1. Startups

Challenges and Opportunities for "Green Startup" Growth in Indonesia

Similar to the global trend, the environmental startup segment in Indonesia is still dominated by the electric vehicle business

One of the reasons for the slow growth and penetration of services green startups is the undeveloped existing ecosystem. However, according to Co-founder & CEO Ecoxyztem Jonathan Davy, although there are still a small number of local startup activists who try to provide solutions around renewable energy, energy efficiency, to waste management, it is estimated that in the next few years the number will increase.

Build an ecosystem

There are some interesting notes shared by Jonathan, based on his experience going directly to the environmental sector. Starting from the background of startup founders who must really understand the existing solutions and problems, to the potential to work on a more profitable B2B segment.

This is the right step to take, seen from a market that is much more scalable than B2C. Massive adoption is needed until affordability when a startup that focuses on climatetech started his business to B2C. Apart from B2B, the potential that can then also be worked on is targeting B2G.

Similar to global trends, currently most startup activists who present products or services to support climate change include energy efficiency, renewable energy, waste management and electric vehicle (EV), as well as supporting services and technology, namely charging station.

DailySocial.id noted that in the last few years, technology and energy companies and venture capitalists have been busy working on projects electric vehicle. This is to support the government's efforts to make Indonesia the center of electric vehicle production in Southeast Asia with a target of producing 600 thousand electric cars and 2,5 million electric motorcycles by 2030.

"Similar to global trends, mobility In this case, EV is the one that gets the most funding. This happens because of the most EV technology mature At the moment. However, other services and products are now starting to catch up, such as the circular economy renewable energy and energy efficiency," said Jonathan.

The challenge of finding talent

If you look at the background of the startup founders who provide services climatetech, most of them really understand environmental problems and other related matters. According to Jonathan, this is what differentiates the founder green startups with startup founders in other segments.

Founding father Surplus for example, Muhammad Agung Saputra, apart from being an ITB graduate, he is also a graduate of Imperial College London with an educational focus on Environmental Economics, Environmental Law, Environmental Pollution & Control, Environmental Policy.

Now Surplus is considered one of the startups that continues to experience growth prevention food waste management for industry hospitality and F&B in Indonesia. Meanwhile, one of the Co-founders power brain Irvan Farasatha, apart from being an ITB graduate, is also a Master of Science - MS graduate, Energy Engineering Politecnico di Milano.

"We have conducted almost 100 research ecopreneur in Indonesia, and the main challenges currently are three. The first is the problem skillset and access to talent. "So most of them are masters or PHDs in their fields," said Jonathan.

The second factor which is also still a challenge is risk capital. Even though there are some fresh funds flowing in currently, most of these investments only focus on advanced stage funding. So there is still a great need for investors who can help them get fresh funds in the early stages and go through all the existing processes. The final challenge is, navigation to market and barrier regulators.

In terms of regulations, it is currently still somewhat gray. This means that the government, through the Ministry of Energy and Mineral Resources (ESDM), the Ministry of Environment and Forestry (KLHK) and Bappenas, have not yet provided regulations for green startups in the country.

However, from the side growth models, not many among startup founders climatetech it finds the right formula. Only a few of them then succeeded in conducting direct trials on the market, and found the right and of course profitable business model.

From an investment perspective, even though it is still very niche, but it is predicted that in the next few years more and more local investors will be interested in investing in startups climatetech. Although currently the majority of foreign investors still dominate investment in foreign investors ecopreneur.

What needs to be emphasized is, don't just focus on geography, but also ticket sizes which are given. Currently, many local investors are starting to be interested in investing in green startups.

"Based on several reports we have seen, investment venture capital for targeting startups climatetech still few in number. But in the future, even if it is moderate tech winter, we still see growth in investment going up to around $40 billion," said Jonathan.

Ecoxyztem Focus

Sebagai venture builder who really cares about growth ecopreneur in Indonesia, Ecoxyztem provides quality human resources, assistance in the form of venture architects for business modeling, and support market penetration by business matchmaking, as well as raising capital. Not only capital assistance, but also relevant networks and opportunities to get investment from green funds and other foreign institutions.

More Coverage:

As background, Ecoxyztem, which is part of the Greeneration Group, decided to change its business model to venture builder on May 17 2021. The word XYZ symbolizes Ecoxyztem's business pillar, X from the word X-Seed, namely human resource development, Y from the word Ympact Lab for development climate-tech startup, and Z from the word Zinergy to develop access to the market.

Currently, Ecoxyztem has four startup portfolios, namely Waste4Change in the waste management sector, ReservoAir which solves flood problems, Ravelware which drives the green industrial transition, and Enertec which works in the energy efficiency sector.

Recently Waste4Change announced the acquisition of series A funding of $5 million (more than 76 billion Rupiah). AC Ventures and PT Barito Mitra Investama became lead in this round, followed by other investors, namely Basra Corporation, Paloma Capital, PT Eight Satu Investa, Living Lab Ventures, SMDV, and the Urban Gateway Fund.

"We are looking at existing startups bootstrapping or those who are still in the early stages. Because our goal is not just to make a profit, but rather to improve the ecosystem climatetech "is more advanced in Indonesia," said Jonathan.

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