Jakarta, CNBC Indonesia – Funding for Indonesian startups will plummet throughout 2023 even though investors, including venture capital, still have abundant funds to disburse.
Startup companies are considered to still need a clear profitability plan and must prove to investors that they have an exit strategy.
This was revealed in the e-Conomy Sea 2023 report released by Google, Temasek and Bain&Company.
Partner and Head of Vector in Southeast Asia Bain & Company Aadarsh Baijal, said that private funding in Southeast Asia, including Indonesia, reached its lowest level in the last six years.
This follows global trends showing increasing capital costs and challenges throughout the funding cycle.
In Indonesia, private funding fell by 87 percent in the first half of 2023 compared to the same period in 2022. Meanwhile, the smallest decline occurred in early stage funding.
“There are several challenges faced, including a general valuation correction after rising during 2021,” said Baijal during the Media Briefing e-Conomy SEA 2023 Report, at the Google Indonesia Office, in Jakarta, Tuesday (7/11/2023). “Uncertain profitability in several companies and a less conducive capital market situation can make it difficult for investors to exit,” he added.
Even though investors are increasingly selective in investing capital, dry powder reserves in Southeast Asia are still safe at US$15.7 billion at the end of 2022, from US$12.4 billion in 2021.
This indicates that the necessary “fuel” is still available to encourage further growth of the digital economy in this region.
Digital financial services are still a key investment sector due to their high monetization potential. New sectors are also experiencing an increase in investment, which indicates that investors are looking to diversify their portfolios.
[Gambas:Video CNBC]
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