Startups Outside Jabodetabek Face Challenges from Funding to HR

The majority of Indonesian startups are in Jakarta, Bogor, Depok, Tangerang, and Bekasi (Jabodetabek). This is because startup companies outside this region face a number of challenges, such as access to funding to digital talent.

Data from the Indonesian Information and Communication Technology Creative Industry Society (MIKTI) in mid-2019 shows that 52.7% of startups are based in Jabodetabek. A total of 168 are scattered in Bali, West Nusa Tenggara, Kalimantan, Sulawesi and Sumatra.

Deputy for Industry and Investment of the Ministry of Tourism and Creative Economy (Kemenparekraf) Fajar Hutomo said the low number of startups outside Jabodetabek was due to many obstacles. “For example, access to funding, human resources (HR), and supporting ecosystems,” he said Monday (18/1).

Lack of Digital Talent Reduces Investor’s Interest

He noted that investors are less interested in startups starting a business outside Jabodetabek. However, he did not elaborate on why. However, he said that startups outside Jabodetabek face a lack of digital talent availability.

In fact, HR plays an important role in the growth of the startup business. Nationally, McKinsey and the World Bank estimate that Indonesia will need nine million digital workers by 2030. This means, there is a need for 600 thousand digital workers per year.

Another obstacle is the supporting ecosystem. Based on East Ventures’ research entitled Digital Competitiveness Index (EV-DCI) 2020, DKI Jakarta’s competitiveness is the best. The capital’s score is 79.7. Then, followed by West Java with a score of 54.9.

In fact, according to Fajar, businesses outside Jabodetabek have enough potential for startups to grow. “Bandung, Yogyakarta, Malang, Surabaya, Denpasar and Medan have potential,” he said. The Indonesian Internet Service Providers Association (APJII) noted that the largest number of internet users was in West Java, namely 35.1 million.

The second position is Central Java, 26.5 million. Then, East Java 23.4 million. Even so, unicorns still target markets outside Jabodetabek, one of which is Bukalapak. This e-commerce company focuses on targeting cities at the level or tier two to pursue profit. The second-tier cities that are targeted are Yogyakarta, Manado, Solo, Palembang and Pekanbaru.

“Our focus has always been on Micro, Small and Medium Enterprises (MSMEs), as well as tier-two cities,” said Bukalapak CEO Rachmat Kaimuddin, quoted from Tech In Asia, last October (21/10/2020). Apart from its potential, e-commerce penetration is dominated by metropolitan areas. Meanwhile, outside this area it is still low.

“Only 5% penetration is in cities outside tier one. In fact, if you think about it, those who need it are outside that region,” said Bukalapak President Teddy Oetomo during a virtual press conference, September last year (11/9/2020).

Startups from the Region are Starting to Emerge

Even so, start-ups in several areas have emerged. One of them is a personal shopper startup, Titipku, based in Yogyakarta. This company has attracted tens of thousands of MSMEs and hundreds of thousands of users. Then, the fintech startup crowdfunded Santara from Sleman, Yogyakarta.

The company, which was founded in 2012, has channeled financing of more than IDR 5 billion and attracted 1,082 investors. There is also a Surabaya-based healthy culinary retail network startup, Greenly. Currently, the company operates five outlets in Surabaya.

One outlet is in the mall with a cafe concept, while the other four serve delivery messages with a cloud kitchen concept so that consumers cannot eat on the spot. Previously, the Chairman of Endeavor Indonesia Arif P Rachmat considered that the potential for startups both in Jabodetabek and outside this region was the same.

Therefore, he encouraged more entrepreneurs to build businesses in the regions. “This country needs more high-impact entrepreneurs because they can bring Indonesia to become a developed country,” said Arif, early last month (17/12/2020).