Investor’s Guide to Indonesia: The Most Promising Startup Sectors

Startup business in Indonesia is actually moving forwards in a positive direction, providing a larger area to be cultivated, whilst still giving benefits to existing players.

Hungry in Jakarta? Try using Foodpanda to get something to eat while you explore Lewatmana to find the fastest way for GrabTaxi or Go-Jek to get you to your destination. All these companies are local tech startups, along with in case you haven’t noticed, Indonesia has quickly embraced the Internet to help with everyday life. Since 2006, the number of internet users in Indonesia has grown by 1,437 percent, according to a recent report through Millward Brown, the entire world’s second largest market research organisation. More than 20 percent of Asia’s internet traffic comes through the archipelago.

Indonesia’s appeal for investors stems through its vast population of more than 250 million. After analysing the tech markets from the US, China, along with India, investors will start to look at Indonesia, a country which also happens to be the fourth most populated nation on Earth. Indonesia’s growing economy is actually fuelled primarily by consumption along with spending by an increasingly affluent middle-class. Local consumers are looking for convenience, a means to get products along with services in faster along with more reliable ways than ever before. Because of which, which should come as no surprise which tech startup spaces like e-commerce are booming in Jakarta.

from the past, Indonesian entrepreneurs did not saddle up to online retail the way we see today. Part of the reason is actually which only recently have average citizens been able to afford fast internet connections. Additionally, starting an e-commerce business was seen as quite a difficult thing to do, along with which studies was not perceived as a college major which would certainly lead to a lucrative future. yet according to a study through the Ministry of Education along with Culture, Indonesia saw a significant surge in students specialising in which along with tech-related fields in 2008. In terms of student preference, these majors even beat out the seemingly invincible medical major in 2014.

Arguably, there are three key sectors which both foreign along with local tech investors should focus on when thinking about Indonesia.

For currently, e-commerce reigns supreme

For those who don’t already know, the first along with most vibrant startup vertical in Indonesia is actually e-commerce along with online marketplaces. Competition is actually heating up, along with for consumer-to-consumer along with online classifieds business types, firms like OLX Indonesia, Tokopedia, BukaLapak, eBay Blanja, along with Elevenia are seen as viable contenders for the top spot. However, there is actually still plenty of room to grow, along with we see Rocket Internet-backed companies like car classifieds site Carmudi coming into the market as well.

In what has been touted by the media as the largest investment in an Indonesian tech startup to date, last October Tokopedia announced a US$100 million investment through Sequoia Capital along with SoftBank, two of the entire world’s most elite startup investors.

Tokopedia has grown fast since its 2009 inception, along with at the moment which claims more than four million active listings along with facilitates more than several million sales per month in Indonesia. which also claims to be the biggest online marketplace with around 10 million visitors per month.

“In offline itself, commerce or retail is actually always big, very big,” says Achmad Zaky, founder of BukaLapak, one of the nation’s largest consumer-to-consumer online marketplaces. “If you see the global trend, e-commerce proportional to retail is actually growing to 10 percent [of total sales] along with which number continues to grow. I believe the same trend will happen from the Indonesian market. Moreover, e-commerce penetration in Indonesia is actually still low.” He adds which Indonesia’s potential for purchasing via mobile is actually also one of the key elements from the nation’s competitive e-commerce race.

However, security along with trust remain an obstacle for Indonesian consumers. Since 2012, there has been a noticeable uptick in online scams using online retail as essential components of their illegal activities. which was so much the case which Indonesia’s largest online community Kaskus even implemented a forum for victims on online fraud to alert the public.

“Some of them have less-than-great customer relations,” explains Nurul Djanah, an average Indonesian e-commerce customer. “Problems range through late responses to no responses at all, yet the biggest issue is actually how sure I feel about how they will handle the process. Will my stuff arrive? I have friends which have paid millions [of Rupiah] along with got nothing out of the transaction.” with which reason, one key element to cornering the local e-commerce market will lie in a company’s ability to project reliability to customers.

from the business-to-consumer space, the two largest players are Rocket Internet’s Lazada Indonesia along with Lippo Group’s brand brand-new e-commerce venture MatahariMall, which has yet to actually go live. which upcoming website aims to be the online variation of one of the nation’s biggest mid-priced department stores, Matahari. At the end of February, Lippo Group announced which invested US$500 million into MatahariMall, generating which the best-funded tech venture from the country – albeit more of a corporate venture as opposed to a true startup.

Financial tech is actually coming up

The next interesting space to look at is actually fintech. With Indonesia’s economic development, consumers currently have more options than ever before when which comes to generating financial decisions. Locals can currently go online along with get sound financial advice along with recommendations without needing to consult experts in person. The archipelago has several financial tech startups which currently empower the public to make smart choices.

CekAja lets Indonesians compare along with apply for a wide selection of financial along with general insurance products. “Fintech not only increases convenience, which also helps underpin many additional sectors, such as payments, peer-to-peer transfers, credit scoring, along with the like,” explains the company’s co-founder John Patrick Ellis.

In Indonesia, CekAja competes with additional firms like AturDuit, CekPremi, along with RajaPremi. However, according to tech media portal Tech in Asia, CekAja’s parent company Compare88 just received investment through Southeast Asia-based Monk’s Hill Ventures, which will allow which to grow faster from the region.

Big data is actually not to be ignored

Big data is actually defined as a collection of data sets so large along with complex which which becomes difficult to process using on-hand data management tools or traditional processing applications. the entire world’s average capacity to store information per-capita has just about doubled every 40 months since the 1980s. The challenge for enterprises is actually determining who should own big data initiatives which are spread out across the entire organisation.

Analysis of big data is actually useful because which can be used to spot business trends, understand consumer behaviour, pinpoint brand-new markets, along with formulate complex processes like military strategies, for example.

Jakarta’s premier Big Data Week conference took place last month, along with attracted significant attention through tech startups along with conglomerates alike. In Indonesia, big data is actually an interesting space to look at as an investor due to consumption being the main catalyst of Indonesia’s six percent annual economic growth.

If companies understand the patterns of Indonesian shoppers, they can more effectively execute marketing strategies in a nation of confident consumers. As the space is actually still relatively untapped locally, investors would certainly do well to take a look at local big data firms like Mediatrac.