<article><p>As far as venture capital investing in Indonesia goes, 2021 was a year for the record books.</p></article>

<p>As far as venture capital investing in Indonesia goes, 2021 was a year for the record books.</p>
<p>With VCs loosening their purse strings, the country added seven new startups — Kopi Kenangen, J&amp;T Express, Tiket.com, Blibli.com, Kredivo, Xendit, and Ajaib — to the unicorn club, and also witnessed the local IPO of homegrown e-commerce firm Bukalapak — a sign that exits are feasible in this market.</p>
<p>Moving into 2022, Indonesia-focused VCs say they remain bullish thanks to the country&#8217;s digital infrastructure and its handling of the pandemic, among other things. However, they also warned that ample liquidity and limited targets for investments have created exorbitant valuations.</p>
<h3>Steady stream of funding</h3>
<p>Startups enjoyed a steady stream of funding last year. According to DealStreetAsia <a href="https://www.dealstreetasia.com/reports/se-asia-deal-review-q4-2021/" target="_blank" rel="noopener">DATA </a><em><a href="https://www.dealstreetasia.com/reports/se-asia-deal-review-q4-2021/" target="_blank" rel="noopener">VANTAGE&#8217;s </a></em><a href="https://www.dealstreetasia.com/reports/se-asia-deal-review-q4-2021/" target="_blank" rel="noopener">SE Asia Deal Review: Q4 2021</a> report<em>, </em>Indonesian startups raised $9.4 billion from 213 deals in 2021, almost three times the $3.42 billion raised a year earlier. J&amp;T Express was the top fundraiser in the Southeasia region in 2021.</p>
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<p class='my-2' style='text-align: right !important'><a href='#' class='tablepress-expand-button btn btn-sm btn-primary'>Expand Table</a></p><h2 id="tablepress-1284-name" class="tablepress-table-name tablepress-table-name-id-1284">Top equity fundraisers in Indonesia in 2021</h2>

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	<th class="column-1">Investee</th><th class="column-2">Type</th><th class="column-3">Value (in millions $)</th><th class="column-4">Vertical</th><th class="column-5">Investors (not exhaustive)</th>
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	<td class="column-1">J&amp;T Express</td><td class="column-2">Unkown series + pre-IPO round</td><td class="column-3">4500</td><td class="column-4">Logistics</td><td class="column-5">Boyu Capital, Hillhouse Capital, Sequoia Capital China, SIG China</td>
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	<td class="column-1">GoTo+Gojek</td><td class="column-2">Corporate round + pre-IPO round</td><td class="column-3">1600</td><td class="column-4">Multi-vertical</td><td class="column-5">ADIA, Google, SeaTown Master Fund, Temasek, Tencent</td>
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	<td class="column-1">Bukalapak</td><td class="column-2">Unknown series</td><td class="column-3">400</td><td class="column-4">E-commerce</td><td class="column-5">GIC, Microsoft, Naver, SC Venture</td>
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	<td class="column-1">Ajaib</td><td class="column-2">Series A + B</td><td class="column-3">243</td><td class="column-4">Fintech</td><td class="column-5">DST Global, Horizons Ventures, Ribbit Capital, SoftBank</td>
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	<td class="column-1">Xendit</td><td class="column-2">Series B + C</td><td class="column-3">215</td><td class="column-4">Fintech</td><td class="column-5">Tiger Global Management, Accel, Y Combinator</td>
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	<td colspan="2" class="column-1">Source: DATA VANTAGE</td><td class="column-3"></td><td class="column-4"></td><td class="column-5"></td>
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<p>&#8220;Indonesia has become the most attractive country for investors both domestically and abroad, thanks to the acceleration of digital adoption during the COVID-19 pandemic and improvements in digital infrastructure that makes online costs more efficient,&#8221; Willson Cuaca, co-founder and managing partner at East Ventures told DealStreetAsia.</p>
<p>East Ventures, an Indonesian sector-agnostic VC, said it closed the year with more than 80 deals across Southeast Asia and welcomed 48 new companies into its portfolio.</p>
<p>Meanwhile, Mandiri Capital Indonesia (MCI), the corporate venture arm of state lender Bank Mandiri, exceeded its own expectations by participating in seven funding rounds in 2021.</p>
<p>In 2021, MCI had joined Bukalapak&#8217;s undisclosed pre-IPO funding round led by GIC and Standard Chartered in April, Ayoconnect&#8217;s pre-Series B with Patamar Capital and Habibie Foundation in July, and another unnamed insurtech in mid-December. The corporate VC also topped up its investments in Amartha, iSeller, Crowde, and PrivyID in the year.</p>
<p>Eddi Danusaputro, secretary-general of the Indonesian Venture Capital Association (AMVESINDO), said he is hopeful that foreign investors will return to Indonesia this year as COVID-induced restrictions on travelling ease. While foreign investors applied the brakes last year due to the travel restrictions, Danusaputro said local investors had stepped in to fill the void.</p>
<p>In 2021, some VC firms <a href="https://www.dealstreetasia.com/stories/indonesian-vc-funds-exceeds-target-271874/" target="_blank" rel="noopener">exceeded their initial fundraising targets</a> and amassed more capital than initially planned, a sign of increasing investor interest in the country.</p>
<p>Jakarta-based early-stage investor AC Ventures, for instance, recently upsized its third fund and closed it at $205 million, higher than its initial $80 million target.</p>
<p>Alpha JWC Ventures, another early-stage investor, closed its third vehicle at $433 million from global and regional investors such as the IFC, Morgan Stanley Asset Management, and some family offices. Initially, the VC had targeted $250 million.</p>
<p>&#8220;Indonesia remains a very attractive market. It is the largest market in ASEAN, the demographics are good, and it has handled COVID-19 well relative to some other countries. This has led to investors, including many foreign investors, having more confidence in the country,&#8221; said Northstar Group director Carlson Lau.</p>
<h3>Hot sectors</h3>
<p>In 2021, fintech was the hottest sector by deal value and volume.</p>
<h3 style="text-align: center;">Top sectors by deal value and volume in 2021</h3>
<p><img loading="lazy" decoding="async" class="aligncenter wp-image-278516 size-full" src="https://media.dealstreetasia.com/uploads/2022/01/Fintech-2021-e1642776687547.jpg?resize=640,293" alt="" srcset="https://media.dealstreetasia.com/uploads/2022/01/Fintech-2021-e1642776687547.jpg?w=1920 1920w, https://media.dealstreetasia.com/uploads/2022/01/Fintech-2021-e1642776687547.jpg?resize=300,137 300w, https://media.dealstreetasia.com/uploads/2022/01/Fintech-2021-e1642776687547.jpg?resize=1024,468 1024w, https://media.dealstreetasia.com/uploads/2022/01/Fintech-2021-e1642776687547.jpg?resize=768,351 768w, https://media.dealstreetasia.com/uploads/2022/01/Fintech-2021-e1642776687547.jpg?resize=1536,702 1536w" sizes="(max-width: 1920px) 100vw, 1920px" data-recalc-dims="1" /></p>
<p>Around 20% of the deal value and volume in the fintech sector was garnered by Indonesia-based firms.</p>
<h3 style="text-align: center;">Fintech deal volume (inner circle) &amp; value (outer circle) by market</h3>
<p><img loading="lazy" decoding="async" class="aligncenter wp-image-278518 size-full" src="https://media.dealstreetasia.com/uploads/2022/01/Fintech-Indo.jpg?resize=640,528" alt="" srcset="https://media.dealstreetasia.com/uploads/2022/01/Fintech-Indo.jpg?w=825 825w, https://media.dealstreetasia.com/uploads/2022/01/Fintech-Indo.jpg?resize=300,248 300w, https://media.dealstreetasia.com/uploads/2022/01/Fintech-Indo.jpg?resize=768,634 768w" sizes="(max-width: 825px) 100vw, 825px" data-recalc-dims="1" /></p>
<p>Speaking on investment themes for 2022, VCs said they are looking at sectors from blockchain to ESG.</p>
<p>&#8220;From the fintech sector, blockchains and NFTs are believed to strive and create a bang between investors. More instant commerce companies are expected to emerge as well, seeing how the pandemic has accelerated the demand,&#8221; wrote Cuaca of East Ventures on the firm&#8217;s website.</p>
<p>Cuaca noted that healthtech startups and companies focusing on addressing the ESG sector are also expected to rise this year. He expects more new sectors in East Ventures&#8217; portfolio in 2022.</p>
<p>East Ventures recently announced its investment in Fraction, a Hong Kong- and Bangkok-based fintech startup, that links properties to NFTs which can be split and sold to small investors. While East Ventures led the $3 million pre-Series A round, Emtek Group, Thakral Limited, and V Ventures also joined.</p>
<p>The Northstar Group’s strategy is to invest in consumer businesses, financial services, and the digital economy. Within digital, the firm is looking at businesses driving SME productivity, supply chain management, and the creator economy.</p>
<p>&#8220;We are seeing more and more creators and influencers starting to effectively tap directly into consumer markets,&#8221; Northstar&#8217;s Carlson Lau said, noting that the firm is looking at online brands and some of the tools that support online brands.</p>
<p>Intudo Ventures, on the other hand, is focusing on its bread-and-butter verticals — agriculture, B2B and enterprise, education, finance and insurance, health and wellness, logistics, and new retail and entertainment.</p>
<p>&#8220;Intudo has never been a trend-follower,&#8221; said Eddy Chan founding partner of Intudo Ventures. &#8220;We avoided areas of investment that are prone to hype cycles, preferring to filter through market noise to find clear category winners and non-consensus plays that have the potential to create new categories in their own right.&#8221;</p>
<p>For MCI, meanwhile, the focus will be to back growth-stage companies working in the social commerce space, wealthtech, logistics tech, remittance, securitised crowdfunding, and corporate enabler, said chief investment officer Dennis Pratistha. &#8220;We will prepare larger funds in comparison to the previous year with the hope that the digital ecosystem can be accelerated and continue to grow positively. We have, therefore, prepared more diverse funding stages for startups — from seed to Series C,&#8221; said Pratistha.</p>
<h3>There&#8217;s &#8220;frothiness&#8221; in the market</h3>
<p>As funds keep pouring into the country, industry insiders have raised concerns of overvaluation.</p>
<p>&#8220;I think there&#8217;s frothiness in the market,&#8221; Joel Shen, the head of Withers tech Asia said, commenting on the aftermath of excess liquidity in the market, rising asset prices, and a resilient consumer market.</p>
<p>&#8220;Thanks to a decade of cheap money post the global financial crisis, we should be mindful of excess liquidity leading to overvaluation,&#8221; Chik Wai Chiew, Heritas Capital&#8217;s CEO and executive director, told DealStreetAsia. Established in 1997, Singapore-based Heritas Capital has been investing in the region with an eye on impact. In Indonesia, the firm has invested in Alodokter, Cakap, and Pintek which operate in the healthcare, education, and technology space.</p>
<p>&#8220;With an abundance of capital in the market, our guidance for founders is to be more cautious in valuations. Markups are great for everyone, but from our experience, these cycles don’t always last,&#8221; said Chan of Intudo Ventures.</p>
<p>Over the course of 2020 to 2021, Intudo Ventures noticed that certain sectors received a lot of media and research report coverage which, in turn, resulted in massive funding at an early stage. Chan called this a “recipe for market froth”.</p>
<p>While he declined to give specifics of the sectors, Chan, who has been working on venture investments since the late 1990s, said the trend often attracts founders, investors, and employees who don&#8217;t have a strong passion about the field they work in. This often results in very expensive inorganic customer acquisition strategies with massive subsidies.</p>
<p>Withers&#8217;s Shen said there will be more liquidity in the market this year but whether it&#8217;s a good or bad thing for private equity and venture capital players remains to be seen.</p>


There will be more liquidity in the market this year but whether it's good or bad remains to be seen.

Indonesian VCs move into 2022 with optimism despite warnings of market froth

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