Earlier this week we were invited to Endeavor Indonesia’s annual event Scale Up held on February 3rd. It was an event filled with Indonesian Social Entrepreneurs, Entrepreneurs, Investors and key players in Indonesia's ecosystem. The day started bright and early with an Investor track and the ScaleUp Conference happening in parallel.
Below are just some of the people who were speaking at the event:
- Suzy Hutomo (CEO, The Body Shop Indonesia)
- Anton Wirjono (The Goods Dept)
- Patrick Walujo (Co-Founder & Managing Partner Northstar Pacific Partners)
- Edwin Soeryadjaya (Founder of Saratoga Capital)
- Nazar Yasin (Managing Partner, Rise Capital)
- Chris Zook (Head of Global Strategy Bain & Company)
- Antonny Liem (CEO, Merah Putih)
- Cheryl Goh (VP of Marketing GrabTaxi)
Indonesia is a fascinating market, with endless opportunities but great challenges at the same time. It has always been a love / hate relationship for many and continues to be a market capturing the hearts of those willing to jump into the whirlwind and chaos that is Indonesia. Creativity and innovation are at the core of most Indonesians as they live with minimal resources and have to come up with out-of-the-box methods to generate an income and make life work for them. Attending this event only reaffirmed the potential Indonesia has and the fact that as a country there is still so much to do. Indonesia is the 4th largest country in the world with over 250 million people.
Being half Indonesian and born in Jakarta I’ve always had an affinity for this country, and it was really wonderful to see how the community has flourished in the past year. Despite the fact that Jakarta is a city of an estimated 10.2million people, the business world is small and brings with it advantages and disadvantages for emerging entrepreneurs in the ecosystem as networks are very centralised and concentrated. Networks are no more than a couple degrees of separation and are usually of similar class, making it hard for those at the bottom of the pyramid to really get access. This country more than anything is about who you know.
The draw that Indonesia brings to many outside investors or businesses is significant yet it comes with it’s challenges - and is for the patient entrepreneur and investor. Throughout the day it was evident there is still a lot of major work needed from various players and stakeholders in the ecosystem and key challenges for investors or startups in Indonesia. Hopefully the challenges are not to the detriment of this country’s growth and burgeoning middle class, as the future of Indonesia could be even more golden than what people have predicted.
Some challenges (of doing business in Indonesia or being an entrepreneur in Indonesia):
- Legal Uncertainty - mainly for investors
- Partnerships - partnering with the right people and ensuring that they are helpful, collaborative and know the lay of the land.
- Regulations - the difficulty of dealing with almost constant regulation changes depending on who is in power or in control (govt or non-govt)
- Corruption - the never ending corruption that affects all of the above 3 points and whether or not your business will thrive without complications from those with more money, more power and more authority. (Indonesia is known for it’s high corruption and ranked 114th in the world by Transparency International Corruption Perceptions Index)
- Access to resources, networks and funding is still concentrated with a key group of individuals and family networks - which comes with another set of interesting pro’s & con’s. However the number of overseas investors interested in investing in businesses other than in the mining & gas sector seems to be growing more recently.
- There’s a lot of interest in the market but it seems investors are still having difficulty in finding the right startups / social enterprises to put money in. This is something that seems to come up in general in S.E.Asia. I think we can all agree that the ecosystem and scene is still so early, we are not even at the start so let's all be patient and foster what we have now - our time will come.
- Patience & great diplomacy skills are two of the main qualities you need in Indonesia.
- Sitting in briefly on the Investor track, I realised some of the main startups being talked about (Rumah / GoJek and KartuKu) all met at Harvard and were invested by some of the local investors in Indonesia. (A coincidence? Perhaps yes and I thought a very interesting fact)
- A further shift of mindsets for both startups and the investors /business community is needed to also help focus on problem solving real issues for the future Indonesia in more creative and innovative ways with an Indonesian spin vs only bottom of the line profit. At least it’s started, and mindset is always the hardest.
- Growing industries are Infrastructure / logistics or operations, supply chain solutions / FinTech / Health Care.
- Execution risk is more of an issue than market risk (from the investors perspective)
- Talent is a major issue for growth or scaling especially at higher level positions.
- Closed Networks - networks overlap easily in Jakarta which I see as both positive and negative.
- More Exposure - is needed for both startups and VC’s - It’s still difficult for your everyday entrepreneur do get seen in Jakarta, let alone Indonesia. So how do we build this awareness further and provide more exposure to those funding and looking for funding.
- Mentorship/Skill development - a growing need in the region - quality of mentors and skill training is essential to build the future generation of Indonesians. Both hard and soft skill development as we see a the Knowledge Economy beginning in this region.
- Landscape Navigators - people who are able to help businesses/ startups / investors navigate Indonesia are going to be more necessary. Those who can bridge their networks will be essential landscape navigators who can hopefully flourish from business deals and knowledge.
- Culture - Hopefully we don't lose the culture that is truly Indonesia and we can work on making things better for the people, the community and the country. Be confident in being Indonesian, own it, love it and embrace - lets preserve our heritage and our culture and make the startup community not just a copy cat version of Silicon Valley or anywhere else, lets stop comparing and carve our own path.
- The need for more low income / large scale startups to serve bottom of the pyramid.
Questions I had
- What will happen when the ASEAN 2015 free trade zone happens, will we see a large number of foreign startups hiring local talent at lower rates? What will happen to the local talent market?
- How can we further foster and provide exposure to the local talent who don’t have the family connections and fancy Ivy league institutes behind them?
- Pay It Forward - Will the founders of key startups in Indonesia help to pump in money to new startups and help build the ecosystem further with resources, information sharing and mentorship?
- What about the informal economy? How does all of that tie into current problems and potential solutions / opportunities / ideas for startups in Indonesia?
- How can we expand the networks? A recent article in Scientific American stated that “what we are like as individuals critically depends on how we are linked socially and emotionally with others in relational networks reaching far and wide" and that “the network revolution also has the promise of reshaping our basic common sense expectations of the world around us, and may allow us to recognise that we are not a basically individualistic, asocial, and quarrelsome creature that comes in bounded linguistic, ethnic, racial, or religious types, but a social species linked to one another by far-reaching network ties.”. So I ask how can we expand our weaker ties with outside networks in Indonesia to enable a wider network for opportunity, access and knowledge sharing.
Overall Solonia and I were honoured to be apart the event, it was filled with insightful topics of discussion and facilitated networking. The day ended on a high note with an investor speed-networking session that hopefully helped the many entrepreneurs looking to get connected or access to funds. Thank you to Sati and the team at Endeavor for making this event happen and I look forward to next years event.