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State, Challenge and Opportunity of Indonesian Startup

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Silicon Valley is the role model of several startup ecosystem in the world. But if you enter the Indonesia Startup ecosystem, it’s a whole different ball game. Many has tried to adopt the “Silicon Valley” way but because the local startup scene is very different in term of culture, financing, behaviour and way of thinking, it would take a lot of effort to try to move the concept to Indonesia. Instead, local startup entrepreneurs has found different ways to activate the ecosystem and gain momentum.

State of startups

  • We learned from various sources that usual tech startup cycle is begun with online portal followed by ecommerce phase (search and buy things through internet) and then social app. Indonesia now is in the era of ecommerce and trying to move forward into social era.
  • Many Japanese investors coming to Indonesia because they see reversed triangle demographic in Japan and normal triangle in Indonesia, means in Indonesia young people is dominating the country.
  • Old media (television) and telecommunication company start getting serious in startups and setting up initiatives provide incubation, fund and even as potential exit strategy. Telkom already have Bandung and Jogja Digital Valley, Indosat will have startup fund in Q4 2013, some startups reported having private due dilligence with some telco companies.
  • Indonesia ecommerce usersaccording to the report from Dailysocial and Veritrans is 6,5% from the entire population, ecommerce market size (2011) is $0,9 billion, average annual spend $256, resulted only 0,7% of total retail sales of 135 billion. Same report stated that bank transfer is the most widely used payment method for ecommerce (70%)
  • Internet penetration is around 23% of 220 million total population, means 55 million internet users, internet access is expected to reach 100 million users by 2016.
  • In Indonesia, there are 200 million mobile subscriber, feature phone dominated the market by 76% compared 24% of smartphone market, but smart phone market is predicted to grow fast.
  • Daily deals rising in Indonesia around 2010-2011 is an important factor in educating Indonesia internet consumer.
  • We casually surveyed some top ecommerce sites (funded around 2011 – 2013) about their top 5 traffic generators, the results are : SEO, SEM, GDN, Partnership, Facebook. The sequence is depend on the priority of particular month.
  • We got info from Liauw Oswin (Cyber Agent Ventures) GDP per capita in Jakarta and nearby Jakarta is 7000 – 8000 USD that means if you want to start a service (sometimes it depends on what kind of service) you must start from Jakarta and its nearby city. The trend is if Jakarta people knows you, it will spread outside Jakarta. GDP per capita outside Jakarta will also increase from time to time so you can expand outside Jakarta also in the future.
  • Based on a social experiment conducted by Arip Tirta of to determine where the early adopters of new startups live in Indonesia, we learned that Bandung, Yogyakarta and Bali are on the top 3 cities for early adopters. He mentioned that Jakarta has the “wait and see” mentality in which they wait until they see some Jakartans joined the site before they start joining in big number. Surprisingly despite being the second largest city in Indonesia, Surabaya doesn’t make it on the top 5. It should be noted that he conducted the experiment by sending  25 invitation emails to different cities in Indonesia encouraging real estate agents to join and determine the ranking by the number of register agents from each city.
  • He also mentioned that Indonesians need to talk more about apps as part of their daily activities. When he lived in the US, he notices that people including Indonesians who live there talk about new apps quite often and has became part of their life. Many people rely on apps to make their life better. This behavior helped the market adaption and the success rate of many startups in the US.


  • Case of founders exit from their startups are relatively rare in Indonesia, and usually they don’t publish the number, different from in the USA where so many successful founders share their story to public and inspire younger generation to do startup.
  • Local angel investors usually have a short term mindset, business must have revenue or profit after 1 or 2 years operation, so most of Indonesian founder must understand how to crack the business model that generated revenue from day 1 such as ecommerce or service.
  • Angel investor in Indonesia usually don’t published that they’re an angel investor, we can’t give a clear reason why, probably because potential conflict of interest (usually they’re people who hold position in a company)
  • There’s an opinion that series A di indonesia is relatively limited, it’s challenging for seed fund to bridge into series A, one of the incubator program is put on hold because “funding ecosystem is not ready” but in Indonesia, each year we see some new Venture Capital are coming so the there’s a big chance the situation will change year after year.
  • Only 25% of Indonesian have access to bank account and 1-4% have credit cards.
  • We learned from Stefan Jung of Rocket Internet that while he is researching for a new potential vertical ecommerce in Indonesia, he found that search volume in Indonesia is relatively very small in South East Asia, he gave example of glasses, very small number of people search to buy glasses on search engine.
  • Case of local startup expanding overseas is rare except game startup, unlike Singapore that founder usually have a global mindset from day one, probably because language barrier and domestic market is so big ( this is an advantage but also a disadvantage at the same time).
  • According to Mckinsey report, Indonesia is projected (2030) to face challenges in ensuring that workers receive the right level of education, the projected undersupply numbers is 9 million in 2030.
  • Despite strong growth in internet access, research in Asia shows that  Indonesia’s broadband penetration lags behind it’s peers. Vietnam for instance, has more than 4 percent broadband penetration compared with Indonesia 1 percent.
  • Indonesia GDP Per capita in 2012 is around 3,500 USD. It means there are some business models from US and Japan that will not running well if adopted now in Indonesia, mainly business model that monetize from the consumer side.


  • Indonesia has one of the most youngest demographic profiles, 60% of the population is below 30 years of age and the population is growing at the rate 2,5 million per year, this means more and more potential early adopters for your startups.
  • According to many reports, Indonesia young population offering the economy a potential demographic dividend, on current trends, Indonesia is on course to become the seventh-largest economy in the world in 2030 from the 16th largest today. Positive view of Indonesia is increasingly shared by global player, among 18 largest economy in the world, Indonesia is projected to experienced 2nd fastest nominal GDP growth (Russia is #1) from 2009 to 2015.
  • Indonesian internet users are very social and passionate social media users, around 47 million Facebook users, 29 million Twitter users, 1,4 million Linkedin users, in Indonesia, social media is important distribution channel for startups, according to, Indonesian visit social sites more than search engine.
  • Tapping the indonesian market means anticipating mobile internet boom, most indonesian can’t afford to buy pc or laptop but they can buy cheap phone with internet.
  • We learned from Hadi Wenas, Co Founder of zalora, in early days when Zalora launched, 80-90% of ZaloraID customers are from Jakarta, in January 2013 customers from Jakarta around 50-70%, in July 2013 customers from Jakarta only 20-30% (note : the sales numbers increase significantly). This means “the money is there outside Jakarta”, the pattern of many Island in Indonesia have big ecommerce potential. Mohamad Rosihan, founder of, one of the biggest moslem fashion ecommerce said, the ecommerce boom in Indonesia will happen when SME production centers in East Java, Central Java, West Java have access to ecommerce.
  • Many green areas in technology startup business in Indonesia, because funding ecosystem still relatively new in Indonesia, we talk with many VCs and generally they are looking for portfolio such as (but not limited to) health startups, niche / vertical ecommerce such as affordable luxury ecommerce, jobs site with better filtering system, online education, dating app, online travel, vertical photo sharing, online niche media such as female media, social network (people trying to find a right “hook” for local social media now).


Technology and internet Incubator, accelerator and VC operated in Indonesia (Alpabetical order)

  • 500 startups
  • Batavia Incubator and Corfina Group
  • Ciputra + GEPI incubator
  • Cyber Agent Ventures
  • East Venture
  • Founder Institute
  • Gree Ventures
  • Grupara Inc
  • Ideosource
  • IMJ Fenox
  • In House VC
  • Merah Putih Incubator and GDP Venture
  • Mountain Ventures and Ideabox (Indosat)
  • Nusantara Venture
  • Rebright Partner
  • Rocket Internet and Global Founders Capital
  • Systec Group

Some investors said “this is the right time to enter Indonesia market” the door is opening now, if you wait 2 or 3 years, the price of investing in Indonesia will be a lot higher, so why are you waiting ?


Sources :



Ecommerce in Indonesia report by Dailysocial and Veritrans |

Chairul Tanjung presentation

Andy Zain presentation Introduction to Indonesia startup ecosystem

Mckinsey report : The archipelago economy, unelashing Indonesia’s potential

Oxyweb search Vs social