The Great Interest of Local to Foreign Venture Investors Investing in Indonesian Startups

In research exposure conducted by Alpha JWC Ventures with Kearney revealed that there are still many local and foreign venture capitalists who plan to invest in Indonesian startups.

In one of the series webinar #StartupForCountry initiated by Amazon Web Services and DailySocial, Co-Founder & General Partner Alpha JWC Ventures Jeffrey Joe said, currently there are still VC funds that have been recorded since 2020. However, what distinguishes investment activities during the pandemic is the process due diligence and tighter curation.

"Investing in the technology sector is tempting for investors, as evidenced by the amount that continues to grow and even doubles even during the pandemic. In the future I see that there will be more and more venture capital who are more careful when they want to invest in Indonesian startups."

There are several reasons why during the pandemic there were still many venture capitalists who then poured their funds into Indonesian startups. Starting from positive macroeconomic developments, increasing the quality of startups and founder, faster digital adoption during a pandemic, to government efforts to promote ecosystems in cities tier 2 and 3 and of course the digital infrastructure is getting better.

"Technological advances are also assisted by internet penetration in the country as well as the ability to spend and develop infrastructure in Indonesia, which are factors that are then attractive to investors. In the future, I see that digital growth will increase in Indonesia's digital economy," said Jefrey.

He added that Indonesia is a country in Southeast Asia that has the potential to become a regional giant. This is the right moment for Indonesia to grow, supported by a large population, which is dominated by productive and talented people.

Education drives digital adoption

According to Shirley Santoso as Partner & President Director of Kearney, although currently digital economic growth is still concentrated in cities tier 1 such as Jakarta, Bandung, and Surabaya, but seeing the potential that exists in cities in Indonesia tier 2 such as Semarang, Makassar, and Denpasar have started to show good growth. Likewise, cities in tier 3 such as Magelang, Prabumulih, and others. The challenge, of course, is their willingness and initiative to start adopting technology.

"Most of them are still not willing to spend more to buy a data package or use a smartphone. They are still quite comfortable using traditional methods."

To spark more people in the city tier 2 and 3 adopt technology, educational activities are then mandatory to be launched. Not only from the government, but also startups to technology companies that want tocater their needs.

"With the economic power possessed by the cities in tier 2 and 3, have great potential for them to become core contributors to the digital economy in Indonesia in the future," said Shirley.

Associated with SME businessCurrently, many have started to use technology to help their business grow even better. But most of them are still quite passive in taking care of the business, and are only limited to sales, bookkeeping, sourcing and inventory management. Only a few of them then use technology to its fullest.

"The majority still carry out traditional business activities, however awareness they will digital products quite high. For this reason, it is important to provide education on digital solutions that can help them," said Jeffrey.

Jeffrey concluded, technology can change positively for MSME businesses, but more activities are needed to encourage this growth, namely through education. For this reason, startups and technology companies that want to target MSMEs must have clear offers and solutions that users really need.

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