State of tech startup ecosystem in Medan

Most of Indonesia’s tech startup ecosystem is centralized in the capital city of Jakarta. Not only has Jakarta become the host for numerous startup-related events, it is also the place where many business deals are made. Other cities like Bandung and Bali are following in Jakarta’s footsteps when it comes to building a tech startup ecosystem. Aside from those three, other big cities in Indonesia also show signs of potential to be a good launchpad for new tech startups, one of which is Medan, located in Sumatra province.

Challenges and opportunities

With over two million inhabitants, Medan is the third largest city in Indonesia, after Jakarta and Surabaya. Almost 50 percent of Medanese people are in the age group of 15 to 39 years old. This indirectly contributes to Medan’s high productivity. Demographically, Medan has diverse ethinicities like Batak, Javanese, Chinese, Malay, and Karo people.

Besides having ample human resources, Medan also has abundant natural resources. No wonder the city is where business and pleasure collide in Indonesia. As one of the biggest industrial zones in the country, many entrepreneurs head there to make business deals. Several national and international companies reside there.

Medan also has good telecommunication infrastructure, and the government is now strengthening internet infrastructure as well. So far, everything looks set to advertise Medan as a very attractive market to be in. So why haven’t we heard much about its tech startup ecosystem?

There are a few factors that hinder the tech scene’s growth here. First is the lack of awareness and knowledge regarding startups. Not a lot of people fully understand them. Because of the lack of success stories from within the city, many are reluctant to try their luck building tech startups. Few startup-related events in the city are available to inspire and teach the local folks about starting their ventures.

Second is the talented IT graduates who still prefer to work at established companies. Medan has no shortage of IT talent, but many of those young professionals decide to take it elsewhere. William Tanuwijaya, the CEO of local marketplace Tokopedia, is one the few success stories from Medan. But he is running his business in Jakarta, not his home city.

See: Tokopedia turns 5 years old, touts 24 million products sold last year

Third, many entrepreneurs still do things the traditional way. “Yang penting cuan,” which means “as long as we’re making profit,” is still the mindset whenever someone decides to build a company, whether it is offline or online. This is a mindset that makes entrepreneurs reluctant to embark on tech ventures that are deemed to be more risky.

What Medan needs

Indra Halim, founder of Medan food directory KulinerMedan as well as the head committee of restaurants in North Sumatra’s chamber of commerce, says the city has immense potential and opportunities are abundant.

Medan can be a good place to build a startup, because it has diverse culture and also consumers that are ready to transact. Unfortunately many startups aren’t ready yet. Until now, a lot of them still utilize social media [as one of the main channels] to sell.

According to Halim, the lack of hype and media attention surrounding Medan’s startup scene is also the reason why the ecosystem hasn’t yet boomed there. Halim hopes more startup mentorship programs will be held in the city so founders and future founders can understand the industry and run their businesses better. He explains:

Startups we found in Medan