Encouraging Floor Startups on the Stock Exchange

Indonesia currently has four technology startups that have a valuation of over one billion dollars (more than 14 trillion Rupiah according to today's exchange rate). They are Go-Jek, Traveloka, Tokopedia, and Bukalapak. Even so, the four of them haven't been go public on the stock exchange, especially the Indonesia Stock Exchange.

Jagartha Advisors, a service independent wealth management see this driven by several factors.

The rules are still strict

Currently, only three startups, dominated by fintech, have made an Initial Public Offering (IPO) on the Indonesia Stock Exchange. They are Kiosk, MCash and NFC Indonesia. Although there are many startups in Indonesia that have the potential to conduct IPOs, the still strict regulations from the IDX and OJK, make it difficult for them to conduct IPOs on the stock exchange.

"I see that one of the reasons for the low interest in startups to take the floor is because currently Indonesia is still referring to two boards, namely the main board (the main board).mainboard) and development board (Development). For the main board, the requirements are quite difficult to be met by a startup that is still relatively small in scale," said Ari Adil, Co-Founder and Managing Partner of Jagartha Advisors.

The three startups that have been listed on the exchange are currently still on the development board and cannot be listed on the main board. For this reason, Ari sees that the stock exchange's plan to review the existing regulations and the plan to issue an acceleration board is the right solution for startups and SMEs.

For information, the performance of Kioson and M Cash shares has been quite satisfactory since their IPO at the end of last year. The market capitalization of the two companies is now above 2 trillion Rupiah.

"The management of the Indonesia Stock Exchange (IDX) said it would open an acceleration board for issuers around the end of 2018. If it is later launched, startups can get additional alternative capital from the IPO," said Ari.

Currently a phenomenon sharing economy offered by startup “Unicorn” in Indonesia is allegedly the main trigger factor for the entry of fantastic foreign investment funds. Both GO-JEK, Tokopedia, Bukalapak, and Traveloka maximize the concept one stop solution in one application. According to Ari, they (unicorn startups) do not have assets like conventional companies in general.

"The startup provides applications that are useful not only for users but for those who have assets such as motorcycles, cars, products, and the presence of this startup is able to bridge gap among these," said Ari.

Local investors must be "king"

The rise of foreign investors who fund many startups in Indonesia is a positive thing to accelerate the growth of startups. However, this phenomenon has not been matched by the number of local investors from venture capital to individuals to invest. According to Ari, this is not enough to develop its potential for local investors.

"I see that actually Indonesians want to invest in GO-JEK or Traveloka, but so far there is no market or opportunity to carry out these activities. With the acceleration board for startups, it is access for Indonesian people to invest in Indonesian startups through IPOs," said Ari .

The problem of access is still a barrier to investment activities. Opportunities for local investors to invest in Indonesian unicorn startups are still available. Especially if the startup decides to take the floor on the Indonesian stock exchange. The role, support, and collaboration of many parties, including the private sector and the government, are urgently needed to produce local investors who become full "kings" for unicorn startups from Indonesia.