Joshua Agusta on the future transformation of Indonesian fintech

Written by Sara Mandagie Published on     5 mins read

Agusta is the director of Venture Funds at Mandiri Capital Indonesia, a corporate VC  from one of the largest banks in the country.

Joshua Agusta talks about his career journey as a venture capitalist since 2012, when venture capital (VC) was still new in Indonesia. He served as vice president of investments at MDI Ventures of Telkom Indonesia, where he managed to achieve a track record of seven exits (two IPOs and five M&A) in four years. Agusta currently serves as the director of Venture Funds at Mandiri Capital Indonesia – a corporate VC  from one of the largest banks in Indonesia, which focuses on financial verticals.

This interview has been edited for brevity and clarity

KrASIA (Kr): How did your professional journey lead you to the venture capital industry? 

Joshua Agusta (JA): My journey started in 2012, almost nine years ago. I didn’t even know what venture capital or startups were. I just knew that companies like Facebook and Airbnb were out there, and they were changing the world. Back then, I was working in one of the largest fast-moving consumer goods (FMCG) companies in Indonesia. I hated my job, and I shifted tracks by becoming a venture capitalist after talking to Nicko Widjaja, who currently serves as the CEO of BRI Ventures.

My first venture capital company was called Systec group, one of the first venture capital companies in Indonesia. We didn’t have much information then, and we had never made any venture investments before. Everyone in the company and industry were newbies. Networks were limited, so you only knew what you knew. We made some bad decisions and investments, losing around USD 5 million. We learned from that experience.

Telkom came in after, asking Nicko to manage USD 100 million for them so that they could build a corporate VC. We warned Telkom of all the risks, that VC is not a profit-making business, at least not immediately. Telkom liked that honesty, and MDI was born.

We managed the initial USD 100 billion and the Indigo incubator, which is one of the largest and oldest accelerator programs in the country. We made several investments globally. When I left in 2019, there were almost 40 companies in 11 countries.

Kr: What is your view of Indonesia’s fintech industry, and where it stands in the Asian region? 

JA: The trend now is embedded finance. If you break down our portfolio until today, it’s either on payments, lending, or small and medium-sized enterprises (SME) empowerment. It’s purely fintech. However, what we believe is that for Southeast Asia, and Indonesia specifically, financial services and technology are going to be everywhere, not just in fintech companies.

Other startups, not just fintech players, are providing financial services. It has become a global trend. Apple is a tech company, but now they also issue credit cards. Financial support services are one of the main contributors to their revenue, second or third, right after their phones. Shopify is doing the same thing. They host websites for e-commerce, but right now, more than half of their revenue comes from distributing lending to their merchants on Shopify. They’re essentially a fintech company. Gojek is a ride-hailing company that can’t be separated from GoPay. Even though many companies did not start as fintech companies, they now are. This is the trend for financial services.

The early faces of Mandiri Capital Indonesia (MCI). Courtesy of MCI

Kr: What’s your take on Indonesia’s financial inclusion and serving the underbanked? Are there any challenges slowing down the progress?

JA: Financial inclusion is the access to financial services. A basic one is a bank. Access is expanding rapidly thanks to the distribution of mobile wallets, but there are still many areas that are highly untapped. Big players are expanding into remote areas, so eventually, everyone will use an e-wallet. Financial inclusion should lead to the increase of one’s well-being and wealth. Any startups that are working on financial inclusion should focus on that instead of just using their product or platform. There’s still a lot of homework left to do.

Kr: What are some products or services that fintech startups should develop to step up in the industry in Indonesia?

JA: Some are already doing exceptionally interesting things. There’s open banking, which is new. Others are becoming a hub or cloud for banking. Right now, there are two main revenue streams in banking. One is interest income, which comes from lending. The other is a non-interest income, or fee-base, that comes from the company payroll service and the likes. Some financial services technology are doing core banking products but on the cloud, aggregating with all the banks. If you are a company with a lot of employees with multiple bank accounts, it would be useful to use this service of aggregating all the banks rather than being attached to one bank. It’s more efficient in the long run.

Kr: What’s the most difficult decision you’ve made in your time leading a company? As a leader, how do you want to grow? 

JA: Decisions are difficult, but the repercussions of some decisions are sometimes even more difficult. In a company like Mandiri Capital, there is still bureaucracy. There are still challenges to convince other people, that are making decisions, to believe in what we do. This was especially true in the earlier days. As young players, we need patience. It’s difficult for people to believe in us. These processes are the most difficult in running this corporate VC. It’s not really about the decision-making process, but more about stakeholder management.

Personally, I want to have more in-depth knowledge about the operations of a company so that I can grow it. I would be able to make sharper investment decisions too. I also want to work on my inner peace. People would know me as someone with a short temper, and I’ve been working on that a lot. Impatience and a heightened emotional persona aren’t good. I am currently learning about zen, and trying to work on it.

Kr: What are your three recommendations for startup founders, especially in fintech?

JA: One, prepare for the worst. Think about both growth and stability. How can your business still be relevant in the next five to ten years?

Two, always find opportunities in your circumstances, good or bad, and use the momentum.

Three, build your company responsibly. Think of how your company can affect not just your direct stakeholders, but also the externalities.


Sara Mandagie


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