Indonesia has witnessed total funding of $1.4 billion year to date, a drop of 54 percent as compared to the same period in 2022, Tracxn said Wednesday.

The firm said in its “Geo Annual Report: Indonesia Tech 2023” report that the number of funding rounds in the country year to date also experienced a drop of 49 percent as compared to the same period in 2022.

According to Tracxn, Indonesia is the second largest economy in Southeast Asia after Singapore and is also the second highest-funded startup ecosystem in Southeast Asia till date.

It noted the country where has witnessed its highest funding in 2021, has seen as steady decline in the funding since then.

It said that 2023 is the least-funded year for Indonesia since 2020.

According to the report, the decline in funding is primarily attributed to a 38 percent drop in late-stage funding, a total of $1 billion year to date compared to $1.66 billion in the same period in 2022.

Seed-stage also experienced a 65% drop to $76.8 million year to data, with 44 rounds compared to 98 in 2022.

Early-stage funding also saw a 73 percent decrease, amounting to $341 million year to date compared to $1.25 billion in the same period in 2022.

According to the report, the top performing sectors in the country are fintech, followed by food and agriculture tech and auto tech.

Nevertheless, the first two sectors witnessed a drop in funding.

The fintech sector experienced a significant 52 percent decline year-to-date compared to the corresponding period in 2022.

Similarly, food and agriculture tech witnessed a 59 percent decrease in funding in 2023 compared to 2022.

On the contrary, auto tech, unlike the other two top-performing sectors, has seen an uptick in funding year to date, showcasing a remarkable 63% increase compared to the same period in 2022.

It is noted that in 2023, there were nine acquisitions, marking a 55 percent decrease from the 20 recorded in 2022.

A noteworthy acquisition in 2023 that surpassed the $100 million mark, was the consumer goods finance company Home Credit. Krungsri, Adira Finance, and MUFG collectively acquired Home Credit for $219 million.

The top-funded cities in 2023 include Jakarta ($974 million), Bandung ($249 million), and Tangerang ($114 million).

The top investors in the Indonesia Tech space are East Ventures, AC Ventures, and Alpha JWC Venture.

East Venture, Antler, and Northstar Group were the most active investors in the seed stage, while SMDV, TMI, and Openspace Ventures were leading in the early-stage investments.

According to the report, the tech space in Indonesia witnessed one unicorn company in 2023, which is a 50 percent decline from 2022 and a 75 percent decrease from four in 2021.

It noted that after a recent funding round of $200 million, eFishery achieved unicorn status with a valuation of $1.2 billion.

Despite these challenges, Tracxn said Indonesia remains optimistic about its long-term economic development.

It said the country boasts a young population and high internet penetration, creating favorable conditions for the digital economy’s rapid growth in the upcoming years.

It noted the Indonesian government has also introduced the Startup Incubator Program in collaboration with the Ministry of Corporate Affairs and small and medium-sized enterprises (SMEs) of Indonesia.

It said this initiative aims to promote local entrepreneurship, providing direct access to MSE Grants.

Additionally, it said the Micro Business and Government Microloan Program (KUR) will distribute micro-loans for businesses, contributing to economic growth.

As the Indonesian startup ecosystem navigates these challenges, the government’s focus on digital infrastructure improvement and tax reforms reflects its commitment to bolstering the country’s growth, it added.

Tracxn: SEA tech startups continue to see a downward trend as funding falls 65 percent in 2023