BTPN Syariah, an Indonesian bank that is publicly traded, has formed BTPN Syariah Ventura, an investing arm. According to a filing with the Indonesian stock exchange, the corporation has invested 300 billion rupiahs (about $20.6 million) in the new entity, together with its partner BTPN.
According to the company, it is the first and only corporate venture capital firm in Indonesia to execute Shariah compliance.
Ade Fauzan, who served as an executive in many local Shariah-compliant banks and co-founded loan startup Investree in 2017, would lead BTPN Syariah Ventura. It will focus on Indonesian entrepreneurs in the series A through pre-series B stages, and it has already made its first investment by leading the pre-series B round of Dagangan, a social commerce platform, for US $6.6 million.
According to Fauzan, the VC company wants to invest in firms that target micro-entrepreneurs in Tier 3 and Tier 4 cities, which are comparable to BTPN Syariah’s target markets. “They must also be focused on financial inclusion, but not necessarily fintech,” he added.
BTPN Syariah Ventura, as a subsidiary of a Shariah-compliant bank, is required to follow Shariah principles in its activities and portfolio firms. According to Fauzan, the term sheet may look similar to those of other VCs, but there is an extra need to follow Islamic standards, such as not selling alcohol or cigarettes and not providing interest-bearing loans (riba).
BTPN Syariah was founded in 2010 as a Shariah-compliant business arm of Bank BTPN and was split off as an independent bank in 2014. It focuses on providing loans to women entrepreneurs in Indonesia’s rural communities. More than 4.1 million active borrowers have been contacted through its network of more than 10,000 agents.
Fauzan said that there is no specific target on how much return the firm has to get, or when the fund needs to be returned to the parent company. “As long as the company is still growing, then BTPN Syariah Ventura is still on the right track,” he added.
