In a “Geo Annual Report: Indonesia Tech 2023” by Tracxn, Indonesia saw a 54% decline in startup funding in 2023 as compared to the previous year, accounting to $1.4 billion. The funding rounds in the country also plummeted by 49%. The second highest-funded startup ecosystem in Southeast Asia after Singapore, Indonesia’s funding, has been waning since its peak in 2021. The year 2023 remains the least-funded year for the country since 2020.
- The decline in funding is principally attributed to a 38 percent drop in late-stage funding, a total of $1 billion year to date compared to $1.66 billion in 2022.
- Seed-stage funding also experienced a 65% drop to $76.8 million year to data with 44 rounds compared to 98 in 2022.
- Early-stage funding also saw a 73 percent decrease, amounting to $341 million year to date compared to $1.25 billion in the same period in 2022.
The fintech sector experienced a significant 52 percent decline year-to-date compared to the corresponding period in 2022. Similarly, food and agriculture tech witnessed a 59 percent decrease in funding while auto tech saw a notable 63% increase in funding in 2023 compared to 2022. With nine acquisitions in 2023, there was a 55 percent decrease from the 20 recorded in 2022, including the $219 million acquisition of the consumer goods finance company Home Credit by Krungsri, Adira Finance, and MUFG.
Despite these challenges, Tracxn said Indonesia remains optimistic about its long-term economic development. The country’s young population and high internet penetration are driving the rapid growth of the digital economy. The Indonesian government has even introduced the Startup Incubator Program in partnership with the Ministry of Corporate Affairs and small and medium-sized enterprises (SMEs) of Indonesia. This initiative, along with the Micro Business and Government Microloan Program (KUR), aims to promote local entrepreneurship, provide direct access to MSE Grants, and distribute micro-loans for businesses, contributing to economic growth. The government’s continued focus on digital infrastructure improvement and tax reforms highlights its commitment to bolstering the country’s growth despite the present challenges.
