MDI Ventures sees back-to-back exits from Whispir and Red Dot Payment
Whispir’s IPO on the ASX and Red Dot Payment’s acquisition by the Naspers-owned global fintech firm PayU bring validation and capital gains to Indonesia’s corporate venture capital space.
Earlier today, MDI Ventures announced that it has cultivated two successful exits from its portfolio companies Whispir and Red Dot Payment (RDP). In the venture capital space, the term ‘exit’ is used to describe a point at which an investor sells their stake in a firm to realize gains or losses. According to MDI Ventures, the two back-to-back exit scenarios represent healthy capital gains for the fund, and bring the firm’s track record to four success stories since its first investment in 2016.
Melbourne-based Whispir (ASX: WSP) is a cloud-based communications platform that brings channels like email, text messaging, and web chatting together in one easily accessible space. Whispir commenced trading on the Australian Securities Exchange (ASX) on 19 June 2019, following an oversubscribed IPO that raised A$47 million via the issue of 29.4 million shares at A$1.60 each. The IPO comprised a primary raise of A$27 million and a secondary sell down by existing shareholders of A$20 million. At the IPO listing price, Whispir had a market capitalization of A$163 million.
Singapore-based RDP is a fintech firm best-known its product RDP Connect, which focuses primarily on the hospitality industry. With RDP’s proprietary tools, hotel chains can introduce their own booking sites without the need of other booking engines or aggregators. Naspers’ global fintech company PayU announced it had acquired a majority stake in RDP on 05 July 2019 as part of its expansion into Southeast Asia. While the details remain undisclosed, PayU has confirmed it values RDP at US$65 million.
“These two exit scenarios represent more than just good wins or capital gains for us,” explains MDI Ventures’ VP of Investments Joshua Agusta. “What this really tells us is that our investment thesis is working, and that Indonesian corporate funds can succeed not just on their home turf, but also throughout the region. While most corporate funds in general cannot boast amazing track records, we have already provided liquidity to limited partners and shareholders.”
Agusta said that MDI Ventures took both a qualitative and quantitative approach when investing in Whispir and RDP.
“On the quantitative side, strong traction and growth in their key operational metrics were important to us. Whispir has recorded a more than 100 percent net negative monthly recurring revenue churn since 2013. For any SaaS company, this is a very impressive stats to have. For RDP, since back in 2016, the company has been growing its revenue at a double-digit rate month-on-month, with a healthy gross margin compared to other payments companies,” said Agusta.
He added, “In terms of quality, both companies had strong founding team members, which was a real attractive thing for us. RDP consisted of ex-banking industry veterans who mostly worked for Visa. This showed us a deep level of domain expertise, which is important for a highly-regulated industry like payments. Whispir’s founding team members were also solid and persistent. This was shown by the company’s ability to land multiple sales contracts from Fortune 500 companies and partner with world-class names in enterprise communications. These included prominent companies like IBM and Twilio.”
MDI Ventures has clocked four exits in the span of three years. The firm’s exits from both Whispir and RDP serve as validation for the corporate venture capital (CVC) model in Asia Pacific.
Recent data shows that 2018 saw a surge in CVC activity worldwide. The second quarter alone clocked a record 757 CVC deals and US$14.1 billion in funding. For the whole year, there were 2,740 deals on record, while roughly US$53 billion was disclosed in CVC funding for tech startups. This is a staggering increase from US$36.1 billion the year before.
Asia attracted 38% of all CVC deals in 2018, up from 31% in 2017. In the third quarter, Asia overtook North American deal share for the first time. CVC accounted for 38% of all disclosed funding for tech startups in Asia.
See: How we help foreign investors enter Indonesia’s tech space
MDI Ventures is a corporate venture capital initiative backed by Telkom Indonesia, with headquarters in Jakarta and operations in Singapore and Silicon Valley. It is an independent entity aiming to bridge the gap between large corporates, smart global investors, and innovative startups in Asia Pacific.
