[THE INVESTOR] JAKARTA -- Indonesia is home to four unicorns -- startups whose value reaches over US$1 billion -- Go-jek, Traveloka, Tokopedia and Bukalapak. But the world’s fourth populous country with more than 250 million potential spenders wants more such success stories.
“We want to have at least five unicorns by next year, so we are waiting to see who will be next,” said Indonesia’s Communication and Informatics Minister Rudiantara, during an opening event hosted by EV Hive, a fast-growing local co-working space earlier this month.
Go-jek and Grab motorcycle drivers in Jakarta, Indonesia
“Currently, we have four startup unicorns from Indonesia but none are from fintech services. I hope to see the next unicorn from this field,” said Rudiantara, adding that he believes P2P lending fintech startups have a chance to become the next unicorn.
His wish may soon become a reality as Indonesia’s market potential, combined with the government’s push for creating a startup hub are attracting aspiring entrepreneurs from all around the world.
“Indonesia has huge potential thanks to its population, the number of young people, and a spiraling mobile penetration,” Andy Zain, founding partner of Indonesia’s Kejora Ventures, told The Investor at his headquarters in Slipicon -- an area hosting many up-and-coming startups, dubbed Slipicon Valley. “The birth of unicorns, especially those like Go-jek, are opening up new opportunities for many industries in Indonesia.”
Qraved's headquarters decorated with Korean and Indonesian flags in Jakarta, Indonesia
Kim Chang-beom, Korea’s new ambassador to Indonesia said he was very impressed by Indonesia’s startup boom and Korean startups could find opportunities in this transformation. “This is my first time back in Indonesia in 13 years, and the biggest change is the one to a digital economy, and the change to e-commerce and mobile payment,” Kim told The Investor. “ “So it's important for Korean companies to study and adopt this transformation to grasp new opportunities.”
And there are indeed some Korean entrepreneurs taking advantage of them.
Qraved, a food and restaurant directory app co-founded by Steven Kim, was named as one startup that the ministry sees can grow into a unicorn. Another one is Cashtree, an advertising platform on mobile phones, established by Kim Jin-ho, who co-founded game company Neople in 2001 in Korea. Cashtree plans to tap into Indonesia’s US$280 billion mobile advertisement market.
OK Home, a domestic service agency, is founded by two young Korean men who had never been to Indonesia before three years ago. But now they are focusing on their goal to improve the quality of life in Indonesia.
But it’s not all peaches and cream, especially for startups led by foreign entrepreneurs. Although the government does not block such attempts except for the fintech industry, and is more flexible in terms of regulations compared to Korea, human resources is a huge challenge due to strict labor and immigration laws, according to multiple CEOs.
“I think in Indonesia, to a certain degree, it’s tougher to hire and fire employees than in Korea,” said Kim of Qraved.
To overcome these problems, dedication and localization are key.
“You really have to go all-in,” said Kim Jin-ho, founder and CEO of Cashtree. “Some Korean startups think that coming to Indonesia with exactly the same idea and practices they did in Korea will work, but it won’t. You have to be committed to this market and localize properly.”
Right now there are less than 20 Korean startups based in Indonesia, but this year might see more cooperation between the two countries as they are set to join forces to boost startups following a submit between Korean President Moon Jae-in and Indonesian President Joko “Jokowi” Widodo in November last year.
“The two heads agreed to increase cooperation in digital startups as part of Indonesia’s national agenda to set up 1,000 digital startups. So we're working on how to increase collaboration in this area and boost cooperation at the governmental level,” said the ambassador.
By Park Ga-young and Ahn Sung-mi (email@example.com) (firstname.lastname@example.org)
This story was sponsored by the Samsung Press Foundation. - Ed.