Able to Survive during the Pandemic, Investors Aim for Local Startups

The coronavirus pandemic has an impact on almost all business sectors, including startups which are the motor of technology in Indonesia. However, several actors in the sector are considered to be able to survive amid pressure.

Seong Yeow Ong, Maybank’s Head of Research, Technology & Innovation Kim Eng Group believes, although many companies and startups are struggling with economic difficulties due to the pandemic, there are still opportunities for growth this year. Kim gave an example of Gojek who recently received funding from Facebook Inc. and PayPal Holdings Inc.

“We see the big picture that some of these industry accelerators such as Gojek have just received new funding,” he said in an online discussion titled “Capitalising on The Recovery from Lockdowns”, Thursday (6/4/2020).

He continued, the new funding indicates a long-term funding opportunity in the future, including for actors in the digital economic ecosystem involving Gojek and its competitors, Grab.

Being One of the Most Promising Internet Markets in the World

Indonesia is one of the most promising internet markets in the world, driven by the rapid adoption of smartphones and economic growth. Indonesia is also the largest country in Southeast Asia, which underpins a regional internet economy estimated to reach more than US$ 100 billion in 2019 and will triple by 2025.

Meanwhile, this week Facebook Inc. and Paypal Holdings Inc. announced the funding steps for Gojek. For Facebook, this is the second international investment in the last 6 weeks after the company bought shares of Reliance Jio India for US$ 5.7 billion.

Entering a new normal era (new normal), a number of venture capital companies have begun to actively look for new investments in startups in the country. Investment coffers are estimated to flow into several sectors, namely agriculture, logistics, and health.

Ideosource Venture Investment Associate Eldo Wana Kusuma said there were at least around 150 venture capital companies interested in investing in startups in Indonesia with a total investment value of US $ 4-5 billion.

Several companies, Eldo said, are analyzing the development of the investment world in Indonesia in the new normal era. Meanwhile, the sectors that have a great chance to reap the coffers consist of logistics or food, agriculture, and health.

The reason is that startups in these sectors are considered to have great potential in the future after the demand for related products remains high during the coronavirus pandemic (Covid-19).

Investment for Indonesian Startups is Expected to Reach 7 To 8 Billion USD in the New Normal Era

The number of funding opportunities can boost the number and value of agreements in several business verticals, such as in the health and agriculture sector.

Based on the Dealstreet Asia report titled Southeast Asia Deal Review: Q1 2020, sectors such as healthtech, foodtech, and greentech are at the lowest level of the order of investment agreements throughout the quarter I / 2020.

During the first quarter, the companies in the three verticals each only made one agreement with a total investment value of US$ 5.2 million. In contrast, the electronic trading and education sectors succeeded in making 14 agreements with a total investment value of US$ 33.2 million in the same period.

Meanwhile, Chairman of the Indonesian Technology Startup Association (Atsindo) Handito Joewono assessed the estimated total investment value of US$ 4-5 billion was considered a realistic figure. In fact, he hopes the value of the investment in the Indonesian startup ecosystem in the ‘new normal’ period can reach US$ 7-8 billion.

“If the recovery back to normal can be carried out on time from the end of June [2020], we hope that investment for Indonesian startups can be US$ 7-8 billion. Moreover, Indonesia is classified as a country that is predicted to recover quickly,” said Handito to Bisnis.

According to him, the comprehensive program carried out by the government by placing economic recovery as a double priority, in addition to preventing the spread of Covid-19, made Indonesia relatively more prepared to carry out recovery.

This is considered to be able to give a positive signal to investors from abroad to invest in Indonesia.