TLDR: VC Industry Hopes for Market Turnaround in Second Half of 2024
Venture capital firms suggest a possible rebound of Indonesia’s tech sector could begin later this year, though the first half of 2024 will likely remain under the shadows of the 2023 decline marked by mass layoffs and business closures.
Key Points:
- VC firms predict a potential rebound in the second half of 2024 for Indonesia’s tech sector
- First half of 2024 expected to reflect the decline observed in 2023
- Lower valuations have resulted in higher dilution for startups during fundraising rounds
Venture capital firms in Indonesia are hopeful that the country’s tech sector will experience a turnaround in the market during the second half of 2024. Despite a decline in the industry marked by mass layoffs and business closures in 2023, there is optimism that macroeconomic conditions and the upcoming elections in Indonesia will contribute to a more positive outlook in the second half of the year.
However, the first half of 2024 is expected to reflect the challenges and difficulties faced in the previous year. Startups have experienced lower valuations during fundraising rounds, resulting in higher dilution for founders. The decline in valuations means that founders are sacrificing a larger portion of their ownership during early-stage funding. Despite this, venture capital firms remain focused on the fundamentals and are eyeing early-stage deals in 2024.
According to a report by AC Ventures and Bain & Company, the first half of 2023 saw only 110 deals compared to 344 in the second half of 2022. This decline in transaction volumes highlights the challenges faced by startups in securing funding during this period.
Overall, while the first half of 2024 may be challenging for the tech sector in Indonesia, there is hope for a market rebound in the second half of the year. The declining valuations and higher dilution faced by startups are important factors to consider, but venture capital firms remain optimistic about the long-term potential of the Indonesian tech industry.
