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Indonesia, one of the largest economies in Southeast Asia, has experienced rapid growth in its start-up ecosystem over the past two decades. Thanks to government support and special funding for technology start-ups, Indonesia has accelerated its progress in the digital economy. Despite the emergence of the coronavirus pandemic, the Indonesian start-up ecosystem attracted one of the largest volumes of venture capital in the first quarter of 2020, just after Singapore.
According to the Indonesian Business and Start-ups Association, total financing for start-ups in Indonesia amounted to USD 1.9 billion in the third quarter through 52 rounds of financing. EdTech, Fintech and SaaS have dominated these financing rounds.
The COVID-19 pandemic has added a new and innovative chapter to Indonesia’sstarting ecosystem.
Earlier this year, the emergence of the coronavirus pandemic marked a major change in community culture in Indonesia. When people were forced to stay at home, Warung Pintar, who complies with the COVID-19 standard, started visiting regular customers at home to deliver the ordered goods by SMS. The company also uses IoT and other digital technologies to unlock the economic potential of the country’s traditional street vendors.
The pandemic has forced the Indonesians to change their attitude towards technology and convince consumers and retailers to switch to e-commerce and overcome the crisis. Similar trends were observed on the fintech platform.
The Indonesian Association for Venture Capital and Start-ups has stressed the role of start-ups in helping the Indonesian economy cope with the consequences of the COWID-19 pandemic. For example, agro-technical start-ups have helped finance farmers, while digital identity providers have facilitated the restructuring of loans by banking institutions.
Indonesian Start-up Ecosystem – Key Financing Agreements in 2020
Kopi Kenangan, an F&B chain, raised $109 million, followed by Cargo, a logistics technology start-up, which raised $31 million.
Gojek, which specializes in the construction of vehicles, raised $1.2 million in March 2020. The company has developed a one-stop-shop application for food orders, digital payments, commuting, shopping, hyper-local delivery and many other services.
In June, Shipper, a young logistics company from Jakarta, announced that it had raised an unknown amount in a financing round led by the South African company Prosus Ventures. Existing investors such as Y Combinator, Floodgate, Lighspeed, AC Ventures and Insignia Ventures were also involved. According to media reports, the company has raised about 20 million dollars. However, the company did not confirm the amount.
Desty’s digital platform, which serves as a one-stop-shop for influencers, sellers and makers to sell and promote their products, also received an unknown amount in a seed financing round led by East Ventures, a start-up venture capital firm.
In February 2020, the Indonesian start-up EdTech Zenius Education raised $20 million. The round table was led by Northstar Group, with Beenext and Kinseys Group as participating investors.
Overall, despite the pandemic, Indonesia’s primary ecosystem functioned well.
Following the global trend EdTech shines during pandemic.
Due to the closure of educational establishments following the coronavirus outbreak, the information and communication technology sector has been very active throughout the country. The pandemic has accelerated the introduction of e-learning methods. Online platforms such as HarukaEdu, Ruangguru and Cakap grew during the year.
Many EdTech start-ups have shown their support for the e-learning policy. Zenius, an online education platform, has made some of its content available free of charge. The start-up has launched a program called Zenius Untuk Guru that helps teachers, especially those living in villages or small towns, to develop their skills in using new technological tools.
HarukaEdu helps universities organize online courses by offering customized learning management systems and online courses. The company also provides a helpdesk and IT support to facilitate the e-learning of students.
Tourist starters are exposed to the maximum of the pandemic
Young Indonesian tourism companies have seen the impact of the COWID-19 epidemic on their activities. This crisis was overcome by Traveloka, one of the largest online start-ups in Southeast Asia. With sales dropping to almost zero due to flight cancellations and holiday planning, the pandemic hit businesses hard, the company said.
But now that the restrictions have been lifted, the company is on its way to break even. In July 2020, the company managed to raise $250 million to support its operations during the crisis.
Indonesia intends to maintain its position as one of the most important starting locations in the ASEAN region
Special support from the Indonesian government and the introduction of regulations for start-ups with innovative business models and a penchant for further digitisation and automation could give a boost to the Indonesian start-up ecosystem. This will help Indonesia to maintain its leading position in the ASEAN region for start-ups.
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