Overall fundraising by Indonesian startups in pandemic-hit 2020 is poised to fall by nearly a third from last year.
Fifty-two startups in the country had raised $1.92 billion until the third quarter of 2020. This may inch up to $2 billion by the end of this year, forecasts Indonesia’s venture capital association (Amvesindo). That’s still down 32.4% from the $2.95 billion raised in 2019.
Speaking at a forum with journalists, William Ghozali, Amvesindo’s vice chairman and chief investment officer at BRI Ventures, said PEs and VCs are delaying investments in Indonesia even though they are interested in Southeast Asia’s biggest economy.
“The main factor [behind lower investments] is the delaying of the due-diligence process. Some investors also prioritise supporting their existing portfolio over new investments. Investors also anticipate how deep the pandemic impact will be on startups — whether the startups have reached the worst-case scenario or are still going down,” Ghozali said.
His observations are in line with DealStreetAsia’s SEA Deal Review in Q3 2020 report, which stated that Indonesian startups raised $596 million in the third quarter of this year, down 53 per cent sequentially, and 69 per cent lower year-on-year. The lower valuations and the absence of big-ticket investment rounds contributed to the decline.
Travel tech startup Traveloka, which raised $250 million, was the largest fundraiser in the third quarter, followed by logistics firm Waresix which raised $100 million, and beauty e-commerce platform Sociolla with $58 million.
In 2019, Gojek had dominated funding investments, raising $2 billion in a Series F round.
Favourite sector: Fintech
Ghozali highlighted six sectors that received the most funding this year in terms of deal volume in Indonesia.
The fintech sector is the most leading sector, in which eight deals were sealed, followed by edutech (6), SaaS (6), new retail (5), logistics (4), and e-commerce (4).
“Compared to last year, edutech has gained due to consumer habits changing during COVID-19. It is predicted that users intend to continue this digital activity post-COVID. Therefore, the investors are still looking for a positive sign in this industry,” Ghozali added.
He is bullish on four sectors that have enough room to grow in 2021 — supply chain commerce, beauty startups, social commerce, and food tech.
“These sectors have room to grow, as Indonesia has numerous small and medium enterprises (SMEs). The pandemic has accelerated digital adoption. We see supply chain commerce has a good prospect. Meanwhile, the social commerce trend has increased; our country is known as the fourth largest in terms of social media users. Simultaneously, the food tech sector has just started to grow, pioneered by ride-hailing players who have big data and insights. They know which areas have a high demand for the food,” Ghozali explained.
Meanwhile, health tech, edutech, eLogistics, and eGrocery will see acceleration, meaning these sectors continue to grow during and post the pandemic.
The tourism sector — hit hardest by the pandemic — will recover slowly like a “J pattern”, because the industry depends on government policy such as travel restrictions, said Ghozali.