Startup Genome Report: Jakarta Ranks Second in the “Emerging Startup Ecosystem”

Jakarta ranks second out of 100 cities worldwide on the list “emerging startup ecosystem” according to the annual report Global Startup Ecosystem Report (GSER) published by Startup Genome.

The top rank is occupied by Mumbai. After Jakarta, there are Zurich, Helsinki, and Guangzhou. Jakarta ranks highest compared to other neighboring countries in Southeast Asia, such as Kuala Lumpur (11), Manila (31-40), Bangkok (51-60), and Ho Chi Minh City (71-80).

Startup Genome is releasing this list of cities' ecosystems for the first time as part of the GSER report in order to highlight metropolitan areas that are gaining relevance and impacting the economy in meaningful ways.

In each of its reports, Startup Genome generally displays the position of cities that are included in the global startup ecosystem list. The names of the cities that are included in the top positions are relatively the same. For example, Silicon Valley, New York, London, Beijing, and Boston are in the top five respectively.

Startup Genome has nearly doubled the number of ecosystems studied since 2019, grading more than 270 ecosystems in more than 100 countries to rank in the top 30 globally and runner up.

In compiling the rankings, Startup Genome uses a methodology that focuses on factors that are more relevant to the region that is beginning to achieve high levels of investment and innovation.

Overall, this report combines a number of data sources to rank the ecosystem, including data from Crunchbase, Orb Intelligence, PitchBook, Dealroom, and local partners from each region.

They also mix internal data taken from interviews with more than 100 experts, plus two-year data from a survey that takes more than 10 thousand respondents each year.

Startup Genome combines data to generate four key scores that rank each city's performance, funding, market reach and talent on a scale of one to 10.

Mumbai, which came in first in this order, scored 10 on each of these factors. Meanwhile in Jakarta, only talent scored 9 compared to other metric scores which scored 10.

Along with the emerging ecosystem rankings, Startup Genome also divides the rankings of each city based on the total value of the ecosystem and early stage funding. Jakarta is in the top position with an ecosystem value of $26,3 billion, followed by Guangzhou ($19,2 billion) and Kuala Lumpur ($15,3 billion).

Even for early-stage funding metrics, Jakarta tops the list with around $845,9 million invested in early-stage startups based on estimates from 2017-2018. The second position is occupied by Barcelona with an investment value of $ 472,7 million.

The Startup Genome report only looks at the ecosystem of each city that is the capital city of a country. When referring to other reports, such as StartupBlink said Indonesia's ranking had fallen to 54th from the previous year's 41st.

Jakarta is ranked 41st out of all cities in the world whose ranking has also fallen by two places. It is natural that Jakarta is still the leading city in supporting the startup ecosystem, other cities are still catching up because they need supporting factors.

Other reports compiled by East Ventures – Digital Competitiveness Index can be another reference to encourage the digital economy ecosystem of each region in Indonesia to be more competitive. It also mentions that Jakarta is the province with the highest index (79,7), while Papua ranks last (17,7).

Ecosystem support

As the ecosystem of the city develops, all early-stage companies compete with each other globally. So, it takes an important role from the supporting ecosystem to smooth out future plans.

All of this information can be copied from global ecosystem leaders so that each ecosystem can reinforce where their strengths lie. Startup Genome recommends five things.

Starting from founder technology for first movers and early adopters globally or regionally. The closest examples are Silicon Valley, Boston, and Seattle. Second, global business hubs that drive business and global financial centers, for example, are London, New York, and Singapore.

Third, R&D talent centers for technology production, examples are Tel Aviv and Stockholm. Fourth, large protected markets, such as Beijing, Shanghai, and Jakarta. Lastly, cosmopolitan creative places that promote openness and quality of life, such as in Berlin and Melbourne.

More recommendations

The Startup Genome report can be directed to all stakeholders in the startup ecosystem, both from the startup itself, investors, and the government as policy makers. The global pandemic has certainly hit the economy, which has spread to various business lines, including startups.

Global technology companies with the availability of lots of funds, can be successful in pivoting during a pandemic, on the other hand, many other startups are struggling. Global funding is said to have fallen by 20% since December 2019.

From the survey results, in the middle of this year more than 40% of global startups are in a “red zone” when it comes to the availability of fresh funds. That is, they have only a few months to survive or a short runway.

If they don't manage to turn things around, they are forced to close. Likewise for startups that have received a minimum funding of Series A or above, a third only have a runway of up to six months. The conditions for fundraising have become much more challenging.

Therefore, Startup Genome recommends the presence of the government to inject these startups in order to operate. In fact, startups are believed to be able to help the process of economic recovery, to have a large role in doubling the economic value of each industry, and to be able to lead the post-crisis economy to remain competitive.

“Without startups, technology, finance, healthcare and other industries will remain stagnant. Who wants to live in a world where the banking system is dominated by a few players, leaving businesses and consumers with no alternative to managing their money,” the report said.

"When startups develop and become important players in their industry, they will bring more value and dignity to the ecosystem of the cities in which they operate," he continued.

The recommendation that the government can take, according to Startup Genome, is to design effective funding. This pattern has already been implemented in the UK which created the Coronavirus Future Fund. This funding specifically targets startups that are still pre-revenue and pre-profit that rely on shares and debt securities from the government with a need range of $150 thousand to $6 million.

Or protect talented talents, for example, the United Arab Emirates government has extended visas for foreign residents who reside at no additional cost.