Venture Capitalists Encourage Startups to Change Business “Playbook”
Focus on product development and business fundamentals in the face of economic turmoil
Venture capitalists (venture capitalist) in Indonesia constantly stressing startups to stay resilient in the midst of various world economic turmoil this year. Moreover, throughout this year, we have seen a number of startups implement efficiency, some have closed their services and some have laid off many of their employees.
The economic turmoil that occurred is known to be one of the anticipatory steps global economy to face a recession with inflation and rising interest rates. In fact, the new turmoil increased after the Indonesian government announced an increase in fuel prices.
Actually, the CEO of BNI Ventures Eddie Danusaputro judging the sentiment that occurs doesn't always mean it's bad, whether it's a trend bullish, bearish, or market corrections. "It's a market adjusting itself. Moreover, [startup] valuations have been expensive in recent years," he said at the Nexticorn International Summit 2022 session some time ago.
Nevertheless, founder startup too not too overlook overlook pada cash management which can trigger startups to neglect the use of their capital. Startups need to refrain from doing shopping spree, burn money for promo activities, or add multiple teams.
"We see startups starting to make efficiency, it can be in the form of reducing costs marketing or human resources. Startups have to change playbook in the current situation. try to fall in love with the products they develop," said Eddie.
In line with the above, Alpha JWC Ventures Co-founder and Managing Partner Jeffrey Joe argues that the situation 'tech winter' can be momentum founder to reflect and refocus on product development. Para founder also need to change the way they build their business.
According to him, the big challenges will actually be experienced by startups in the series A, B, and C stages, not at the startup stage early stage. Reflecting on his experience, Jeffrey assessed that not all startups were able to demonstrate profitability at this stage. Startups need to refocus on the fundamentals and don't need to be trapped in the pressure of having to hurry up profit as long as the business is solid.
"Last year, we thought the market was very bullish, many founder could funding, the team increases. Suddenly this year bearish very extreme. Where's the money, where's the profit? Therefore, startups that receive funding must take it slow. They have to change, one of them achieve product-market-fit to five years to be able achieve profitability. We'll see a lot of potential growth in the next 3-5 years," he explained.
On the same occasion, DailySocial.id also had time to talk with a number of startups unicorn responding to IPO issues and expansion plans. Most claimed to have completed 2022 with a focus on product development and regional expansion.
Kopi Kenangan, for example, will open first regional outlet in Malaysia in the fourth quarter of 2022. Kopi Kenangan co-founder and CEO Edward Tirtanata revealed that this is part of an expansion plan to Southeast Asia that will be carried out in stages.
He admitted that he had finalized the expansion plan for a long time by taking into account the potential increase in raw material prices. However, this situation was overcome by integrating from the side upstream. As of 2021, Kopi Kenangan has sold 40 million cups. Now, total ohas reached 672 outlets in 45 cities in Indonesia.
Likewise Xendit's Co-founder and COO Tessa Wijaya who claims to focus on regional expansion instead of thinking about plans to go public on the stock exchange as GoTo and Bukalapak have done. For your information, Xendit has started its regional expansion since 2020.
"Currently, we are only present in the two southeast and our dream is to dominate Southeast Asia. Maybe next, we will look to Malaysia, Thailand and Vietnam for this [expansion] because there is a demand from customers. global company growing. They want a product not only in Indonesia, but in Southeast Asia," he explained.
As for, J&T Express is currently expanding into China and Latin America. According to J&T CEO Robin Lo, J&T's market has grown enormously in Indonesia, but has not yet penetrated into Southeast Asia. As of 2021, J&T has held the title decacorn with a valuation of $20 billion.
"Many foreign companies enter Indonesia with super-giant investments. If we don't try other countries, when we are attacked by the outside, we will be difficult survive because only have market in Indonesia. Once we survive in Southeast Asia and China, [we] will be easy survive anywhere." He concluded.