Top 5 Startup Industry Highlights in 2020

DSResearch just published Startup Report 2019 supported Mandiri Bank and video. There are a number of interesting insights collected in this report, from the investment climate to the growth opportunities of new vertical businesses outside E-commerce and ride hailing.

The report also highlights the intense competition for startups online travel agents or OTA which is currently still controlled by startup unicorn Traveloka with a valuation of $4,5 billion in 2019 and Tiket.com which was annexed by Blibli.com in the same year.

Then, competition is still happening in the veteran sector E-commerce. Currently the top five positions E-commerce Indonesia is occupied by Shopee, Lazada, Tokopedia, Blibli.com, and JD.id.

To find out the next interesting presentation, check out the Editor in Chief review DailySocial Amir Karimuddin on this #TuesdayStartup session.

Gojek so "decacornand potential to merge with Grab

The 2019 Startup Report highlights the new status Gojek as "decacorn"first in Indonesia, after receiving an injection of funds F series round of the three Mitsubishi companies. With this new funding, Gojek is now valued at over $10 billion.

However, this valuation does not necessarily guarantee projected profitability Gojek forward. Especially if Gojek plans to use the majority of this funding to exponentially acquire the market through a discount or price promotion strategy.

In his hypothesis, Amir assesses Gojek haven't been able to pocket a profit even though this startup has become a service top of mind for the Indonesian people. According to him, it could be that the income earned has not been able to cover the costs incurred to acquire the market.

Though, service ride hailing in Indonesia only dominated by two players, namely Gojek and Grab. Duopoly conditions do not necessarily make these two startups profit. The most relevant example is the case of the duopoly Uber and Grab in Singapore. Even though in the end to merge also, fortunately not significant.

"At level maturity this, investors have started asking return to LP, they have to find a way to exit. If the method is through an IPO, one of the things that is being pursued is profitability. To achieve it, maybe yes, through monopoly. There is no competition, they can decide value targeted," he explained.

However, he added, it should be underlined that monopolistic action does not necessarily make customer service better. Customers are judged not to have bargaining power because there is no choice. If there is a continuation of the "story" of the duopoly situation, Amir judges the stakeholder need to look at a broader shovel, not only business but also regulation.

A fresh breeze for the 2019 startup investment climate

The next highlight is the investment climate for startups in Indonesia throughout 2019. The 2019 Startup Report notes that there are 113 transactions publicly announced for a total value of $2,95 billion. The number of transactions is much higher than in 2017 (67 transactions) and 2018 (71 transactions).

Interestingly, the number of series A funding transactions has doubled to 31 transactions compared to 2018 of 15 transactions. In terms of value contribution, Gojek "ate" more than half with injections of $ 2 billion. The remaining less than $ 1 billion divided into 112 other transactions.

"2019 provides a breath of fresh air for industry players who have started mature. That is, many VCs are starting to enter later stages because they have prepared another 'VC kid' to play in training underneath," said Amir.

If broken down from vertical business, financial became the sector that received the most funding. Then followed by service e-commerce, on-demand, and SaaS.

"Although this sector is less sexy because of B2B, but SaaS has good growth potential because there is a guarantee" revenue better than services that enter the retail market," he said.

'Natural selection' startup industry in 2020

Amir estimates that there will be a number of startups that will gain extraordinary business growth because of: COVID-19 pandemic. On the other hand, a number of startups will also face great trials due to this outbreak. What is certain is the startup in the sector online travel agents (OTA) and its derivatives.

The current situation is considered to be a 'natural selection' for any startup. To get through this crisis, leadership become something that startup leaders should have. They need to address things quickly.

"If there are startups that cannot see their financial condition in the next year, it may be difficult for them to survive. However, startups that are still productive, are able to maintain services in the current situation, and can adapt to the implementation of WFH can survive in the future. This situation is far away more difficult than other economic crises," he said.

3 sectors that will steal attention in 2020

In more detail about the predictions above, Amir estimates that there are three startup business verticals that will steal attention in 2020, namely education, health, and agriculture. The biggest trigger is the COVID-19 pandemic which will boost tremendous growth.

Take startups for example EdTech Ruangguru working with the operator Telkomsel to make the service free. This startup is harvesting traction because the government closed schools and lectures.

Then, startup agritech who try to provide solutions from upstream to downstream. One of the startups that accommodates this is TaniHub, which has subsidiaries TaniFund and TaniSupply. Sector agritech certainly attractive to the Indonesian market as an agricultural country. With a situation like this, the service request e-groceries will certainly increase.

Last is healthtech. The current situation requires the people of Indonesia to prioritize health. No wonder if the service healthtech dominated Halodoc (67,7%) and HealthReplies.com (28,5%) will get traction high.

"Not to mention talking about derivative services, like insurtech. There are many new players offering innovative products, especially regarding microinsurance," added Amir.

Test case for startups EdTech

Still related to the pandemic. Amir also gave full attention to how this situation can become a means of proving the online education service that startups have been promoting so far EdTech as Ruangguru, Zenius, and Quipper.

"Like it or not, the COVID-19 pandemic can be the answer whether the solutions implemented by the educational technology platform really meet the needs of the community, especially in the segment grassroots. In addition, the initiation of a number of startups to provide free services also encourages greater adoption," he said.

This global health crisis is also considered to be able to change the way of teaching and learning for Indonesian people in the future, where the solution is EdTech could be the answer. This is because so far Indonesia has not seen the urgency of adoption EdTech and e-learning only be a 'supplement' learning. 

"With schools [and campuses] closed, this will be test cases interesting whether they are ready to become a primary platform, not just a supplement. We will see throughout this year," he concluded.