor

14. 1. Investing into smaller
number of deals with
bigger check size
(>$15-20 Mn)
2. Shorter investment
horizon (2-3 years)
3. Bigger opportunities for
bottom line contribution
through exits (FVTPL
treatment)
CVC Strategy 1: Investing in Later Stage with Larger Ticket Size

15. CVC Strategy 1: Investing in Later Stage with Larger Ticket Size
Series A
($10 Million)
Centaur
($100 Million)
Unicorn
($1 Billion)
Investment
Multiple
Capital Gain
$500,000 $5 Million $50 Million
20.00x
$9.5 Million $45 Million $150 Million
10.00x 4.00x
IRR
44%
(in 8 years)
55%
(in 5 years)
45%
(in 3 years)
Directing focus on later-stage companies may provide smaller money multiple, but it will provide quicker win with larger
capital gain, thus capture substantial value that may drive the corporation’s value.

16. Impact of Technological Investment by Market Cap
May 2001: USD 0.696 billion (Pre-Tech Investment Era)
Oct 2018: USD 133,75 billion (Post-Tech Investment Era)
CVC Strategy 2: Tech Investments as an Important Force in Driving Corporate’s
Enterprise Value

17. Case Study: Tech Investment Become The Key Transformation Driver
Pay TV (57%)
Internet (6%)
Print Media (21%)
Technology (5%)
Book Publishing (6%)
Private Education (5%)
Pay TV (45%)
Technology (4%)
Internet (16%)
Print Media (35%)
Internet (45%)
Pay TV (39%)
Print (16%)
Social & Internet Platform (61%)
Ecommerce (18%)
Media and other (3%)
Video Entertainment (18%)
REVENUE
US$ 661 Mio
REVENUE
US$ 1.3 Bio
REVENUE
US$ 5.2 Bio
REVENUE
US$ 20.1 Bio
Pre-Tech Investment Post-Tech Investment
FY2002 FY2008 FY2013 FY2018

18. Case Study: SVF as Softbank Group’s New Growth Driver

19. Digital orchestration by acquiring digital capabilities
1. Actively spotting new market & opportunities
2. Picking the clear winner in the market
3. “Drag-along” growth through acquisition
4. Utilizing multiple strategic investment mechanisms
(minority, simple majority, acquisition, JV, etc)
CVC Strategy 3 - Taking the Responsibility as a “Corporate Digital Strategist”
C A S E S T U D I E S

20. Thank You !
joshua.agusta@mdi.vc