AI-focused startups in Southeast Asia, particularly Indonesia, are gaining investor traction as they offer locally relevant, practical solutions. This comes at a time when overall startup funding in the region is declining.

AI has moved beyond being a futuristic concept; it is now a central force shaping today’s industries. In Indonesia, AI startups are solving persistent problems that conventional approaches could not address, making them increasingly attractive to investors.

East Ventures is one of the key venture capital firms intensifying its focus on AI startups as a core investment area in the coming years.

In its white paper titled AI-first: Decoding Southeast Asia Trends, East Ventures forecasts that one in four businesses in the region will use generative AI (GenAI) by the end of this year.

The number is expected to rise to 50% by 2027. AI is projected to contribute between 10%–18% of Indonesia’s GDP by 2030.

East Ventures Prioritizes Sector-Agnostic AI Funding

“AI startups have great potential to solve real problems in society. Indonesia’s unique strength lies in its ability to make AI locally relevant,” said Willson Cuaca, Co-Founder & Managing Partner of East Ventures.

Although the firm is sector-agnostic, it places funding priority on AI startups in healthtech, climate tech, and consumer tech. AI, data, and cybersecurity now make up 15% of East Ventures’ portfolio, following e-commerce at 28%.

East Ventures has recently funded Sxored, an AI-based credit analysis startup. Its platform automatically extracts and analyzes credit documents, producing borrower summaries and property valuations while ensuring secure, encrypted data handling.

The features enable faster collateral assessments, improved fraud detection, and more efficient decision-making. Cyrill James Hardie, CEO of Sxored, said the system replaces manual review of thousands of files, reducing time and error risks.

“With our system, banks, fintechs, VCs, and auditors can underwrite faster, detect fraud more accurately, and serve more customers with lower risk,” he said.

GenAI Delivers Tangible Results in Key Sectors

OpenAI Chief Economist Aaron “Ronnie” Chatterji, Ph.D., stated that the biggest AI opportunities lie in its downstream applications, particularly in specific sectors like finance, health, education, energy, and retail.

Nexmedis, a healthcare startup, uses AI to cut hospital administrative work by 90%. Its system speeds up diagnoses and operates in more than 80 regions, with 85% located in remote areas. This allows doctors to focus on patient care rather than paperwork.

In education, Ruangguru integrates AI-powered tools with direct teaching and hybrid learning centers in over 120 cities.

The platform reaches 45 million users in Southeast Asia, 75% of whom are outside major cities. The technology supports personalized, efficient learning.

Ronnie emphasized GenAI's potential in personalized tutoring, adaptive content, and localized services tailored to Indonesia’s linguistic and cultural diversity.

GENEXYZ, another Indonesian startup, builds AI-based metahuman virtual influencers. These digital figures deliver brand messages in culturally relevant ways. “We develop all our virtual influencer characters in-house, with top technology and talent,” said Belinda Luis, Co-Founder & CEO.

Bythen, a separate startup, allows users to create AI-generated digital versions of themselves. These avatars support content creation, livestreaming, and digital personal branding, a relevant tool in the growing creator economy.

Indonesia’s Digital Profile Supports Strong AI Growth Outlook

Global AI startup investment surpassed US$100 billion in 2024. In contrast, Southeast Asia saw only US$1.108 billion, a slight dip from the previous year.

However, in Indonesia, AI investment is growing. East Ventures’ Digital Competitiveness Index 2025 reports that AI startup funding in the country reached US$542.9 million (Rp 8.6 trillion) by 2024, up 141.5% from 2020.

East Ventures Partner Melisa Irene remains optimistic. She noted that AI significantly speeds up product development. “Tools that used to take two to three months to build can now be done in half a day,” she said.

She added that Indonesia’s population of 280 million and internet penetration rate of around 80% present strong conditions for AI startup growth.

PHOTO: FREEPIK

This article was created with AI assistance.