Opinion: What Indonesia lacks as a startup ecosystem and how we can fix it

Jakarta city. Photo credit: manjik / 123RF Stock Photo.

A few days ago, I had the opportunity to speak at the Indonesia International Conference on Innovation, Entrepreneurship, and Small Business (IICIES) organized by the Institut Teknologi Bandung (ITB), one of Indonesia’s premier tech institutes. I remember reading that the school has spawned many startup founders in the country. I took this opportunity to spend a bit of time analyzing where Indonesia lacks as a startup ecosystem and what we can do at the grassroots level to improve it.

By investor accounts, the deal quality in Indonesia has not been up to the mark lately. It has been difficult for all of us to find a good-quality deal flow, and the few companies that exist get chased by local and international investors incessantly, driving up valuations and making the deal less attractive for everyone else on the table.

Don’t get me wrong, a lot is also going right in Indonesia. The buzz in the startup scene is reminiscent of India in 2014 when the country hit an inflection point in startup creation and funding. But to be able to sustain this initial momentum, we now need to prop up the whole startup base on a strong foundation.

Four strong pillars

Four pillars of a healthy startup ecosystem.

Similar to how farming needs key variables for success, a startup ecosystem also needs to be built with some fundamentals to truly mature.

1. Entrepreneur

It all starts with the entrepreneur, of course. Without a strong entrepreneurial DNA in the market, you are unlikely to find good upcoming companies. I’ve seen this hunger in the Indonesian people firsthand. While the culture might not be as aggressive as that of India or China, the people are ambitious in their dreams and possess the stamina to pursue them. This combination is a must.

2. Talent

Once the entrepreneur has embarked on their idea, the next task is to build a strong support team for execution. This is where the problems start in developing markets, especially in Indonesia.

Photo credit: StackOverflow.

Tech talent is a known challenge. According to data from StackOverflow, one of the most popular websites for amateur and professional developers alike, Indonesian developers are one of their lowest contributors amongst big population countries. Even the Philippines ranks higher. As you can see in the chart above, India is leading the charge amongst developing markets, and this is one of the biggest reasons its market is exploding in recent years.

Three problems, three solutions