Analysis: Indonesia’s Innovative Startups Are the Catalyst for Increasing Investment
In recent years, the explosive growth of Indonesia’s startup scene has grabbed global headlines. Its capital city, Jakarta, ranks third on Startup Genome’s 2021 “Emerging Ecosystems” with a combined startup valuation of USD 34 billion. Much of the spotlight has shined on the country’s success in producing homegrown unicorns, which totaled eight as of 2021. Household names such as GoTo (Gojek and Tokopedia) and Bukalapak were joined by new entrants in 2021, including online stock trading platform Ajaib and e-commerce platform JD.id.
Despite economic uncertainty attributed to the COVID-19 pandemic and global trade tensions, the long-term trends of sustained GDP growth and rapid internet penetration have encouraged investors’ trust in the potential of Indonesia’s tech-centric startups. According to Tracxn, capital investment in Indonesian tech companies in 2020 and 2021 stood at a historic high of USD 3.4 billion over the two years.
Underpinning these statistics are unique innovation trends developing in the Indonesian startup scene. For one, the next wave of fast-growing startups is deviating from the traditional consumer grounds of the Greater Jakarta area. Capitalizing on the potential of tier-2 and tier-3 cities, startups and investors are transforming their businesses as well as their go-to-market and funding strategies to thrive in a heavily fragmented landscape. Recent developments point to the emergence of a mature startup ecosystem in Indonesia, one which is self-sustaining and generates considerable momentum for entrepreneurship.
Photo courtesy of pisauikan.