by Hayati Nupus
JAKARTA, Sept. 2 (Xinhua) -- Startup companies in Indonesia now have to change their business strategies to more efficient and profit-oriented ways to survive the "bubble burst."
Chairman of the Indonesian Venture Capital and Startup Association Eddi Danusaputro said that investors are currently more selective in disbursing their money amid the global economic crisis that has triggered a lack of liquidity and rising interest rates.
"Investors are now only interested in startups that can manage their runaway and have a clear path to profitability, especially the future valuation trend will fluctuate," Danusaputro told Xinhua recently.
Indonesia has 40 percent of Southeast Asia's Gross Merchandise Value of 70 billion U.S. dollars in 2021, which is expected to rise to 146 billion dollars in 2025, according to the e-Conomy SEA 2021 report "Roaring 20s: the SEA Digital Decade" researched by Google, Temasek, and Bain & Company.
This archipelagic nation of 270 million people with a growing middle class has many fields to explore, from financial inclusion, transportation to agriculture, which are very tempting for venture capital firms.
But so far, nearly 3,000 technology startups in the country are competing to get the unicorn title with valuation as the main goal and putting aside profit, said Danusaputro.
When the "bubble burst" of funding sources comes, efficiency is the only option for those who are not yet profitable to survive, said Danusaputro. These startup companies have to reduce promotions, delay expansion, tighten cash flow, and even cut the number of employees.
"This step to reduce the number of employees does not seem good in the short term but it makes the company survive and be profitable in the long term," he said while emphasizing the importance of financial independence rather than having to rely on donor money for healthy startups.
If startup companies are healthy, they can maximize their potential and build a strong digital ecosystem in a country to prevent a financial crisis, added Danusaputro.
Venture capital firm AC Ventures said two years ago was a golden period for startups amid the pandemic that triggered people to switch their activities to online, but now market expectations have changed a lot due to the economic crisis.
Stopping "burning money" and pursuing profit are key strategies, said AC Ventures' Founding Partner Pandu Sjahrir.
"Mergers or acquisitions are examples of exciting new opportunities," Sjahrir said.
To survive and continue to grow, SIRCLO, a startup company providing services and software for e-commerce, is focusing on cost-conscious business strategies and developing services that drive revenue systems, said founder and CEO of SIRCLO Group Brian Marshal.
"The business model we are currently running is oriented towards sustainability and profitability, so even (if) investment is being tightened, we are optimistic that we will be able to grow amidst this challenging situation," said Marshal.
Moreover, e-commerce solution services will be needed more in the future, Marshal added, amid technological developments that boost online sales trends.
Rather than relying on external funds, startup NoLimit Indonesia, which focuses on monitoring and analyzing online media with big data technology, prefers to maximize its resources as internal capital to build a healthy company.
"I think all startups can start running their company with whatever capital they have, as long as they are consistent and tough to face challenges," said CEO of NoLimit Indonesia Aqsath Rasyid.
* http://www.china.org.cn/world/Off_the_Wire/2022-09/02/content_78402490.htm
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