1. Startups

Willson Cuaca: We Are On The Way To The Digital Golden Age

Seeing the issues that are being highlighted in Indonesia's startup ecosystem, from the perspective of data and venture capitalists

Bad news is hitting the startup ecosystem in Indonesia. In recent times, the public and the media have highlighted a lot of negative sentiment regarding local startups, it is suspected that incidents such as layoffs, business closures, until the news of funding that is said to be dragging disbursed.

Became a byword because the issue involved big names, in 2022 and then got advanced funding from a number of investors including MDI Ventures. Not to mention, this year they also fully acquired the tutoring company Primagama — to integrate their entire network into an O2O learning concept.

Data perspective: startup funding is increasing

DailySocial.id just launched Startup Report 2021-2022Q1 summarizes data on the development of the startup ecosystem in Indonesia. One of the interesting things is that the report also summarizes investment round data throughout the first quarter of this year. There are at least 76 startup funding announced to the public. Of the 50 transactions mentioned in value, $1,22 billion was collected. The trend is positive, because when compared to the same period last year, the value has increased by 2x.

The same is true of what happened in 2021. There were approximately 213 successful funding rounds recorded, raising more than $4,3 billion from the 126 transactions that were declared worth. This achievement is an increase when compared to 2020, which was 113 transactions with a nominal value of $3,3 billion from 50 transactions whose value was announced. And the most interesting thing in 2021 Indonesia already has 12 unicorn and over 50 centaur.

Funding is not the only parameter to measure the level of proficiency of the startup ecosystem. However, in the funding process there are several activities that also measure level startup maturity — from hypotheses and applied metrics.

From the data above, the conclusion that can be drawn is that the startup ecosystem in Indonesia in general is still on-track on its growth. Existing funding also spans across a variety of business models — including those that are rising stars in recent times like quick commerce, wealthtech, to SaaS for MSMEs.

Investors still have high confidence in founder local startup, proven by total the initial funding that is still a lot and dominates from 2021 to this Q1 2022. It is known that initial funding carries a greater risk, as investors bet on new business models and prowess founder in executing its plans.

Late-stage funding has also increased, for series A and above — this has also spawned more startups centaur (valued at over $100 million).

Venture capitalist perspective: Willson Cuaca, East Ventures

In the startup report, for three consecutive years, East Ventures has been named the most active venture capitalist in Indonesia. They invest in early-stage and late-stage startups, across various business sectors. With their role, we think they are representative enough to provide views regarding what has happened in the Indonesian startup ecosystem in recent times.

To DailySocial.id, Co-Founder & Managing Partner of East Ventures Willson Cuaca said, there were two factors that caused the 'shock'. The first is external factors, based on world economic factors anticipating a recession with rising interest rates and high inflation. This includes the effects of the Russo-Ukrainian war which resulted in the disturbance supply chain, the tightening of startup regulations in China, and the massive sale of tech stocks in the United States. This results in investor growth stages more afraid to pay high valuations.

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Then the second is the internal factor. Willson said, because in the previous two years there was a digital acceleration, during the pandemic, many startups are overconfident and not careful manage their expenses. Their assumption is wrong that this acceleration occurs continuously. So there is a difference between expectation and reality. But not all startups think so.

“From the East Ventures side, not much has changed. The East Ventures hypothesis is based on 2 main points, supporting entrepreneur and also believes that there are still many opportunities in Indonesia's digital economy. In fact, we think we are heading towards a digital golden era. Some bad news from startup do not change the position because there are still many fundamentals startups That's good," said Willson.

With the existing conditions, East Ventures admitted that he will continue to make investments that are considered in accordance with his philosophy, namely: People and Potential Markets for startup in stage seeds; while the advanced stage of funding focuses on traction.

“Remain calm and alert in dealing with this situation. Seek support from your investors, be more prudent in spending, and don't do fundraising when your company needs money," Willson advises founder.

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