Indonesia, one of the largest economies of Southeast Asia over the last two decades, has seen rapid growth in its startup ecosystem. With support from the government and especial encouragement to tech-related startups has accelerated Indonesia’s advancement into the digital economy. Despite the outbreak of coronavirus pandemic in 2020, Indonesia startup ecosystem in the first quarter of 2020 raised one of the highest amounts of venture capital, second only to Singapore.
According to Indonesian Venture and Startup Association, the total funding of startups in Indonesia reached US$1.9 billion by the third quarter through 52 funding rounds. EdTech, Fintech, and SaaS dominated these funding rounds.
COVID-19 pandemic has added a new and innovative chapter to Indonesia startup ecosystem
The outbreak of coronavirus pandemic early this year saw a significant shift in Indonesia’s community-driven culture. As people were forced to stay home, Warung Pintar complying with COVID-19 protocols, started visiting their regular customer base at home to deliver necessities that were ordered through text message. The company is also tapping IoT and other digital technologies to unleash the economic potential of the nation’s traditional street vendors.
The pandemic has made Indonesians change their mindset towards technology and convinced both consumers and vendors alike about adopting e-commerce and moving forward amidst the crisis. Similar trends have been seen on the Fintech platform as well.
The Indonesian Venture and Startup Association has highlighted the role of startups in helping Indonesia’s economy recover from the impact of the COVID-19 pandemic. For instance, the agri-tech startups enabled the financing of farmers while the digital identity providers helped banking institutions to ease the credit restructuring process.
Indonesia Startup Ecosystem – Top Funding deals in 2020
Kopi Kenangan, an F&B chain raised funding of US$ 109 million, followed by Kargo, a logistics tech startup that raised US$ 31 million in funding.
Gojek, a ride-hailing firm, raised US$ 1.2 million in funding in March 2020. The company has built a one-stop app for ordering food, making digital payments, commuting, shopping, hyper-local delivery, and many other services.
Shipper, a Jakarta-based logistics startup announced in June that it has managed to raise an undisclosed amount in a funding round that was led by Prosus Ventures, a South African firm. The existing investors Y Combinator, Floodgate, Lighspeed, AC Ventures, and Insignia Ventures also participated. The media reports claimed that the company raised approximately US$ 20 million. However, the company did not confirm the amount.
A digital platform, Desty that serves as a single online destination for influencers, merchants, and creators to sell and promote their products also raised an undisclosed amount in a seed funding round led by East Ventures, an early-stage VC firm.
Zenius Education, an Indonesian EdTech startup managed to raise US$ 20 million in funding in February 2020. The funding round was led by Northstar Group along with Beenext and Kinseys Group as participating investors.
Overall, the Indonesia startup ecosystem did well despite the pandemic.
As per the trend around the globe, EdTech shines during the pandemic
With educational institutions being closed due to the coronavirus outbreak, the EdTech sector has seen a surge nationwide. The pandemic has accelerated the adoption of online learning methods. Online platforms like HarukaEdu, Ruangguru, and Cakap have seen growth during the year.
Many EdTech startups have shown support for online learning policies. Zenius, an online education platform, has made some of its content free. The startup has started a program called ‘Zenius Untuk Guru’ that helps teachers, especially those living in villages or small towns, develop skills to use new tech-tools.
HarukaEdu supports universities in organizing online classes by providing customized learning management systems besides offering online classes. Besides that, the company is also offering a help desk and IT support to facilitate online classes for higher education students.
Tourism startups faced the maximum brunt of the pandemic
Indonesia’s tourism startups saw a significant impact of the COVID-19 outbreak on their business. This crisis battered Traveloka, one of Southeast Asia’s largest online travel startup. According to the company, with revenues falling almost to zero due to flights and holiday plans being canceled, the pandemic took a heavy toll on the business.
However, now with restrictions being lifted, the company is on the path to reach break-even. The company has managed to raise US$ 250 million in July 2020 to bolster its operations amidst the crisis.
Indonesia all set to retain its position as a top destination for startups in the ASEAN region
Dedicated support from the Indonesian government and enabling regulations for startups that have innovative business models and are inclined to further digitization and automation can give a boost to the Indonesia startup ecosystem. This will help Indonesia to retain its position as a top destination for startups in the ASEAN region.
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