Indonesia, the world’s largest island country and Southeast Asia’s biggest economy, is witnessing a startup revolution. With its bustling cities, youthful demographics, and a rapidly expanding digital economy, Indonesia is carving out a position as a powerhouse in the global startup scene. In this in-depth piece, we explore the intriguing dynamics of Indonesia’s startup ecosystem, its promising advantages, and the potential hurdles entrepreneurs face.
Indonesia’s Startup Ecosystem: An Overview
Indonesia is home to more than 2,300 startups, an increase from just under 1,000 in 2015, according to the Association of Indonesian Startup Digital (ASPIDI). Jakarta, Indonesia’s capital, hosted approximately 68% of these startups, with Bandung and Surabaya following with 9% and 6% respectively, as per data from Tracxn.
The sectoral spread of these startups revealed a strong emphasis on e-commerce and fintech. E-commerce startups made up 31% of the total startups in Indonesia, while fintech represented 17%, as per the Startup Ranking report.
When it comes to investment, Indonesia’s startups attracted an impressive $5.6 billion in 2020, marking an increase of over 11% compared to 2019, according to a report by PWC. In the first half of 2021 alone, investment in Indonesian startups reached $3 billion.
Indonesia’s startup sector is remarkably diverse, with ventures spanning a wide array of industries such as e-commerce, fintech, edtech, healthtech, and foodtech. Of these, e-commerce and fintech have experienced the most significant growth, bolstered by increasing internet penetration and a burgeoning middle class.
Key Players in the Indonesian Startup Ecosystem
There are several prominent Indonesian startups that have achieved considerable success, both domestically and regionally. Gojek, a multi-service platform and digital payment technology group, is one of the country’s best-known startups, boasting a valuation of $10 billion in 2020. Another standout is Tokopedia, one of Indonesia’s largest e-commerce platforms, which merged with Gojek to form GoTo Group in 2021, creating a powerhouse in the Indonesian digital economy.
On the support front, the role of organizations like the Association of Indonesian Startup Digital (ASPIDI), which focuses on facilitating collaborations, and the Indonesian Fintech Association (Aftech), which supports and advocates for the country’s burgeoning fintech sector, cannot be understated.
List of unicorn startups in Indonesia:
- Ajaib is an investment platform that allows users to buy and sell stocks, ETFs, and mutual funds. It was founded in 2019 and has raised over $100 million in funding.
- Akulaku is a fintech company that provides loans, credit cards, and other financial services. It was founded in 2014 and has raised over $1 billion in funding.
- Bukalapak is an e-commerce platform that allows users to buy and sell a variety of products. It was founded in 2010 and has raised over $2.5 billion in funding.
- GoTo is a super app that provides a variety of services, including ride-hailing, food delivery, and e-commerce. It was formed in 2021 by the merger of Gojek and Tokopedia.
- J&T Express is a logistics company that provides delivery services across Indonesia. It was founded in 2015 and has raised over $2 billion in funding.
- Kopi Kenangan is a coffee chain that offers a variety of coffee drinks and food. It was founded in 2017 and has raised over $200 million in funding.
- Ovo is a digital wallet that allows users to make payments and transfer money. It was founded in 2016 and has raised over $1 billion in funding.
- Traveloka is an online travel agency that allows users to book flights, hotels, and other travel arrangements. It was founded in 2012 and has raised over $5 billion in funding.
- Xendit is a fintech company that provides payment processing services. It was founded in 2015 and has raised over $500 million in funding.
These startups are all valued at over $1 billion, making them some of the most successful companies in Indonesia. They are playing a major role in the country’s economic development and are helping to create jobs and opportunities for Indonesians.
Here are some interesting statistics about startups and the startup ecosystem in Indonesia:
- The average age of a startup founder in Indonesia is 30.
- The most popular sectors for startups in Indonesia are technology, education, and healthcare.
- The Indonesian government has invested over $1 billion in startup programs since 2016.
- There are over 100 startup incubators and accelerators in Indonesia.
- The Indonesian startup ecosystem has attracted over $10 billion in investment from foreign investors.
Government Initiatives and Support
The Indonesian government has taken several proactive steps to bolster the country’s startup ecosystem. This includes the creation of “1000 Startups,” an ambitious initiative launched in 2016 aiming to nurture a thousand startups by 2020. Furthermore, the government has introduced regulatory reforms to make it easier for startups to incorporate and operate.
The government has also established Bekraf (the Creative Economy Agency), a body dedicated to fostering growth in creative sectors, which include many of Indonesia’s digital and tech startups.
Top Co-Working Spaces in Indonesia:
- WeWork Jakarta SCBD – Jakarta, Central Jakarta. A large, modern coworking space with a variety of amenities and services.
- GoWork Pacific Place – Jakarta, SCBD. A stylish coworking space with a great location.
- Outpost Canggu – Canggu, Bali. A relaxed coworking space with a beachy vibe.
- Dojo Bali – Canggu, Bali. A modern coworking space with a focus on wellness.
- Hubud Ubud – Ubud, Bali. A coliving and coworking space with a focus on community.
- Livit Hub Bali – Sanur, Bali. A stylish coworking space with a great location.
- Koléga Coworking Space – Jakarta, Tebet. A coworking space for startups and entrepreneurs.
- EduPlex Coworking Space – Bandung. A coworking space for students and professionals.
- Ruangreka Coworking Space – Bandung. A coworking space with a focus on design and creativity.
- DILo – Surabaya – Surabaya. A coworking space with a focus on community and collaboration.
- C2O Library & Collabtive – Jakarta. A coworking space with a library and a focus on learning.
- 3/4 Coworking Space – Semarang. A coworking space with a focus on community and collaboration.
- CEO SUITE Sahid Sudirman Center Jakarta – Jakarta, Sudirman. A high-end coworking space with a great location.
- Cekindo Business Center Bali – Canggu, Bali. A coworking space with a great location and a variety of amenities.
- Genius Cafe Sanur – Sanur, Bali. A coworking space with a cafe and a focus on community.
- The Hive Coworking Space Jakarta – Jakarta, SCBD. A large, modern coworking space with a variety of amenities and services.
- Kampung Coworking Space – Jakarta, Kemang. A coworking space with a focus on community and collaboration.
- CoHive Senopati – Jakarta, Senopati. A stylish coworking space with a great location.
- BiliQ Coworking Space – Jakarta, Kuningan. A coworking space with a focus on technology and innovation.
- BeLuna Ubud – Ubud, Bali. A coliving and coworking space with a focus on wellness and sustainability.
Advantages of Starting a Startup in Indonesia
- Vast Market: With a population of over 270 million, Indonesia is the fourth most populous country in the world, offering a sizable domestic market for startups. Median age is 27.
- Growing Middle Class: The expanding middle class in Indonesia is driving consumption and creating opportunities for startups, particularly in the e-commerce and fintech sectors.
- Increasing Internet Penetration: With around 200 million internet users, Indonesia has one of the highest rates of internet penetration in Southeast Asia, providing a large user base for digital startups.
- Government Support: The Indonesian government’s commitment to startups, demonstrated by initiatives such as the “1000 Startups” program and the establishment of Bekraf, creates a supportive environment.
Challenges in the Indonesian Startup Ecosystem
While there are numerous advantages, launching a startup in Indonesia also presents a set of unique challenges:
- Regulatory Complexity: The World Bank’s Doing Business 2020 report ranked Indonesia 73rd out of 190 economies in terms of ease of doing business. Indonesia’s regulatory environment can be complex and somewhat unpredictable, posing potential difficulties for startups.
- Infrastructure Bottlenecks: Despite improvements, Indonesia still grapples with infrastructure challenges, particularly in areas outside of major cities.
- Access to Funding: While funding for Indonesian startups is on the rise, access to early-stage funding remains a challenge.
- Talent Shortage: Indonesia faces a shortage of local talent in critical areas such as advanced tech skills, which could limit the growth of tech startups.
Indonesia’s startup ecosystem is teeming with potential, bolstered by a large domestic market, increasing digital connectivity, and supportive government policies. However, entrepreneurs must be prepared to navigate the challenges that come with the territory, including regulatory complexities and infrastructure bottlenecks.