Indonesia to launch Merah Putih Fund worth $200M to support local 'Soonicorns'

Indonesia President Joko Widodo, also known as Jokowi, will launch the Merah Putih Fund which focused on domestic startups which soon to reach unicorn’s status (soonicorns), local media Tempo.co reported.

One of the initiators of the Merah Putih Fund platform is State-Owned Enterprises (SOE) Minister Erick Thohir, who believes that some startups with the potential of becoming Indonesia’s unicorns deserve funding.

“Without funding, they could lose that potential,” he was quoted as saying at the ‘Digital Generation Acceleration’ event on Wednesday.

Jokowi, who attended the same event, said that Indonesia currently only has one decacorn, or a startup with more than $10 billion valuations, and seven unicorns, according to the report.

Erick said Indonesia has the potential to create more unicorns, 25 in his estimation. He said startups that are eligible to receive the funding are those created by Indonesian nationals, operating in the homeland, and paying taxes.

He previously said the company which receives funding must go listing on the stock exchange in Indonesia. “IPO must be in Indonesia, not in Singapore,” Erick was quoted as saying then.

Indonesian government’s move to support local soonicorns comes at a time when the tech sector in Southeast Asia is booming. Last year, 52 startups in Indonesia were able to raise $1.9 billion, according to the Indonesian Venture Capital and Startup Association (Amvesindo).

Southeast Asia has around 400 million internet users. This year, it is expected that around 80 percent of the region’s population (aged 15 and above) will be classified as digital consumers, according to a report by Facebook and Bain & Company.

The Merah Putih Fund is set to be launched by Jokowi on Friday (Dec 17). With this new funding model, the government aims to support the digital businesses in the country through SOEs.

So far, Indonesian startups have been receiving support from foreign financing.

>>> Invite you to read more articles about investment in Indonesia:

• Sofia and Sequoia Capital India invested $36 million in Indonesia's Lemonilo in Series C
• Juspay - India's payment technology platform raises $60 million led by SoftBank
• Singapore’s VC firm 1982 Ventures reaches the first close of the maiden fund at $12.5M