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What Do Tech Startups In Indonesia Need Most From Investors?

This question originally appeared on Quora, and the answer that follows was provided by Arip Tirta, the co-founder of UrbanIndo [1].

Arip Tirta, Cofounder of UrbanIndo

In order of importance, I think what the Indonesian technopreneurs need from their investors are: Capital, mentorship, and connections.

Based on my interactions with other technopreneurs in Indonesia, there are several reasons why some founders in Indonesia prefer not to deal with any institutional investors:

  • Losing control – This is probably the biggest concern that Indonesian technopreneurs have. They are afraid if they take money from an institutional investor, they will lose control of the company and will need to follow what the investor wants.
  • Bootstrapping mentality – Many Indonesians, including me, come from generations of entrepreneurs who founded various companies via bootstrapping. Many founders embrace the self sufficient mentality and don’t feel the need to raise money from outsiders as long as they have a plan to generate positive cash flow for their tech startup quickly.
  • Dealing with the unknown – While entrepreneurship has been part of Indonesia for many years, VC investing and technopreneurs are a new phenomenon for many Indonesians. Many Indonesian technopreneurs  are not familiar with VC investing, and there is currently little help that they can get to have a better understanding on VC investing. They are afraid of dealing with the unknown.

Here are couple tips and precautions that I can provide for Indonesian technopreneurs:

  • Don’t expect a hostile take-over a la Carl Icahn from an institutional investor. Even though an institutional investor will want to have control on the company, the key management team will continue to have major control of the company as they will be the ones who run it. It’s for the investor’s best interest to have alignment of interests with the management team. Early stage investors spend the big chunk of their due diligence on the management team. Product evolves, [and] so does the business model, but a good management team will go a long way because they will know how to maneuver the company to overcome all the problems that might arise. Any major changes to the company’s goals, business model, exit strategy, and others will be best executed with management’s full support.
  • I applaud a bootstrapping mentality as it requires us to be frugal and exercise caution. I do however believe that a bootstrapping mentality is best fitted for traditional non-tech startups as tech startups have more unknown variables that require the founder to take more risks in a fast moving tech world.
  • Don’t just focus on the valuation, as the devil is in the details. If you are not familiar with the legal documents, hire a good lawyer. Make sure that you fully understand the documents inside and out to prevent any surprises. Despite what they say, all the terms on the documents are negotiable depending on the company and the VC’s appetite. The VC creates the documents to protect them, you need to expect the documents will be a one sided document in favor of the VC.

More questions on Startups in Indonesia:


  1. Disclosure: UrbanIndo is an East Ventures portfolio company, and East Ventures is also an investor of Tech in Asia. Read our ethics page for more information.  ↩



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