Danamon, MUIP and MUFG, Present MUIP Garuda Fund and Digital Solution to Support Startups Amid the Tech Winter Phenomenon

Press Release / 14 October 2024

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Jakarta, 15 October 2024 — Indonesia currently has 2,647 startup companies, making it the country with the sixth-largest number of startups in the world, following the United States, India, the United Kingdom, Canada, and Australia. Startups in Indonesia have a significant potential to contribute to economic growth, with an estimated contribution of around 4.6% to Indonesia's GDP. However, the Tech Winter phenomenon has been affecting the investment landscape in the country. According to research by Traxcn, a survey and consulting platform related to startups, in Indonesia, in the first half of 2024, seed capital dropped by 42% from USD 45 million to USD 26 million, early-stage funding decreased by 24% to USD 113 million, and late-stage funding plummeted by 85% to USD 52.2 million. Additionally, Indonesia has not recorded any new unicorns in 2024, with only one startup valued above USD 1 billion.

The Tech Winter phenomenon is not only happening in Indonesia, but also the global startup ecosystem. Investors are now becoming more selective in choosing startups for investment, because they are emphasizing on profitability and sustainable cash flow. In the recent NextHub Global Summit press conference at the Ministry of Communication and Information (Kominfo), former Minister of Communication and Information Rudiantara explained that previously, investors focused on growth, but now investors are focusing on profitability, positive EBITDA, and sustainable cash flow. This shift has made it difficult for many startups to secure funding despite the high demand for capital.

To address these challenges, since January 2023, PT Bank Danamon Indonesia Tbk ("Danamon"), together with MUFG Innovation Partners Co., Ltd ("MUIP") and MUFG Bank Ltd ("MUFG"), launched the MUIP Garuda Fund. The MUIP Garuda Fund is a venture capital fund aimed at strategic investments in Indonesia. With a total fund of USD 100 million, the MUIP Garuda Fund focuses on startups at the Series A and Series B stages, with investments ranging from USD 5 million to USD 10 million. This funding aims to strengthen Indonesian startups and expand the digital collaboration ecosystem between startups, Danamon, and Adira Finance.

One of the startups that received funding from the MUIP Garuda Fund is Qoala, an insurtech company that provides easy access to insurance solutions through an integrated digital platform. Qoala secured funding from the MUIP Garuda Fund in the fourth quarter of 2023.

Jin Yoshida, Global Alliance Strategic Director of PT Bank Danamon Indonesia Tbk, explained that the MUIP Garuda Fund is a testament to Danamon's commitment backed by the support of MUFG's global capabilities, to continuously transform as an innovative financial group through partnership with various digital startups. "Through the MUIP Garuda Fund, we are enhancing our digital platform and enriching the range of financial solutions that we offer. This aligns with our objective of becoming a trusted financial partner that is always oriented toward our customers’ needs," said Yoshida.

In addition to providing funding through the MUIP Garuda Fund, Danamon also supports the digital transaction needs of startup entrepreneurs by offering various products such as QR Danamon and Direct Debit Danamon. These products provide ease in conducting secure and efficient financial transactions. QR Danamon consists of two types: QR Static and QR Dynamic. QR Static allows customers to perform transactions manually, while QR Dynamic is integrated with digital platforms and points of sale (POS) via API (application programming interface). QR Dynamic automatically displays the transaction amount, providing greater convenience for users.

The activation process for QR Danamon is also relatively quick. For QR Static, it takes only three days, while QR Dynamic takes up to three months due to the need for more complex system integration. Startup entrepreneurs can check payment status and perform real-time settlements through the API or the QR Danamon app, specifically for Android users. These transactions are processed quickly, as the settled funds will be deposited into the entrepreneur's Danamon account within one business day.

Direct Debit Danamon is an online payment solution integrated with the BI SNAP API for e-commerce and P2P transactions. Customers using Direct Debit can make payments up to a limit of IDR 1 million per user for e-commerce transactions and IDR 2 million per user for P2P transactions. Transaction security verification is conducted through 2-factor authentication using OTP, ensuring that transactions proceed safely and smoothly. Startup entrepreneurs can also use the recurring payment feature for routine payments such as installments and insurance, providing greater flexibility in managing their finances.

As a result, per August 2024, Danamon has recorded a significant increase in QR Danamon and Direct Debit Danamon transactions. In fact, QR Danamon saw significant growth, approximately by more than a thousand percent YoY, which demonstrates the successful integration of these digital products among customers. Andreas Kurniawan, Chief Digital Officer of PT Bank Danamon Indonesia Tbk, stated that these digital products answer the needs of startup entrepreneurs to grow their businesses more efficiently. "We provide integrated digital payment solutions through API, which aligns with the rapid development of technology. With QR Danamon and Direct Debit Danamon, we hope to facilitate the optimum growth of startup entrepreneurs' businesses, helping them overcome challenges, especially amid Tech Winter," said Andreas Kurniawan.

All information regarding the Garuda Fund and these digital products is presented in depth in the 6th episode of Danamon Financial Friday (DFF) 2024, the financial education platform regularly hosted by Danamon. In this episode, Danamon invites startup entrepreneurs to gain a deeper understanding of how they can secure funding through the MUIP Garuda Fund and take advantage of Danamon's digital products to accelerate their business transactions. Danamon also introduces digital products supporting startup transactions, such as QR Danamon and Direct Debit Danamon. This episode can be viewed at bdi.co.id/dff173.

For more information about the MUIP Garuda Fund, customers and the public can visit Danamon's official website at bdi.co.id/garudafund or email gco.digitalpartnership@danamon.co.id, QR Danamon to link bdi.co.id/qrdanamon, and Direct Debit Danamon to link bdi.co.id/directdebit.

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