Coronavirus, Health Startup Is Predicted to Attract More Investors

Coronavirus outbreak is predicted to affect investment into Indonesian startups. However, the Indonesian E-Commerce Association (idEA) estimates that investors are increasingly interested in investing in the health sector start-ups (health-tech).

IdEA Chairman Ignatius Untung said, startup services in the health sector will be increasingly used during the coronavirus outbreak. Therefore, the transaction will increase.

“When there are people who have the slightest flu, then worry and panic because they think they are infected with the coronavirus, they immediately ask the doctor through the application,” Ignatius told Katadata.co.id, Tuesday (3/3). In Indonesia, there are several health startups such as Halodoc, Alodokter, Prixa, GoApotik, and others.

Conversely, investment in startups sharing a ride (ride-hailing) to e-commerce is predicted to be affected by co-19. Because people will be more careful about buying goods through online platforms or using public transportation.

This condition will affect the operational sharing of startups such as Gojek and Grab, as well as e-commerce. Moreover, economic growth is predicted to slow down due to the coronavirus that is endemic in many countries.

“This means that there is a possibility that the gross merchandise value (GMV) is slightly affected and makes investors want to know the reason it went down. Is it because the coronavirus or (startup) is not accepted by the market,” he said.

Large-Scale Startups will not be So Affected by Corona

Even so, according to him, large-scale startups like Gojek and Tokopedia will not be too affected by the coronavirus, because the transaction has been measured. Meanwhile, startups that are still considered new have not proven its performance, and then investors will review further related to its GMV.

“Overall, the coronavirus will certainly have an impact on investment in startups,” Ignatius said. The same thing was conveyed by the Chairperson of the Indonesian Venture and Startup Capital Association (Amvesindo) Jefri R Sirait.

“There is an influence (coronavirus). We have to be anticipative because this also applies to all countries. Always be vigilant and hopefully (investment) can run normally again,” he said.

Jefri said that some startups affected by the coronavirus outbreak were the logistics sector, leisure or entertainment service providers to transportation. The government is deemed necessary to issue several policies, especially in the field of transportation so that the outbreak does not hamper the growth of investment into startups.

Quoted from the coronavirus distribution map, Coronavirus COVID-19 Global Cases by John Hopkins CSSE, the death toll reached 3,162 globally until this morning (4/3). There are 92,860 cases of the coronavirus, even so, the number of patients who recovered are as many as 48,252 people.

Previously, Similar Pandemics Happened and Influenced Funding

Pandemics such as covid-19 have occurred several times and affected funding to private companies, including startups. The Acute Respiratory Syndrome (SARS) Server Virus, for example, was endemic in Guangdong, China in November 2002. SARS caused 774 deaths and 8098 infections in 26 countries. The outbreak had an impact on funding to private companies (private market funding)

Based on CB Insights research, funding to private companies in Asia decreased by 27% in 2003 compared to 2002. The decline continued in 2004, 29% compared to 2002 or 3% compared to 2003. WHO just announced that China was free of SARS cases in May 2004.

Funding to the private sector also increased by 56% on an annual basis (year on year / yoy) in 2005. The intended funding was in the form of direct investment from venture capital or acquisition or mergers.

The decline in funding to private companies also occurred when Zika’s outbreak happened in Brazil in 2005. The pandemic spread throughout South America, including the United States.

Based on PwC and CB Insights data, funding from venture capital globally fell 16% quarterly (quarter to quarter / qtoq) in the fourth quarter of 2019. While the value of investment entering Asia fell from US$ 16 billion to US$ 14 billion quarterly.