Singapore is always considered the Silicon Valley of Southeast Asia. The country’s availability of technological talents and government support to build a healthy climate for the startup community is the key.
However, Indonesia is arguably has its own magnet to many startups in the South East Asia region. Startups are popping up along with the emergence of startup community clusters in various cities.
Four out of seven unicorns in Southeast Asia are from Indonesia: Go-Jek, Traveloka, Tokopedia, and BukaLapak. They are all combined worth at US $ 6.3 billion valuation.
Indonesia does have many factors needed for a startup to grow. Creative and innovative talents, large market bases, rocketing internet and mobile devices penetration, and steady economic growth.
Research conducted by We Are Social and Hootsuite released in early 2018, said that Indonesia has 132 million internet users and 130 million active social media users.
In a report ‘Unlocking Indonesia’s Digital Opportunity’, McKinsey & Company said that if Indonesia has fully embraced digitalization, Indonesia will be able to achieve economic growth of US$ 250 billion by 2025. Tech Startups are obviously expected to be an important factor of the economic growth.
In fact, investment on Indonesia tech startup Indonesia in 2017 reached US $ 3 billion, doubled from 2016. That number would have been growing this year along with the mushrooming of the new startups across the country.
Venture capitals and international banks has responded quickly. Goldman Sachs said that Indonesia is a next hotbed of the technology company, given the high population, the economic growth, and the massive of untapped market potential.
Google spoke the same thing earlier. Managing Director of Google Indonesia, Tony Keusgen, said that local and foreign investors are keeping an eye on Indonesia. Google sees a bright future in the growth of the digital economy in Indonesia. And Google has been stepped further by investing in Go-Jek, one of Indonesia’s unicorns.
The Bright Future of Indonesian Fintech
Minister of Communication and Information, Rudiantara, said that the high interest of VCs on Indonesia financial technology (fintech) startup, increase the possibility of soon to be born new Indonesian unicorn from this fintech area.
Rudiantara previously thought that the new unicorn came from the education sector. But, he might be wrong. Some Indonesia’s Fintech Startups has just got an injection. Kredivo and ModalKu have received fresh money for the series B rounds of US $ 30 million and US $ 25 million.
Similarly, UangTeman and Amartha have also managed to raise of US$ 20 million and US$ 10 million on their series B rounds.
From data shared by Indonesian Fintech Association (Aftech), there are approximately 64 Peer-to-Peer Lending (P2P Lending) companies registered with the Otoritas Jasa Keuangan (Indonesia’s financial services authority).
As of June 2018, the companies have distributed Rp 7 trillion (US $ 486 million) year-to-date.
Aftech itself already has 235 members. UOB estimates Fintech Indonesia’s economy will contribute approximately US$ 48 billion to the overall economy by 2022.
Fintech or not, is not the point. Chasing the target of becoming a $130-billion digital economy by 2020, Indonesian government obviously has to maximize their support to startup communities with the unburdening policy and the right strategy. Otherwise, it will be a long(er) way before the next unicorn really shows up.