Investor interest in Indonesia's startup ecosystem is shifting, with a growing emphasis on sustainable business models rather than achieving unicorn status. According to Anthony Tjajadi, Partner at Trihill Capital, investors are now prioritizing startups with clear profitability paths instead of those solely focused on aggressive growth. This trend began in 2022 as startup valuations stabilized following the liquidity surge in 2021.

"Between 2021 and 2022, startup valuations skyrocketed due to excessive market liquidity. However, we are now seeing adjustments that make valuations more rational, particularly in Indonesia," said Anthony during the Investment Outlook 2025 event in Jakarta (February 5). He emphasized that investors are becoming more cautious in selecting startups, focusing on strong unit economics and realistic growth strategies.

Anthony also noted that unicorn status is no longer the sole measure of success. "In reality, unicorn startups are rare in Indonesia. Founders should not build companies just to chase unicorn status," he stated. Many startups that rapidly inflated their valuations ended up with unsustainable business models. Instead, he advised founders to aim for long-term resilience and realistic growth. He added that achieving a valuation of $100 million is already a remarkable milestone for a startup.

In addition to this shift in investment focus, Indonesia's startup ecosystem faces another challenge: declining foreign investor participation. "Currently, fewer investors are engaging in venture capital, particularly foreign investors," Anthony observed. He attributed this to global and local economic factors that have led many foreign investors to retreat to their home markets or seek opportunities in other countries.

Despite this decline, Anthony sees an opportunity for domestic investors to step up. "Now more than ever, we as local investors must stay together and build this ecosystem collectively," he stated.

Patrick Yip, Founding Partner at Intudo & Endeavor Ambassador, echoed similar sentiments. "When we entered the market in 2017, startup valuations were still very high. However, with the recent corrections, this is actually a good time to invest," he said. He pointed out that the criteria for evaluating startups have changed. "Previously, valuations were often based on Gross Merchandise Value (GMV). Now, investors prioritize profitability, EBITDA, and other substantial financial metrics," he explained.

While Indonesia’s startup landscape still faces challenges, Yip believes this environment creates opportunities for new and local investors to rise to the next level. "This situation opens doors for new players or investors who have not yet taken a leading role to step onto the main stage," he concluded.

SOURCE: KATADATA | PHOTO: TECNO ID

This article was created with AI assistance.