Is the ‘spray and pray’ investment strategy overhyping Indonesia’s startup scene?

Here’s one for Unpopular Puffin. Investors in Indonesia have recently been using the term “spray and pray.” I won’t say who they are and I’m not sure who coined the word, but for combat purposes – ahem and gaming – the term is used to describe firing an automatic weapon towards an enemy in long bursts, without making an effort to line up each shot. The hope is to hit the target by dumb luck. This is especially prevalent among those without the benefit of proper training.

In terms of an investment strategy, a lot of folks in Jakarta might justify the spray and pray method by saying it’s extremely hard to predict which startups will fail and which ones will take hold in such a weird market. As such, VC firms with cash to burn and pressure from LPs to announce a funding round each quarter may often be resorting to this strategy. Critics could say this is similar to gambling, and not a real way to govern a fund.

Granted, the local ecosystem is still maturing. As such, seed and series A rounds are still very low, as are valuations in Indonesia (although ecommere is certainly getting wild). Couple that with an incentive to not disclose the amount of your investment rounds due to taxation reasons in Jakarta – and bam! – you’ve got the makings for a bunch of investors running around the archipelago with machine guns. But instead of bullets, you’ve got small sums of cash in exchange for large ownership percentages.

For the startups who need a hit of capital, this can be a convenience. For investors with a fair bit of risk tolerance, it’s alright too. However, in terms of public perception of an ecosystem, does this method of “spraying and praying” make markets like Indonesia – and others in Southeast Asia  – seem hotter than they actually are? Does it cheapen the market? Additionally, are investors just throwing money away unnecessarily by playing the game this way?

I’d love to get input from you guys!

Features image by Perry McKenna.