Business Times: Indonesia Startups Should Build on Home Turf, Say Panellists

John Riady, our Managing Partner joined Wilson Cuaca, Managing Partner at East Ventures, Jeffrey Seah, Partner for the Asia Fund at venture firm Quest Ventures, and Jonathan Sudharta, CE and Co-founder of Halodoc in a discussion about investing in Indonesia’s digital economy. — ARE Indonesian startups better off focusing domestically, or should they aim to go regional?

The answer is debatable, but Willson Cuaca, managing partner at venture capital firm East Ventures, made a case for Indonesian startups first becoming market leaders in their home country, before thinking of venturing overseas.

He was speaking at an hour-long webinar discussion on Tuesday titled “Investing in the Indonesian Digital Economy”, an event hosted by Garage, an award-winning vertical of The Business Times (BT). Garage covers startup news and issues in Singapore and South-east Asia.

The session was moderated by Claudia Chong, a tech journalist at BT. Besides Mr Cuaca, the members of the discussion panel were:

  • John Riady, chairman of Siloam Hospitals and managing partner at Venturra Capital;
  • Jeffrey Seah, a partner for the Asia Fund at venture firm Quest Ventures;
  • Jonathan Sudharta, chief executive and co-founder of Indonesia-based healthtech startup Halodoc.

The webinar attracted more than 1,000 participants, the majority of whom seemed to agree with Mr Cuaca. In a poll conducted during the webinar, 42 per cent of attendees thought Indonesian startups would be better off focusing on their home market, 38 per cent said that “it depends”, and the remaining 20 per cent believed these startups should go regional.

Mr Cuaca said startups should “protect their own backyard” and “build barriers to entry” to “win” in their home country first. It is, after all, the place they are most comfortable operating in. This way, when they do venture abroad, their domestic operations would still be defensible from local and foreign competitors.

Indonesian startups and entrepreneurs are fortunate because the country is the single largest homogenous market in South-east Asia.

“When you run a company in a homogenous market, you can run and build a product really fast for scale,” he said.

Mr Riady, who is also the chief executive of Lippo Karawaci and director of the Lippo Group, said that having a regional growth story is “not a must-have”, even if a company wants to go for an international initial public offering (IPO). “I’m less focused about whether a company should be regional or only in one country. We should focus more around what a company can do to solve problems.”

That said, he acknowledged the attractive regional growth story of companies like Sea are what investors have happily lapped up.

“One of the reasons Sea has been able to expand successfully is because with its scale, it is able to invest an immense amount of money into technology and research and development.

“This way, it can amortise that cost across all its different markets.”

Retail investors are getting visibly excited as more companies from South-east Asia pop up in the public markets. Indonesian tech unicorn Bukalapak began trading on the Indonesia Stock Exchange in August, after having raised US$1.5 billion in the country’s biggest IPO.

In the second poll of the webinar, about 43 per cent of the audience signalled that they were “interested” in investing in the IPOs of Indonesian tech companies. Over 28 per cent said they were “very interested”, and 23 per cent said they were “neutral”.

The rest, a minority, were either “not interested” or “against investing”.

The challenge before these startups would be to “continuously communicate with the market about what their plans are, what they are doing and how they will go forward,” said Quest Ventures’ Mr Seah. “And I think they must have lots of experience after all these years pitching investors for that money, and then building the avenue to go IPO.”

When asked if Halodoc is planning a public listing, Mr Sudharta said an IPO is “every founder’s dream”, but that there are “many aspects of going public”, and that the startup was not likely to gun for a listing this year.

But he offered this teaser: “(An IPO) would not be too far on the horizon.”

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