Tracxn, a leading global SaaS-based market intelligence platform, has released its Geo Annual Report: Indonesia Tech 2023. Based on Tracxn’s extensive database, the report provides insights into the Indonesia Tech space.
Indonesia is the second largest economy in Southeast Asia after Singapore and is also the second highest-funded startup ecosystem in Southeast Asia till date. However, the country witnessed its highest funding in 2021 after which there was a steady decline in the funding in this region making 2023 the least-funded year since 2020.
Indonesia has witnessed total funding of $1.4 billion in 2023 to date, a drop of 54% as compared to the same period in 2022. The number of funding rounds in 2023 YTD also experienced a drop of 49% as compared to the same period in 2022.
The decline in funding is primarily attributed to a 38% drop in late-stage funding, a total of $1 billion in 2023 YTD compared to $1.66 billion in the same period in 2022. Seed-stage also experienced a 65% drop to $76.8 million in 2023 YTD, with 44 rounds compared to 98 in 2022. Early-stage funding saw a 73% decrease, amounting to $341 million in 2023 YTD compared to $1.25 billion in the same period in 2022.
The top performing sectors in the country are FinTech, followed by Food & Agriculture Tech and Auto Tech. Nevertheless, the first two sectors witnessed a drop in funding. The FinTech sector experienced a significant 52% decline in the year-to-date (YTD) of 2023 compared to the corresponding period in 2022. Similarly, Food and Agriculture Tech witnessed a 59% decrease in funding in 2023 compared to 2022. On the contrary, Auto Tech, unlike the other two top-performing sectors, has seen an uptick in funding in the YTD 2023, showcasing a remarkable 63% increase compared to the same period in 2022.
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In 2023, there were nine acquisitions, marking a 55% decrease from the 20 recorded in 2022. A noteworthy acquisition in 2023 that surpassed the $100 million mark, was the consumer goods finance company Home Credit. Krungsri, Adira Finance, and MUFG collectively acquired Home Credit for $219 million.
The top-funded cities in 2023 include Jakarta ($974 million), Bandung ($249 million), and Tangerang ($114 million). The top investors in the Indonesia Tech space are East Ventures, AC Ventures, and Alpha JWC Venture. East Venture, Antler, and Northstar Group were the most active investors in the seed stage, while SMDV, TMI, and Openspace Ventures were leading in the early-stage investments.
The tech space in Indonesia witnessed one Unicorn company in 2023, which is a 50% decline from 2022 and a 75% decrease from four in 2021. eFishery, after a recent funding round of $200 million, achieved unicorn status with a valuation of $1.2 billion.
Despite these challenges, Indonesia remains optimistic about its long-term economic development. The country boasts a young population and high internet penetration, creating favourable conditions for the digital economy's rapid growth in the upcoming years. The Indonesian government has also introduced the Startup Incubator Program in collaboration with the Ministry of Corporate Affairs and SMEs of Indonesia. This initiative aims to promote local entrepreneurship, providing direct access to MSE Grants.
Additionally, the Micro Business and Government Microloan Program (KUR) will distribute micro-loans for businesses, contributing to economic growth. As the Indonesian startup ecosystem navigates these challenges, the government's focus on digital infrastructure improvement and tax reforms reflects its commitment to bolstering the country's growth.
