Investments in Indonesia’s Four Startup Sectors Are Predicted to be Bright in 2022

Investors from venture capital circles estimate that funding for Indonesian startups will surge next year. There are at least four targeted sectors, namely health, education, logistics, and financial technology (fintech).

Edward Ismawan, Co-Founder and Managing Partner at Ideosource and Gayo Capital, said that the increase in investment in startups in 2022 was affected by the trend of the birth of new unicorns and decacorns this year.

“The trend of private investment will increase with the emergence of the decacorn,” said Edward, Thursday (23/12). Unicorn is a term for startups with a valuation above US$ 1 billion or around Rp. 14 trillion. Meanwhile, the decacorn is more than US$ 10 billion or Rp. 140 trillion.

There are seven new unicorns in Indonesia this year. They are JD.ID, Blibli, Tiket.com, J&T Express, Kredivo, Ajaib, and Xendit. This way, Indonesia has a total of 11 unicorns, including Tokopedia, Bukalapak, Traveloka, and OVO. In addition, one decacorn is Gojek.

However, CB Insights data titled ‘The Complete List of Unicorn Companies’ shows that Nusantara recorded four new unicorns this year, namely J&T Express, OnlinePajak, Ajaib, and Xendit.

OnlinePajak was on CB Insights’ list, but later disappeared. The valuation of J&T Express was even recorded at US$ 20 billion or decacorn status. In fact, the value was only US$ 7.8 billion in mid-April.

Positive Trend Expected to Increase Until 2022

J&T Express valuation is US$ 20 billion or around IDR 285 trillion according to The HurunGlobal Unicorn Index 2021. The value is greater than Gojek’s US$ 10.5 billion or equivalent to Rp 150 trillion.

In addition, funding from investors is encouraged by the number of startups planning an exit strategy. “So this positive trend should continue to increase until next year,” said Edward.

This strategy is a planned approach to ending investment in a way that will maximize the profits and/or minimize the losses. This could be an IPO, merger, or acquisition.

Meanwhile, the startup sector that is predicted to shine next year, one of which is education. Startups such as Ruangguru and Zenius have become targets because their performance has grown rapidly during the Covid-19 pandemic.

Ruangguru, for example, recorded a 50% increase in users year on year (yoy) to over 22 million.

Zenius users grew more than 10 times in 2020. User retention also reached more than 90%. This achievement encourages revenue to grow 70% on an annual basis. In addition, logistics startups are forecasted to be successful next year.

What’s more, J&T Express is now decacorn status. “This will provide additional confidence for the logistics startup ecosystem in Indonesia,” said Edward.

Health and Fintech Startups Investment are Predicted to be Smooth in 2022

In addition to these two sectors, CEO of Mandiri Capital Indonesia Eddi Danusaputro had said that investment in health and finance startups would be smooth next year.

“We are not easy to change course, because long-term investors,” he said. He estimates that investor interest in health startups will remain high even after the Covid-19 pandemic is over. “This is because people are increasingly literate about health.”

In October, East Ventures Co-founder and Managing Partner Willson Weather said that his company has invested in four health startups. These include research-based ones, such as Nalagenetics and Nusantics.

“In Indonesia, if you look at it, access to health facilities is still very low. If based on progress and talk about other categories, e-commerce, and edutech, digital platforms (health startups) will probably ‘run’ first. But it does not rule out the possibility that research-based ones will work,” said Willson during an interview with several journalists, on October (15/10).

Meanwhile, the fintech sector remains a target, driven by the trend of non-cash transactions and the need for loan services from Micro, Small and Medium Enterprises (MSMEs).