Indonesia’s VC market could drop up to 80% in 2023: report

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Indonesia’s venture capital ecosystem hit the brakes hard on growth this year, with a report by AC Ventures and Bain & Company projecting an up to 80% year-on-year decline in deal value for 2023.

The report noted several factors that contribute to this drop, including the worsening global macro environment, rising interest rates, and weaker consumer and business sentiment.

Investors have noticeably been more cautious since the second half of 2022, shown by a reduced number of deals and a decline in deal sizes. This cautious approach has persisted into 2023, with funding remaining sluggish this year.

The number of large deals, which the report counts as those valued above US$50 million, has dropped 88% year on year.

This was not the case with small deals, or those valued below US$10 million. The report noted that deals of this size saw “healthy growth” compared to 2021.

The report also pointed out that the current trend in investments has been leaning toward ESG and climate tech, particularly electric vehicles and battery technologies.

Despite the overall decline in VC funding in Indonesia, there were some sectors that experienced boosts in deal values this year. Deals in the aquaculture industry grew 1.2x year on year for the first half of 2023, with the US$200 million investment in eFishery standing out as a highlight. 

The healthtech sector also raised more funds, with investments jumping from US$8 million in H1 2022 to US$51 million in H1 2023. This doesn’t include Halodoc’s US$100 million series D round, which it closed in July.

See also: VC funds tracker: East Ventures, August Global, others add $913m in new funds