American multinational technology company Google and American global management consulting firm AT Kearney completed a joint study and released a report, titled "Indonesia Venture Capital Outlook 2017", that shows Indonesia's startup market is thriving - albeit coming from a low base. Financial technology is regarded the top category for future investment.
According to the report, investment in the startup sector of Indonesia grew 68-fold over the past five years to USD $1.4 billion in 2016 on the back of e-commerce and transportation. Meanwhile, in the first eight months of 2017 investment in the sector more than doubled to over USD $6 billion on a year-on-year basis.
Tony Keusgen, Managing Director of Google Indonesia, said local and foreign investors are increasingly watching Indonesia and therefore Google sees a bright future for Indonesia's digital economy. Particularly venture capital is bullish on Indonesia and sees investment opportunities due to the country's robust economic growth, expanding middle class, as well as the big and young population that increasingly uses digital technology amid rapidly rising Internet and smartphone penetration.
However, rapid growth of financial technology also implies that there exists a big need for talented engineers. Without such talent startups will not be able to meet demand and survive. In the report, venture capital players stated that there are four key focus areas that need to be the center of attention to speed up growth of the startup ecosystem in Indonesia. These four areas are (1) talent development, (2) fiscal incentives, (3) funding/exit options, and (4) startup facilitation. These players also indicated that the Indonesian government has a vital role to play.