Local Investors’s Support Is All We Need to Produce World-Class Local Startups

Yesterday, the President of Indonesia Joko Widodo (Jokowi) gave a speech on the potential of acquisition towards local online businesses by foreign companies while inaugurating triawan Munaf as the Creative Economic Body’s Head (CEB). Apart from the controversies growing along with it, I believe that there are a number of points that local startups really need to go global.

Munaf stated in his press release:

“The President sees tons of abandoned SME sub-sectors. He always tells to keep online businesses safe and warm, so that they may bloom in Indonesia, don’t let them be bought by foreign players too soon. He asked online business developers to keep their businesses until they become world-class players.”

The very first thing to clarify is that Jokowi did NOT restrict businessmen to sell their businesses at all. He only expected local online businesses to be world-class players, like Facebook and Alibaba. By being world-class players, local online businessmen can stand along with other world experts, like Mark Zuckerberg and Jack Ma, in global scene.

Let’s take a look at highly potential local businesses. Indomie, which is backed up by Salim Group, is one of Indonesia’s world-class brands. Its brand is so popular that people from the U.S to African countries can have a taste of it. What should other local businesses do to follow Indomie’s foot steps?

The Reality of Local Online Business

Last year, Tokopedia’s massive funding shocked us all. So did the merger plan between OLX and Berniaga, but no one would probably had noticed that both of e-commerce giants are the products of Foreign Investment (FI).

What makes foreign investors so superior when it comes to online business is the fact that they have already done it since 10-15 years ago. However, the ones who really understand about Indonesians’ culture, habit, and preference are our good selves. This what makes us superior to those foreigners.

Many startups which are founded by youngsters aim to be the master of their own home. Some have good, even brilliant, products which can be developed nationally, regionally, and even internationally. Even so, it takes resources and experts’ feedbacks to actually expand and grow.

Facebook will never be as big as it is today if they didn’t receive capital from investors, and serial entrepreneur Peter Thiel was one of them. Alibaba wouldn’t be growing as well if they didn’t get supported by Softbank Japan.

It’s true that online business has quite a risk. Out of 100 startups, only five will most probably survive. This leads local investors to think twice before investing their money. This opens the opportunity for foreign investors to capture the potential of Indonesian online businesses first.

In 2014, we noted a number of local startups which got acquired by foreign players. Among them were PriceArea which got acquired by Yello Mobile Korea, DapurMasak which was acquired by Cookpad Japan, and Klik-eat which got acquired by Yume ni Machi Japan. In my opinion, the basis of the acquisition was because both founders and investors shared the same vision.

It’s time for local investors to make a move

If the government formally restrict any acquisition toward local online businesses done by foreign players, it would only hamper the growth of the business itself. Instead of protecting, the restriction will only make those who feel confined to move their businesses to other countries. Instead of being overprotective, local investors should give more portion to support online businesses.

Ever since 2014, local investors who commit to provide assistance to local startups have started to rise. The list includes but not limited to Sinar Mas Digital Ventures, Softbank Indosat Fund joint venture, Angel Investment Network Indonesia, and Lippo Digital Ventures.

We have yet reached the stage of looking for "unicorn", that’s what we call startups that have reached $1 billion valuation. All we need now is supports to keep growing, and this is where local investors play their part.