Many are predicting that America’s Silicon Valley will soon be overshadowed by other tech ecosystems in different parts of the world. Jakarta is one of the cities that are continuously topping the list of emerging startup hubs with huge potential.
The growing potential for Jakarta startups is huge given the booming number of Internet users and support of incubation programs. The biggest economy in Southeast Asia today is in Indonesia, and Jakarta is in the center of it. The city, which is home to a population of over 10 million, has a big concentration of startups. The city is conducive to businesses that are just starting, with infrastructure and resources that allow owners to run a trial of their products before they expand their business. The city hosts various investors, accelerators and a number of co-working spaces.
Startup support system
According to the chief executive of the e-commerce and e-payment company called Kudo, the startup support system is in place and has made great strides since 2014. In the past, graduates looked forward to working in large multinational companies. Today, they prefer to join startups.
The Indonesian government is involved in the country’s startup ecosystem. An incubation program is run by the Ministry of ICT and the Creative Economy Agency hosts seminars, pitching competitions and invites mentors to help startup owners.
About 50 Indonesian startups were able to get help from the Jakarta Founder Institute, according to its director, Andy Zain. He added that over 1,000 applications are being submitted to their institute annually. Startup incubator Endeavor Indonesia is helping 17 companies, assisted by over 50 Indonesian business mentors.
There’s huge potential for growth in Indonesia, which is increasingly using mobile devices for online shopping. The innovators in Jakarta are eyeing the growth in the Internet population in Indonesia, with about 50 million new users getting online access until 2020.
The first unicorn in Indonesia is Go-Jek, founded by Nadiem Makarim. The company was valued at more US$1 billion. Makarim is a Harvard graduate. He opened a call center in 2010 and hired 20 drivers for his business venture, a delivery and ride-hailing company. The company now employs one million people and is going to expand in Vietnam and Thailand. If the rumor is true that Go-Jek is going to open in Singapore, he will be competing directly with his classmate in Harvard, who founded Grab.
Go-Jek has received investments from Tencent and Google, increasing its worth to nearly US$5 billion, based on projections. From the initial objective of improving the motorcycle taxi industry in Indonesia, Makarim visualized the other services his company can offer. Go-Jek, which now offers various services including e-payment and food delivery, has a great impact on the lives of many Indonesians, especially those people who are also busy tackling their daily tasks, at home and at work. The company also provides support to drivers, self-employed people, entrepreneurs and food service owners. A customer using the Go-Jek app can hail a ride, order groceries and other items, order takeout, send money, book a hairstylist or massage therapist, buy tickets and send or pick up documents.
Go-Pay is the digital payment service which is where Makarim is spending most of his time.
Another Indonesian unicorn is Tokopedia, an online marketplace. It’s a boon to small business owners around Indonesia. About 4 million business owners use the platform to sell their products. Tokopedia says that 70% of the sellers using their system are first-time business owners and about 89% of them do not operate a physical store.
Tokopedia was founded by Leontinus Alpha Edison and William Tanuwijaya. They were one of the early innovators and experienced the struggle of getting funding in Jakarta as the startup scene in Indonesia was just starting.
It is now being called as the “Alibaba” of Indonesia. Among its investors are Sequoia Capital, Softbank and Alibaba of China, which invested US$1.1 billion in the company. Tokopedia now has a digital goods section where users can buy travel and event tickets as well as pay their bills. Tanuwijaya explained that their company is still focused on helping individual merchants.
In the World Economic Forum held in 2016, a Young Global Leader recognition was given to William Tanuwijaya.
HaloDoc was founded in 2016 by Jonathan Sudharta. The company offers easy access to healthcare. The HaloDoc app enables users to connect with licensed medical professionals, pharmacies and medical laboratories. It offers medicine delivery service to Indonesian cities through ApotikAntar that is integrated with Go-MED of Go-Jek. Using the HaloDoc platform, patients can communicate with doctors via voice and video calls or through chat.
HaloDoc has over 22,000 licensed doctors in its roster and each day, about 150 to 200 doctors are actively available. The company has 1,200 partner pharmacies located in 25 cities around the country.
As of early March 2019, HaloDoc announced that it has received US$65 million in new funding from investors in China, South Korea and Singapore, such as Singtel Innov8 and UOB Venture Management.
PasarPolis, founded by Cleosent Randing, was first established as site where users can compare insurance offerings. When it received funding from three unicorns from Indonesia (Traveloka, Tokopedia and Go-Jek), it expanded its services and today offers a platform where insurance companies can offer their various insurance packages. PasarPolis offers healthcare plans for sellers on Tokopedia and life insurance packages for the drivers of Go-Jek.
The company is now concentrating on developing innovative insurance plans for local and Southeast Asian market. They want to provide cheaper insurance packages that are accessible to as many consumers as possible.
Bildeco is a niche marketplace, founded by Errika Ferdinata. He had worked in the construction industry for 15 years and has built a good network of reputable suppliers. He started Bildeco in 2017. The company is concentrated on construction materials and equipment so that builders can shop for construction goods and building/home décor conveniently. Bildeco offers goods from well-known and trust worthy suppliers.
Why Jakarta is conducive to startups
If there is the Silicon Oasis in the Middle East and the Silicon Savannah in Africa, what would be the name of the tech startup hub in Jakarta? Why is it that there are so many entrepreneurial ecosystems in developing countries? While these places may not achieve the capacity and capability of the tech companies in Silicon Valley, people everywhere are searching for innovation for which entrepreneurs provide solutions.
In recent years, the activities of venture capitalists in Indonesia are steadily rising. The technology sector in the country is receiving much attention and funding from giants in industry such as Rakuten Ventures, Sequoia Capital, Tencent Holdings, JD.com, Alibaba and Expedia. From US$31 million in funds from venture capitalists in 2015, investors have increased their investments to US$3 billion in 2017.
This is not surprising if you are in the inner circle and have access to inside information or you are keeping up with the times. Since 2012, Indonesia has been included in the list of top emerging startup hubs. The city of Jakarta is currently the leader in the top 10, followed by Dubai, Vienna, Istanbul, Kuala Lumpur and Bangkok, in that order.
There are several reasons for this.
- Indonesia is a market with a population of over 269 million (2019). Its middle class is growing and the costs of mobile devices are getting cheaper. International startups are paying more attention to Indonesia as a viable place to start their business.
- Internet users in Southeast Asia continues to grow faster than other countries and most people in Indonesia are using their mobile devices for e-commerce. According to projections, the e-commerce industry in Southeast Asia will be worth US$46 billion by 2025.
- Joko Widodo, the president of Indonesia strongly supports his country’s digital innovation, which greatly helps the growth of the sector. President Widodo is aiming to have 1,000 tech startups set up by local entrepreneurs. He is projecting that by 2020, it will be worth US$10 billion.
- Since 2017, the number of co-working spaces, which are the hubs of the activities of tech startups has increased exponentially in Jakarta. Several of them are venues for meetings between venture capitalist and startup owners. The growth of co-working spaces is an indication of the growth of the tech scene in Jakarta and other cities in Indonesia.
The investment in tech startups in Jakarta is increasing. Despite this, there are still problems that beset startups in Indonesia. Many locals still do not have a bank account so credit card penetration in the country is still low. The tech talent pool right now is limited, so several startups look for talents in India and other nearby countries. The Internet penetration in entire archipelago is still poor. Moreover, bureaucratic delays hamper the processing of business permits and other business papers.
But with the international attention Jakarta and the rest of Indonesia is receiving from multinational companies, things will definitely look better for the country’s startup scene in the very near future.
Resources: Fintech and Localization go together when expanding to international markets. Visit our free guide on Going Global in the Fintech Industry.
Make your presence felt in Southeast Asia
Southeast Asia is an emerging and fast-growing market sector that continues to gain worldwide attention. Jakarta is where the seat of ASEAN is located. The city is considered an alpha city and home to several multinational firms. This means that Jakarta attracts businesses from other nations.
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