Indonesian startups chasing growth test waters in the Gulf

The funding winter has forced startups in Southeast Asia to rethink their expansion strategies.

Instead of taking the usual route of entering India or China, many Indonesian startups are setting their sights on the Middle East, specifically the Gulf countries. These include coffee chain Kopi Kenangan, AI conversation firms Kata.ai and Mimin, logistics provider Kargo Technologies, and smart IoT company TaggIoT.

Indeed, startup funding in Indonesia has been on a decline since 2021. In 2025, funding totaled only around US$700 million – the lowest level in the last nine years – across just 69 deals, according to the Tech in Asia database.

There are also market conditions in the Middle East that are hard to find in Southeast Asia, such as stronger purchasing power and higher B2B contract values. At the same time, governments across the Gulf are actively diversifying their economies away from oil, steering them toward finance and tech.

Vision 2030, for instance, is Saudi Arabia’s road map to becoming a leading global tech hub by 2030. Aside from creating new opportunities for startups, the plan is driving demand for AI, fintech, and enterprise software.

However, is expanding to the Gulf sustainable in the long term for Indonesian startups? Or is it merely a short-term effect of the funding winter?

A blue ocean

Historically, Indonesian and other Southeast Asian startups expand first to India or China due to the markets’ scale and the maturity of those ecosystems. However, both countries have become increasingly difficult for foreign entrants to crack.

Joseph Simbar, co-founder and CEO of Mimin, says entering China is difficult due to the language barrier, cultural differences, and strict regulations. Meanwhile, India has an intensely competitive market with many established players.

For Mimin and rival Kata.ai, the Middle East is a blue ocean, even though the infrastructure and clientele are already in place.

Kata.ai secures higher contract values in Dubai, where it expanded in July 2025, than it does in Indonesia. This means the company’s clients in the Emirati city are 5x to 10x more profitable than those in its home market, according to co-founder and CEO Irzan Raditya.

“It’s the same effort but with higher gross margins, higher profit, and higher lifetime value,” he says.

Capital sourcing

Gateway to expansion, market for scaling

Not a walk in a park