Investment Tighter, Startup Ecosystem in Indonesia Remains Rapid

DSInnovate recently published the results of his latest research entitled "Startup Report 2021-2022Q1", summarizes the dynamics of Indonesia's digital startup industry and ecosystem. This report contains data, founders and consumers' perspectives on the development of the technology business. The new topics that are highlighted this year are impacts, both from an investment and startup point of view.

In the Mini-Conference session, Editor in Chief DailySocial.id as well as Director DSInnovate Amir Karimuddin explained several points in the report.

After all of 2020, Indonesia experienced gloomy times, at that time several startups could not continue their business for one reason or another, 2021 is said to be a turning point for the digital business ecosystem in Indonesia. The data that occurs proves that it is true, the country's technology industry is entering a new phase.

Restructuring as a business strategy

Recently, there has been a lot of news about startups doing layoffs. In fact, this news comes not from startups in the early stages or those who are just starting out, but from several companies whose names are already well known. This raises a big question, what is really going on in the startup industry in Indonesia?

Restructuring is not a new thing in an organization or company. But when this happens significantly, it raises a lot of questions. To answer the assumptions that arise when news like this emerges in the media, Amir, representing DSInnovate, tries to explain what might be behind the stage of restructuring the country's technology startups.

One of them is related to investors who are increasingly careful in pouring out funds. In addition to the pandemic issue, currently the United States technology industry is said to be experiencing a crisis "Tech Winter" which can be interpreted as a period of declining interest in and investment in technology. Considering that many investors are also based in Uncle Sam's country, this of course has an impact on domestic investment figures.

With increasingly selective funding, there are many adjustments that companies must make. For companies with a large scale, of course, requires no small operational costs. This then has an impact on . So that runway maintained, there must be an effort to adjust the business. One of them is the restructuring or efficiency of business operations.

Investors are more selective

Also present at the Mini-Conference session, Deandra Fidelia Marbun as Investment Analyst at Central Capital Venture (CCV) as the investment vehicle of the BCA group. He expressed his views related to the intricacies of funding that are happening in the midst of the country's technology industry. Starting from local to global aspects.

On a local scale, the decline in the number of Covid-19 patients has a positive impact. The re-growth economy has an effect on demand increasing population, which then has an impact on inflation. In the global realm, lockdown in China, the Russo-Ukrainian war, as well as "Tech Winter" previously discussed are also taken into consideration. Adjustments do not only occur in startups but also investors, which causes investment to be tighter.

He also revealed that currently there is a market correction. This has actually been predicted by businesses or venture capital, after seeing the emergence of several startups that overvalued. The dynamics that occur are called a test and a startup that can survive is considered sustainable (sustainable).

As a VC, CCV was formed from scratch with an investment objective that leads to synergy. Given the existing infrastructure and experience, CCV has a focus on the fintech sector and its derivatives such as embedded finance. To date, the company has managed dozens of portfolios including OY!, Akseleran, Wagely, and Qoala.

Regarding adjustments, Deandra said that the company's hypothesis in channeling investment was aimed at fast and dynamic startup dynamics volatile, so not many adjustments are made. "But we're still more careful. It's better sustainable growth than hypergrowth But when I stumble, I fall straight down," he added.

A new chapter in Indonesia's startup industry

Amir continued his presentation. Seeing the development of Indonesia's startup industry, at first it was E-commerce came to be the locomotive of the digital industry, then penetrated into fintech, then increasingly targeting other sectors. Once people begin to understand the use of digital financial features, this will also accelerate other sectors.

The penetration of technology in the education and education sector on a large scale during the pandemic has also created great progress in 2022.

In addition, there are three sectors that are also predicted to grow this year; (1) Possible Direct-to-Consumer brand to develop its target market; (2) embedded finance, which offers a solution fintech to be implemented or embedded across multiple platforms; and (3) Web3, the evolution of the internet industry that has the potential to become mainstream in the long run.

In addition, one of the trends that was also brought up in the "Startup Report" is The Rise of Impact Investing. Investors are now not only interested in the sector mainstream but also those that have a direct impact on the socio-economic community such as social commerce, renewable energy, agriculture, and others. Naturally impact investing has a heavier mandate, as there will be additional metrics to accompany the general metrics.

Deandra also added that impact investment is one of the things that value owned by CCV. However, given that the company's main focus is the sector fintech, impact what is meant is more in the social sphere that prioritizes financial inclusion. Like the focus of CCV investment which will be related to fintech or fintech related.

"Nowadays we believe that in the end, all kinds of startups will become companies fintech. This has been proven with global startups, such as Uber with Uber Visa, as well as for other sectors too fintech angle-his. Therefore, we have an investment target this year to embedded finance," added Deandra.

Regarding the prediction of startup growth in the future, Amir revealed that there will be reality check to ensure that the strategies used remain relevant to current conditions, not merely growth at all costs. "Cashflow positive will be gold standard the new one. Balancing antara and growth will become the new norm for startups in Indonesia. Of course, with a record that we can still meet business growth according to the agreement with investors," he concluded.