Powerlist Q&A – Aldi Adrian Hartanto, MDI Ventures

Kenneth Li, CEO and managing partner of MDI Singapore, said: “Despite his current age, Aldi is very much experienced in the Indonesian venture industry since the beginning of the wave.

“I met him when I first started MDI Ventures back in 2015 and at the time, he was with Fenox Venture Capital, after his tenure, he moves to another corporate venture capital (CVC) unit called MCI, Bank Mandiri’s corporate venturing arm, and there where he actually caught our eyes at MDI.

“His investment at MCI has been stellar, to say the least, he led the investment on companies such as Amartha, Moka (exited $100m-plus to Gojek) and Investree, which they made exceptional returns on their own. When he decided to join us, we were ecstatic and I think his experience at a Silicon Valley-based VC and also a CVC brings a heap of expertise and made his adaptation to MDI very swift.

“At MDI, he is tasked with leading and continuing the investment on Telkom Fund I which is a $100m fund. Over the years, it has performed very well and we have seen a total of seven exits with two initial public offerings (IPOs) and five mergers and acquisitions (M&A) transactions.

“At MDI, we always aim for greater heights, we always wanted to perform much better and Aldi has contributed ideas and execution to those new directions by extending our operation in Singapore and Silicon Valley offices along with the establishment of our external funds such as Telkomsel Mitra Inovasi (TMI) fund with $40m assets under management (AUM) and Centauri Fund with $150m-targeted AUM.

“MDI itself has been a success story within the Telkom group where we have assisted multiple Telkom’s group subsidiaries in exploring and adjusting to the digital world. Several of our portfolio companies have been deeply integrated within the Telkom’s group subsidiary and we believe that MDI is very unique in the CVC space where we are allowed to explore many different segments within the digital ecosystem.

“As part of the largest telecommunication company in Southeast Asia (SEA), we are opening new doors and opportunity for the group to access new market where we invested, over the years MDI has invested in more than 10 countries and growing. The success of our fund has opened new doors to our second and third fund which we have launched in the past two years.”

1. Any highlights from the past year?

• Led the team to executed five exits in 2019:
  One IPO in ASX: Whispir
  Four M&As:
  i. CodaPay acquired by Apis Partners;
  ii. Red Dot Payment acquired by PayU;
  iii. Wavecell acquired by 8×8; and
  iv. ObserveIT acquired by Proofpoint.
• Drove $55m-plus synergy value creation – 48% year-on-year from the financial year (FY) 2018 – in FY 2019, through some of the value creation collaborations highlights such as:
  1) Kredivo with AdMedika to provide excess claim reimbursement financing with targeted revenue expected to reach $150,000 per hospital; and
  2) Cloudike to empower TelkomSigma’s cloud infrastructure enhancement with a potential contract of $1m.
• Secured Speaking positions in leading conference and media such as Tech in Asia, CNBC and Global Innovation Korea.
• Won Deal of the Year for PayFazz’s deal and Exit of the Year for Whispir’s deal from SVCA (Singapore Venture Capital Association) in 2019.
• Personally got promoted two times in the same year of 2019 – first promoted from head of investments to general manager (GM) of investments in Q3, then promoted from GM of investments to VP of investments in Q4.
• Set up new Singapore office and integrate the whole team resources where Jakarta, Singapore and San Francisco offices are now syncing and potentially cross share up to 2,000-plus deals this year, three-time bigger than the previous year deals being sourced.

2. What are the plans for the year ahead?

• Continuously accelerate transformation from conventional CVC to multi-stage VC funds by launching two new independent funds from external limited partners (LPs);
• Indonesia-focused seed fund;
• USA-focused growth fund;
• Closed Telkom second fund that will be focused on later-stage startups globally with $500m AUM;
• Expand our global coverage by hiring more talents in the US to cover both east and west coasts;
• Build and reorganise portfolio directorate to strengthen our portfolio management activities;

3. Could you mention some milestones achieved at your unit so far?

• Seven exits to date (two IPOs and five M&As) with more than $500m exits participated;
• Have invested in more than 40 startups across 10 countries globally which managed to fully deploy our Telkom first $100m fund;
• Co-Invested with more than 50 global top investors which includes Sequoia Capital, GV, Tiger Global, DST, NEA, Bain Capital Partners, Y Combinator, Temasek and Menlo Ventures.
• MDI Ventures as a company have booked $10m net-profit-after-tax (NPAT) in 2019, become one of the most profitable subsidiaries in Telkom Group driven by our harvesting activities in 2019;
• Gross IRR for Fund I has reached 28.3%;
• Secured two new external funds: $40m of strategic fund from Telkomsel and first close of $150m growth fund from multiple LPs. Totalling our AUM to reach $290m (with another 2 new external funds totalling $130m AUM potentials and Telkom second fund totalling $500m AUM closing in 2020).

4. Please mention some pain points and opportunities you have encountered in corporate venturing.

Pain points:

• Striking the balance to navigate corporate short term goals and CVC long term goals;
• Convincing portfolio and potential companies, that we are run as and by VC professionals, not a VC run by telco or corporate people;
• Continuously improving and innovating our talent compensation package and talent development to meet industry standards and expectations while still managed to be aligned with the parent’s standard.

Opportunities:

• Becoming the top-line growth engine for the parent through our unrealised gain that can be booked in the form of “other revenue” according to the newest IFRS;
• Driving digital and tech companies M&A activities by the parent through our portfolio companies that they have been familiar with commercial collaboration that we drive during the investment period.

5. What do you think all CVCs could do better to make it a stronger industry?

More CVCs have to act like independent VC by aligning the strategic agenda with the investment agenda (despite focusing on synergy, CVC still need to maintain objectivity on the investment opportunity, with the assumption that the company will still be doing well with or without collaboration with the parent)

Gradually less reliance to the parent company by shifting the CVC positioning that initially acts as a cost-centre unit, to be a revenue centre unit to maintain relevance within the group despite any significant changes in the parent’s management.

6. For colour, what did you do prior to CVC or in your spare time?

I was working as an investment analyst in a boutique investment firm and Kaizen Consultant at Toyota Indonesia prior to deciding to jump into the bandwagon of the VC world as the founding member of the first Silicon Valley-based VC firm that invests in SEA (Fenox VC; now Pegasus Tech Ventures).

Prior to falling in love with finance and venture investing, I was in an indie band as a guitarist that actively performed every weekend from one gig to another until realising that I sucked at it. I am still playing my guitar in my spare time but not as much as I spend with the founders.