What makes our local companies interesting?
Indonesia is now known as one of the countries that produces unicorn companies in the world. Until this year, six startups are categorized as unicorns in Indonesia. There are Gojek, Traveloka, OVO, Bukalapak, Tokopedia, and JD.ID. Indonesia unicorns are now really attracting many Global Technology companies. American Companies like Microsoft, Google, Facebook, and Paypal have invested in some of Indonesia unicorn companies over USD 1 billion. Why are they interested in Indonesian unicorn companies, and what are the next unicorn companies in Indonesia? Keep on reading to learn more.
Big Global Tech Companies Investment in Indonesia’s Unicorn
The number of unicorn companies in Southeast Asia is now increasingly so fast. It is becoming a battleground for giant technology companies from the United States and China for investment opportunities and heightened political tensions between Washington and Beijing. This year, four American global technology companies – Google, Microsoft, Facebook, and PayPal – have invested within the country’s unicorns or private tech firms valued at over USD 1 billion (Jakarta Post, 2019).
Indonesia is known well as one of the unicorn-producing countries within the world. This year, there are six startup unicorns in Indonesia. There are ride-hailing companies Gojek, online travel agent Traveloka, e-commerce platform Tokopedia, Bukalapak, and JD.ID, and e-wallet platform OVO (Mime Asia, 2020). From a political-economic standpoint, Indonesia’s unicorns matter because they are promising to bring the country more significant economic and international attention in today’s increasingly digitized global economy (Jakarta Post, 2019).
A USD 350 Million Investment from Google to Tokopedia
In November 2020, Tokopedia’s CEO, William Tanuwijaya, announced the latest funding round from the global technology giant, Google. Tanuwijaya confirmed that Google would join Temasek (a Singapore government investment company) to be the company’s latest shareholders in a company statement. No exact amount of funding was shared, but Bloomberg news stated that Google and Temasek Holdings agreed to invest a total of USD 350 million to Tokopedia. Based on the Ministry of Law and Human Rights document, Google will hold a 1.6% stake while Temasek will hold a 3.3% stake in Tokopedia.
Founded in 2009, Tokopedia started as a digital marketplace startup based in Indonesia’s capital city, Jakarta. The company aims to bring opportunities to small and mid-size businesses to tap into the e-commerce industry and keep up with technology development. In the past eleven years, Tokopedia has grown exponentially. The platform has connected more than 9 million Indonesian merchants to serve more than 100 million monthly active users (Tokopedia, 2020). In its sixth year, Tokopedia thrived in becoming one of the first three Unicorns in Indonesia.
This new funding will support the growth of Tokopedia even more so. Tanuwijaya stated that the collaboration would be able to support Tokopedia in becoming a sustainable company. It will also accelerate digital transformation and consequently increase economic equality through technology in the country.
Microsoft Collaboration with Bukalapak on an Array Technology Projects
Source: CNN Indonesia
Microsoft has agreed on a partnership and invested in Bukalapak, Indonesian unicorn e-commerce. The deal is claimed to be worth USD 100 million (Tech in Asia, 2020). As a global leading technology company, Microsoft is confident with its partnership with Bukalapak because of the Bukalapak position as a leading homegrown technology player in Indonesia. This partnership has a deep collaboration with Microsoft on various technology projects that will transform technology-driven commerce and operations solutions in Indonesia. Through the partnership, Bukalapak and Microsoft will collaborate on several keys initiatives, including:
- Building some resilient infrastructure
Bukalapak will adopt Microsoft Azure as its new preferred cloud platform to support its 6 million online merchants, 6 million offline merchants, and 100 million customers.
- Bridging the Bukalapak digital divide
The company will explore opportunities to help make the global digital more relevant each day.
Microsoft will provide digital skills training for the Bukalapak employees and Bukalapak merchants.
However with that several, with the adoption of Microsoft Azure by Bukalapak, the partnership will leverage expertise Microsoft in cloud infrastructure to support the online services of Bukalapak, which it claims is employed by over 12 million micro, small, and medium-sized enterprises and quite 100 million customers (Tech in Asia, 2020). With the partnership of Bukalapak and Microsoft, it aims for the merchants and consumers to have a more efficient and innovative reliable buying and an excellent selling experience.
Facebook and Pay-Pal’s Support in Gojek’s Digital Payment Service
In March 2018, Gojek announced that they had pocketed the latest funding from Facebook and PayPal. This investment is one of a series of Series F funding that began in 2018, with a total of USD 1.2 billion or around IDR 18 trillion. The involvement of Facebook and Paypal in this series has made the total funds collected by Gojek reach USD 3 billion or around IDR 42 trillion (Tech in Asia, 2020).
Facebook’s involvement in Gojek’s F series funding is also the first investment from the company owned by Mark Zuckerberg in Indonesia. The investment was used to support Gojek to expand the digital economy in Southeast Asia. Thus, most of the money will be used for the development of its payment and financial service, Gopay.
Source: Tekno Jurnal
Gojek is Southeast Asia’s leading on-demand, multi-service tech platform providing access to a wide range of services, including transport, payments, food delivery, logistics, and many other services. Founded in 2010 with providing solutions to Jakarta’s ever-present traffic problems in mind, Gojek started as a call center with a fleet of only 20 motorcycle-taxi drivers (ojek). In the past few years, Gojek has developed into a unicorn company providing lots of services to make an effective and efficient way of life in Indonesian society.
According to Gojek, this funding will support more micro, small, medium enterprises (MSMEs) towards digitalization and is a big challenge for the investment world for local technology companies. Thus, most of the money will be used for the development of its payment and financial service, Gopay. This is proof of foreign investor confidence not only in the future of Gojek itself in Indonesia and Southeast Asia but also for local technological and economic development.
Indonesia’s Digital Economy: How Can Indonesia’s Startups Grow So Fast?
Indonesia Unicorns Have a ‘Transformational Mindset”
Indonesia’s market is big, but so is that the competition. In 2018, there are estimated to be up to 2,000 active startups in Indonesia (Green House, 2019). Mostly, the companies have a ‘migration mindset’ where their growth strategy is only getting from point A to point B. For these Indonesia unicorns, there’s no point B. They will continuously accelerate and innovate some ideas to find new ways to grow.
Gojek, for example, has been continuously growing to feature new business lines like food delivery and cleaning services starting as a ride-hailing business. It started as a motorbike ride-hailing telephone service in 2010, and now they are focused on being a ‘super app’ offering other services like food delivery, grocery shopping, and even on-demand make-up artists.
Indonesia’s Unicorn Startups Embrace Familiar Ideas
According to McKinsey, 60% of Indonesians claim they prefer to buy some local brands. Familiarity is an essential matter for a great deal to Indonesian consumers. We will see this as how the main idea among Indonesia’s unicorns is just providing platforms for products or services that locals are already acquainted with (Green House, 2019).
For example, Traveloka allows people to shop for tickets and book hotels, while BukaLapak and Tokopedia allow people to shop for and sell things online. These are all simple concepts that many Indonesian potential customers can quickly and more likely grasp. However, McKinsey’s research also stated that having a local perception also matters. As an example, Grab could be a foreign company in Indonesia that also operates on ride-sharing. On another side, Grab’s familiar and local-friendly business model still helped them grow considerably in Indonesia.
They utilize local businesses
Most of Indonesia’s unicorn startup companies have a service to support the important pillar of the country’s economy. SMEs comprise about 99%of business units and 90% of Indonesia’s jobs (Green House, 2019).
This sector always needs development, support, and organization, all things that technology platforms can provide. Except for Indonesia’s unicorn startups, empowering SMEs goes beyond creating social impact. It also can be a central and lucrative part of their business models.
BukaLapak and Tokopedia use a customer-to-customer marketplace model, which suggests that local sellers and SMEs directly deliver goods. Also, they cooperate with third-party logistics to handle the delivery. This will help them more efficiently expand more to their ecosystem across Indonesia.
Indonesia’s Unicorn Companies Prospect
In early 2021, four Indonesian startup companies with unicorn status or with a valuation of above USD 1 billion were encouraged by the Financial Services Authority (OJK) to immediately offer an initial public offering (IPO) on the Indonesia Stock Exchange (IDX). The four companies are Gojek, Traveloka, Tokopedia, and Bukalapak (IDX Channel, 2021).
It is hoped that those unicorn companies will have the opportunity to develop because there will be incoming development funds. If they can use these funds properly, the company will grow bigger. It can even follow in the footsteps of Alibaba’s IPO at a later date (Evandio, 2020). Meanwhile, if four large technology companies in Indonesia took the floor on the IDX, automatically, the four of them would immediately become residents of the LQ45 index which is a stock market index for the Indonesia Stock Exchange (IDX) that shows a company’s good financial credibility and growth with a certain position in the market.
Promising Country for the Development of Tech Companies
The three Indonesian companies that received a funds injection from several international leading tech companies, namely Tokopedia, Gojek, and Bukalapak, have become a bright spot for the Indonesian business world. The trust given by foreign companies to leading local companies proves that Indonesia has very good prospects for technological development.
Well known as the unicorn-producing country, Indonesia keeps encouraging young people to start their startup businesses. The broad prospects making the startup’s development proceed rapidly and profitably. The large number of young entrepreneurs who started small and growing businesses is easy to find. It is known that until 2019, there were 2,193 start-up companies in Indonesia. This number continues to grow and is predicted to reach 15,000 by 2021.
Invest in Indonesia with BRIGHT Indonesia
Indonesia’s startups have a huge opportunity to grow and the rapid development of technology and the Internet. The potential growth is currently lacking enough funding. Many industry sectors, including startups, are open for foreign direct investment.
However, the process to be able to invest in Indonesia might be tricky and time-consuming. From complex bureaucratic hurdles to confusing and overlapping regulations and requirements, BRIGHT Indonesia provides the solution to these problems. BRIGHT Indonesia offers a thorough Foreign Direct Investment (FDI) promotion service that will assist and support you in your investment process to Indonesian businesses. With our business registration services, we could help you ease the process of registration, and the immigration services for the work and stay permit (including KITAS, RPTKA, and IMTA). For further information, email firstname.lastname@example.org.
Co-written with Ristya Sangaji and Rania Savira.