Indonesian Startup : Dream Valuation And Real Valuation

An article from my colleague William regarding reality check the startup world in Indonesia really caught my attention. The article basically complains about the hype that is going on in Indonesia where it seems that the startup ecosystem in Indonesia is not as good as it has been all along. William stated that some acquisitions and funding of local technology startup companies should not be treated with mere excitement.

Of course there are some startups that are run seriously and have good concepts, but from an investment point of view they can be less attractive. All startup deals that have occurred in Indonesia, be it funding/investment or acquisitions, have never had a valuation value come out. Because there is no official value released, there is no benchmark that can be used as a benchmark for the valuation of technology companies in Indonesia.

This is certainly a problem in itself, especially if Indonesian entrepreneurs continue to refer to Silicon Valley where startup valuations can reach tens of millions of dollars in just a few months after being launched. If it is converted to rupiah, the price is already unreasonable for a company that is 8 months old with a valuation above 5 million dollars (40+ billion rupiah). This may be normal in Silicon Valley, but it doesn't make sense in Indonesia.

Based on my meetings with many startups and investors, the valuation of dreams must be eradicated quickly for two reasons: it is not good for an entrepreneur to be caught up in dreams, and secondly, this will certainly have a negative impact on the economy in the long run.

In determining the valuation, of course, there are crucial considerations such as the assets you have, the monthly expenses and most importantly, the revenue projection, the estimated money coming in for the next few months/years. And all this of course must be made as accurate as possible and not marked up for a higher valuation than it should be. After all, these are targets for your company that must be met. If the number is too high, then you should be prepared to work super hard to reach that number.

It's not a dream after all.

So, when you decide to get an investment worth millions of dollars, think again whether your company is really worth millions of dollars? Facts have also proven, most startups die not because of lack of money but because of the inability to manage money.