MDI, Finch launch $40m ASEAN fund

Known as Arise, the fund is intended to fill ASEAN’s pre-Series A funding gap, with check sizes expected to fall in the $250,000 to $3 million range. Portfolio companies will also receive practical support in areas such as establishing product-market fit and effective go-to-market strategies.

Telkom sees Arise as the missing piece in its own investment offering, sitting in between the company’s Indigo Nation incubator and MDI’s Centauri Fund, a $150 million vehicle established last year with Korea’s KB Investment. More recently, MDI closed its second later-stage fund with $500 million in commitments.

“Start-ups backed by Arise should ideally go on to receive investment from Centauri Fund at the Series A stage, MDI Ventures at Series B and later stages, and finally see a meaningful exit via acquisition with Telkom Group as one of the potential buyers or IPO,” said Aldi Adrian Hartanto, a partner at Arise, in a statement.

MDI and Finch noted that early-stage funding has stagnated in Southeast Asia in recent years as successful seed investors have gone on to raise larger funds. They cited unspecified reports that pre-Series A funding has dropped 20% year-on-year in 2020 to date, having reached a plateau in recent years. This is regarded as a trend rather than an isolated incident.

“The unicorns continue to raise money, but the amounts raised pale in comparison to pre-pandemic rounds,” Hartanto added. “Further, a disproportionate allocation of capital makes it even more challenging for promising early-stage companies to secure investments during the region’s economic slowdown. Many of these seed startups already show great early traction, but they have yet to really get their names out there and require further support in accelerating their product-market fit in order to raise proper Series A rounds.”

Finch will contribute its own experience investing in Europe and ASEAN to the joint venture. The firm manages more than $200 million across two funds and has invested in around 30 start-ups, achieving four exits. Within ASEAN, it focuses on Indonesia, Vietnam, Singapore, and Malaysia, participating in Series A rounds for fintech companies.

“COVID-19 may lead to a technological renaissance that will accelerate the adoption of more digital solutions,” said Hans De Back, a managing partner at Finch. “Indonesia is already ASEAN’s largest economy, but it is now also poised to become the region's largest tech hub by 2025. We expect to see the birth of many tech companies riding a new ‘digital wave.’ Arise is ready to support these companies.”

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• Topics
• Southeast Asia
• Fundraising
• Venture
• Early-stage
• Indonesia
• MDI Ventures
• Finch Capital
• TMT