A panel discussion hosted by East Ventures in Jakarta revealed that investors are becoming “more cautious” in investing and giving valuations
The number of early stage investment deal in Southeast Asia has decreased in the first half of 2017, and this trend is expected to continue as investors grew “more cautious” in investing and giving valuations, revealed East Ventures at a panel discussion at JSC Hive in South Jakarta last Friday.
Skystar Capital, Venturra Capital, Mandiri Capital Indonesia (MCI), CyberAgent Ventures, and Coffee Ventures participated in the panel discussion that discussed the state of startup investment in the semester.
East Ventures reported that the venture capital firm has seen a 23 per cent decrease in new Indonesian startup pitches in the first half of 2017.
Price corrections continued to happen in this first half, as the market is bombarded with discounts or cut in valuations.
The panel also outlines that startups are facing a challenge in showing the “right” unit economics that will lead to profitability, as well as a unique selling proposition as the market grew more competitive with more than 2,000 Indonesia-based startups.
“Investors want to see startups creating a ‘business’ with the right unit economics, instead of just [pitching] a ‘product’,” said Aldi Adrian Hartanto of MCI.
Trend-watching
The panel revealed e-commerce (27 per cent) and fintech (22 per cent) as the two most popular verticals in H1 2017.
Other sectors such as healthtech and agritech are also gaining investors’ interest, though they have not seen any startup that is dominating the field or finding a clear path to profitability.
When it comes to investment stages, despite the decrease, seed investment continued to dominate at 38 per cent, followed by bridge stage at 33 per cent.
Recent mergers and acquisitions (M&A) activities, such as Grab’s acquisition of Kudo and Blibli’s acquisition of Tiket.com, are also believed to encourage more startups to appear.
In Indonesia particularly, while most startup investment are being done by foreign parties, the market has begun to see state-owned banks such as Bank Mandiri investing in fintech startups. Additionally, banks are also experimenting using the sandbox method through partnerships with invested startups.
The panel also believed that having more access to capital will accelerate the growth of Indonesian-breed companies.
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Image Credit: acarapi / 123RF Stock Photo
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