After Go-Jek, Tokopedia & Traveloka, Indonesia won’t see new unicorns soon: investors

Indonesia’s Go-Jek started out with motorbikes, then added cars later. Photo credit: Go-Jek.

Anyone following Indonesia’s tech scene is probably familiar with “GTT” – Go-Jek, Tokopedia, and Traveloka, the country’s three billion-dollar startups. This year alone, Tokopedia and Traveloka got a significant boost following investments from backers like China’s Alibaba and US firm Expedia, respectively. Will we see a new Indonesian startup join the unicorn club next year?

Willson Cuaca, managing partner at East Ventures – a prolific early-stage investor in Indonesia and the rest of Southeast Asia – doesn’t think so. “There’s a huge gap between those big companies and the mid-tier ones,” he said during Tech in Asia Jakarta 2017. (Disclosure: East Ventures is an investor in Tech in Asia. See our ethics statement for more info).

Sharing the stage with Cuaca, Pieter Kemps of Sequoia Capital – an investor in both Go-Jek and Tokopedia – agreed that other startups would need time to catch up.

While it may not happen soon, it doesn’t mean Indonesia’s tech scene is “drying up,” Kemps assured the audience.

“You have this first wave of startups in horizontal marketplaces, logistics, travel that have emerged and they’re very dominant right now.” More interesting things are coming up – there’s going to be a “second cycle,” he said.

It’s a trend seen in China, where Toutiao, Meituan, and Didi Chuxing – also known as “TMD” – are following in the footsteps of “BAT” (Baidu, Alibaba, and Tencent). Kemps said TMD might be less known in the region, but each boasts a valuation ranging from US$20 billion to US$50 billion.

In Indonesia, opportunities abound for startups to get a grip on the highly “inefficient” market. “There’s so many things broken in this country, lots of problems to solve,” Cuaca said.

That’s true even for ecommerce – despite the dominance of Tokopedia and another Alibaba-backed firm, Lazada – because the sector accounts for only 2 percent of total trade happening in the country.

L-R: Pieter Kemps, Willson Cuaca, and Grace Xia speaking on stage at the Tech in Asia Jakarta 2017. Photo credit: Tech in Asia.

Skills shortage

But before Indonesian startups can jump to the next level, they must surpass what could be their biggest hurdle – a talent shortage that has been a drag on the country’s tech sector.

Indonesia is one of Asia’s most populous nations, with millions of internet users coming online every month, but tech talent is limited. Specifically, there’s a lack of engineers, the investors said.

“If you look at the quality of engineering in China, I’d say it’s on par with the US, which wasn’t the case in the past. The sheer volume of companies, the scale companies in China are operating at, the complexities of the problems that need to be solved means you have to innovate a lot. Here it’s still a challenge,” explained Kemps.