South Korean fintech startups eye expansion into Indonesia. South Korean fintech startups are seeking to expand into Indonesia by forging partnerships with local startups through an acceleration program carried out by South Korea’s Shinhan Financial Group (SFG) in cooperation with a coworking space company, CoHive.
The acceleration program, called the Shinhan Future’s Lab Indonesia, was officially launched in Jakarta on Monday. It is the second global acceleration program opened by SFG outside of South Korea after Vietnam’s Lab, which was opened in 2016.
Shinhan Bank president Jin Ok-dong said that the launch was part of the bank’s commitment to actively support Indonesian and South Korean startups to expand their businesses overseas.
“Shinhan has been operating in Indonesia since 2016 and we highly value the Indonesian market potential for Korean startups,” said Jin. He also said that Shinhan Future’s Lab Indonesia also supports the goal of the Indonesian government to be the startup hub of Southeast Asia.
SFG digital strategy head Cho Young-suh said Monday that the Indonesia Lab would consist of two batches per year, during which four to five Indonesian startups will be joining the program in each of the batch.
“We started to recruit Indonesian startups in the first quarter of this year. So, we will have some eight to 10 startups by the end of the year,” Cho said.
Meanwhile, the Vietnam Lab started in 2016 and has one cohort every year, from which 11 Vietnamese startups have been developed in the last three years.
“We also sent eight South Korean startups [to Vietnam] and connected them with business partners in Vietnam,” he said.
Meanwhile in Indonesia, about four South Korean startups are to join the first cohort, including peer-to-peer lender Peoplefund and robo-advisor fintech company SBCN. They are to open their offices at CoHive, the largest coworking space company in Indonesia, which would also act as the headquarters of the Lab and is designed to be the hub for innovative ideas, business insights, capacity development and investor networks.
“We will help them to connect with potential business partners in Indonesia,” Cho said, adding that the Indonesia Lab is expected to have eight to 10 South Korean startups by the end of the year.
During the first phase, the Indonesian startups would get funding from the SFG business entities in Indonesia. However, Cho said that there would be also other partners from venture capitalists and investors, namely Plug and Play, East Ventures, Convergence Ventures and Mandiri Capital.
“The cooperation between them would be in the form of portfolio exchange and knowledge sharing,” Cho told reporters.
The Indonesian partners would be able to invest in South Korean companies within the Indonesia Lab and vice versa. Cho acknowledged that such collaboration is needed to accelerate the growth of the startup industry in the two countries as each have their own strengths.
“Indonesian fintech companies have a solid business model, while South Korean companies have good technology,” he said.
Since its initial launch in South Korea in 2015, Shinhan Future’s Lab has accelerated a total of 122 companies and provided innovative services to financial consumers through various partnerships with startup companies. It commits to invest about US$25 million directly in startups over five years through this launch and to actively discover and support innovative startups.
This program matches the target of the Indonesian government to achieve 20 to 30 percent growth in the number of startups, as supported by the high demand for digital solutions in business, industry, government and other sectors.
Meanwhile, Ethan Choi, the co-founder and chief of creative officer of CoHive, explained that the collaboration would benefit both countries.
“The most ideal vision would be for Indonesian and Korean startups to work together in innovative eays to expand into the global market. However, finding the right partner to do that is not easy. That is why we are providing the way for them to connect, build trust and friendship, to eventually work together,” said Ethan.
Regarding the initiative, Indonesia Fintech Association’s executive director for digital ID, Ajisatria Suleiman, told The Jakarta Post on Wednesday that such an initiative should be supported as it provided not only knowledge exchange, but also talent and technology exchange.