Indonesia’s tech startup ecosystem is vibrant as ever with the emergence of tech unicorns such as Bukalapak, the merged entity of Tokopedia and Gojek–GoTo–as well as Traveloka. The country’s digital economy is worth $44 billion, the largest in the region, according to a report from Google, Singaporean state investor Temasek and global consultancy Bain.
The Indonesian Government has hoped to support the startup ecosystem through several initiatives and programs. On Monday, the Indonesian Ministry of Communications and Informatics announced 15 shortlisted early-stage startups–out of a total of 5,723 registrants–to take part in Batch 3 of Startup Studio Indonesia‘s intensive incubation program.
Initiated by the Ministry, Startup Studio Indonesia aims to assist and foster digital startups in finding their product-market fit in order to scale their business. The program aims to incubate 150 startups by 2024.
Launched in 2020, Startup Studio Indonesia complements the Ministry’s ongoing startup empowerment programs, such as 1000 Digital Startup Movement and Nexticorn, targeting to generate 150 digital startups by 2024 who have the capabilities to scale up their business in terms of the number of users, total revenue, employment rate, and funding from Venture Capital.
In an interview with TechNode Global, Impactto Managing Partner Italo Gani, one of the Startup Studio Indonesia’s Batch 3’s board of curators, shared more details on the selection criteria and which are the sectors Startup Studio Indonesia prefers.
“Startup Studio Indonesia has a preference for the following six sectors: education, health, maritime, agriculture, travel, and logistics. But as you can see from our startups, we put more emphasis towards other selection criteria which are: product-market fit traction, founder’s profile, local defensible-factor, and market size,” he said.
With lifestyle changes and adaptation to the pandemic, Italo said businesses are starting to return to normal operations.
“Innovations have also increased significantly, especially within the on-demand services, FinTech, and e-commerce sectors. Apart from the pandemic effect on establishing businesses, most startup businesses still encounter problems in growing and maintaining their existence in the market,” he said.
In the interview, he also shared what the opportunities are available for Indonesian startups, what are the challenges, and how is the government or government agencies are helping them to address these challenges.
Below is the edited excerpt of the interview:
What are the sectors/tech Startup Studio focuses on or prefer? Is there any preference?
Startup Studio Indonesia has a preference for the following six sectors: education, health, maritime, agriculture, travel, and logistics.
But as you can see from our startups, we put more emphasis towards other selection criteria which are: product-market fit traction, founder’s profile, local defensible-factor, and market size.
Will Startup Studio Indonesia provide funding to startups? What kind of ticket sizes?
Startup Studio Indonesia is an equity-free startup development program. We provide intensive incubation sessions for founders.
While the program doesn’t provide any immediate funding support, we help connect them with relevant external investors during the Milestone Day (which is held at the end of the program). We also keep in touch with our alumni to help them secure funding as well.
Additionally, this program helps connect the startups with the Indonesian Ministry of Communications and Informatics. The Ministry is open to providing funding in the form of loans.
How are startups chosen? Could you further explain this?
We select startups based on the four aforementioned criteria: product-market fit traction, founder’s profile, local defensible-factor, and market size.
The ones who select them include:
- Italo Gani – co-founder of adtech Adskom and venture partner at East Ventures
- Christopher Madiam – co-founder of beauty e-commerce firm Sociolla (whose startup has secured $166 million in funding)
- Hiro Kiga – co-founder of fintech firm Wallex (whose startup has facilitated more than $1 billion in yearly transactions)
- Sonny Sudaryana – Program Coordinator at the Ministry of Communications and Informatics
- Bonifasius Wahyu Pudjianto – Director of Informatics Empowerment at the Ministry of Communications and Informatics
What are the opportunities and challenges for startups in Indonesia? For Batch 3, only 15 were chosen from more than 5,000 applicants. The competition is stiff. What other ways can Indonesian startups get funding or assistance to grow their companies?n
The opportunities in Indonesia are huge because there are a lot of local problems that can be solved by local startups. Founders can start experimenting and creating a product to solve these problems.
There are plenty of startup programs and accelerators in Indonesia. We would suggest founders join the ones that are suitable to their needs and business stages.
For example, for founders in the ideation stage, they can join the 1000 Digital Startup Movement program.
Startup Studio Indonesia complements the Ministry’s ongoing startup empowerment programs, such as 1000 Digital Startup Movement and Nexticon. How different is Startup Studio Indonesia as compared to these? Which stage of startups is Startup Studio Indonesia focusing on?
1000 Digital Startup Movement is aimed to help founders in the ideation stage to solve problems in Indonesia with digital products. Nexticorn wants to support later-stage startups raise Series B funding and above by connecting them with local and international investors.
Startup Studio Indonesia sits in between those two programs as we help early-stage startups find product-market fit. Here are the startup criteria to join the program:
- Have a working minimum viable product (MVP);
- Has traction of at least 3 – 6 months;
- Has not raised money beyond seed-stage funding;
- Full-time founders;
- Has a legal entity in Indonesia;
- Shows potential to reach product-market fit and scale.
Startup Studio Indonesia targets to generate 150 digital startups by 2024 that have the capabilities to scale up their business in terms of the number of users, total revenue, employment rate, and funding from Venture Capital. How’s the progress so far? What is the strategy of Startup Studio Indonesia?
Startup Studio Indonesia now has supported a total of 50 startups since 2020 (20 startups in batch 1, 15 in batch 2, and 15 in batch 3).
Since then, the startups have continued to record promising growth, while several of them have gone on to receive external funding offers. Please note that not all fundings have been disclosed yet.
The ones that have been announced are:
- Sribuu (pre-seed funding);
- Lingotalk (pre-seed funding);
- Justika (seed funding);
- Feedloop (pre-series A funding);
- Verihubs (YC S21).
How is the overall startup ecosystem in Indonesia? What are the challenges faced by Indonesian startups and how is the government or the government agencies are helping and addressing these challenges?
When we take a deeper look at the startup growth in Indonesia, the trend continues to go upward (although it went down by 8 percent during the pandemic).
With lifestyle changes and adaptation to the pandemic, businesses are starting to return to normal operations. Innovations have also increased significantly, especially within the on-demand services, FinTech, and e-commerce sectors. Apart from the pandemic effect on establishing businesses, most startup businesses still encounter problems in growing and maintaining their existence in the market.
The Indonesian Ministry of Communications and Informatics believes that the most common mistakes startups make in the competitive market is they start from offering the product to the market directly, rather than validating the market’s needs/wants/problems. Because of this, their efforts become worthless when they can’t master product knowledge.
Realizing this, the Ministry of Research and Technology via its “Tech-Based Later-Stage Firms” program (Perusahaan Lanjutan Berbasis Teknologi), has allocated billions of rupiah (*1 billion rupiah = $69,951) to help startups grow their business with the help of incubators and/or accelerators, founders of later-stage startups, angel investors, venture capital, corporates, government, and other entities. The program aims to tackle three major challenges: problem-solution fit, product-launch fit, and product-market fit which commonly happens to startups.
What kind of potential and opportunities does Indonesia provide to its startups?
Around 196.7 million people in Indonesia are aware of the Internet, and they use it regularly. This is a lucrative market for all digital startups in the archipelago.
The market’s digital lifestyle adoption and positive government support have also given exciting opportunities for startups to tap into available initiatives and resources in order to solve the nation’s problems.
This is done by learning the market needs, bridging the product with that necessity, and getting support from stakeholders to push Indonesia’s economic growth.