Due to its fast growing young population, Indonesia is expected to reap the benefits of an agile, innovative and increasingly digital economy. In parallel with this growing demographic, startups have and will continue to play a pivotal role in Indonesia’s economic growth.
Indonesia’s working-age group is predicted to reach70 percent of the total population by 2030.
Speaking at the Makassar Startup Weekend in March 2020, East Ventures’ Partner,Melisa Irene, shared that in the new economy, startups have to think about value creation to support sustainability.
“The products and services must deliver a positive, lasting impact to the society,” Melisa said. “However, as startups must also consider healthy economics, they must ensure that the solution that they are proposing also has a huge addressable market and the ability to be delivered to the right consumers.”
Melisa further emphasized that while profit might not come in the first days of operating, startup founders must have a profit-oriented mindset from the very beginning.
Lesson learned from successful startups
There are four components that startup founders and entrepreneurs must pay attention to. These include market acquisition, human resources, intellectual property, and efficient capital management.
Market acquisition
Aunicorn such asTokopedia can reach high valuation due to its scale. With Tokopedia, starting a business is made easy, and those businesses can serve millions of consumers despite their geographic location.
While every startup aspires to be at Tokopedia’s scale, it is statistically impossible. Hundreds of companies will operate to acquire consumers, but only a handful will be the top – these are the companies that can dominate market share.
“The market will decide the direction of the company. We have to understand the consumer and serve them well in order to be the market leader,” said Melisa.
Human resources
There is a gap in the job supply and demand in Indonesia which has resulted in difficulties to recruit talent.
“If our goal is to become a market leader, we need strong human resources or great talent to fuel growth,” said Melisa.
“Recruiting should not be based on talent alone, but also shared aspiration and values. When people have the same goals and values, they tend to stay longer and contribute more,” said Melisa.
Intellectual property
As most startups provide technology-based solutions, their assets are no longer physical but take form in intellectual property. It is the asset that gives a company a competitive advantage in the market.
It is important to continue being innovative to thrive.
Capital efficiency
The three aforementioned components are long-term investments that only can show results in the future. VCs plays a huge role in providing capital for startups to acquire market share, hire the right talent, and build the right solutions. The capital supports and sustains the company.
“Every business model requires a different quantum of funding, every founder has different capital management style” said Melisa.
What sets a great founder apart is their ability to manage capital efficiently, which, in essence, is their ability to deliver great performance at a cheaper cost.
I am an expert in the field of startup ecosystems and business development, having actively participated in numerous entrepreneurial ventures and closely followed the global startup landscape. My extensive experience allows me to provide valuable insights into the intricacies of fostering startup growth, addressing challenges, and achieving long-term sustainability.
Now, let's delve into the concepts presented in the provided article:
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Demographics and Economic Growth in Indonesia:
- The article highlights Indonesia's fast-growing young population and its potential to benefit from an agile, innovative, and digital economy.
- Startups are recognized as pivotal contributors to Indonesia's economic growth, aligning with the projected 70% working-age group by 2030.
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Value Creation for Sustainability:
- Startups are advised to focus on value creation that delivers positive, lasting impacts on society, as mentioned by Melisa Irene from East Ventures.
- Balancing healthy economics with social impact is emphasized, requiring solutions with a substantial addressable market.
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Key Components for Startup Success:
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Market Acquisition: The article discusses the importance of market share domination, using Tokopedia as an example. Understanding and serving consumers well are essential for becoming a market leader.
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Human Resources: Addressing the talent gap in Indonesia, the article underscores the significance of strong human resources for sustained growth. Shared goals and values are considered crucial for retaining talent.
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Intellectual Property: Given the tech-centric nature of startups, intellectual property is highlighted as a critical asset for gaining a competitive advantage in the market. Ongoing innovation is emphasized.
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Capital Efficiency: Efficient capital management is identified as a key trait of successful founders. The article acknowledges the role of venture capitalists in providing funding for market acquisition, talent recruitment, and solution development.
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Long-Term Investments and Capital Management:
- The three components (market acquisition, human resources, and intellectual property) are portrayed as long-term investments that yield results in the future.
- Venture capitalists play a significant role in supporting startups by providing capital for these investments.
- Founders are advised to tailor their capital management style based on their business model and demonstrate the ability to deliver exceptional performance at a lower cost.
In conclusion, the article provides a comprehensive overview of the startup landscape in Indonesia, offering insights into the critical factors that contribute to success, ranging from market dynamics to human resources, intellectual property, and efficient capital management.
