Indonesia’s Technology Startups: Voices from the Ecosystem

Monitoring, Evaluation and Learning
Policy Research

Tech startups require an ecosystem of support that differs from the assistance provided to traditional small enterprises. The ecosystem should comprise not only dedicated government policies and programs, but also financing solutions, support from incubator and accelerator programs, and talent development (human resources) versed in technological innovation, but also in inventing new business models. The ecosystem includes public, private, and quasi-public players. Building this ecosystem is critical to developing a vibrant community of tech startups.

Indonesia has established an ecosystem for tech startups. Most of the components have been put in place in the last 5 years, which is a similar time frame to other countries in the region. The challenge now is to deepen this support by understanding what works best and adjusting and refining the measures. There are lessons to be learned from other countries, notably Singapore, which attracts many startups because of its supportive ecosystem.

Better geographic distribution of support would be helpful. Key ecosystem players and programs are concentrated in Java and Bali, while other areas are underserviced. It is useful to move away from thinking of one national ecosystem and instead consider multiple city and local ecosystems that service proximate clients (startups). Globally, ecosystems are most often organized (and assessed) at the city or local level (e.g., Silicon Valley).

Three key areas for improvement are the quality of incubators and accelerators, financial access for early-stage startups, and talent development. These three areas were identified as needing improvement to better support startups. Incubators and accelerators would benefit from improved staffing (i.e., employees with more business knowledge) and mentors with sector expertise and experience. It is a challenge to find good talent because of the short supply and competition from large firms in hiring the best and brightest. Early- stage startups find it difficult to convince equity investors to provide funding, and alternative sources may need to be developed.

Startups in development-oriented sectors face specific challenges. Startups engaged in agritech, edtech, healthtech, and greentech (also known as cleantech) generate both economic and developmental benefits. Tech innovations in education and health improve human capital and well-being. Agriculture employs a large share of the poor population. Greentech provides solutions to combat environmental degradation and climate change. These areas are often seen as risky, and investors lack knowledge about them compared with the popular fintech and e-commerce sectors. Dedicated support to these four sectors is needed.

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Palmira Permata Bachtiar
Hening Wikan Sawiji
Adinda Angelica
Faiq Yahya
Paul Vanderberg
Adinda Angelica
Faiq Yahya
Paul Vanderberg
Research Area 
tech startup
tech startup ecosystem
digital talent development
financial institution
Publication Type 
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