Indonesia adds 9 unicorn companies during the pandemic. Is the tech boom here to stay?

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There was a first wave of unicorns such as Go-Jek, Tokopedia and Traveloka before 2020. Now, there are more of such firms including JD.ID, Xendit and Akulaku.

JAKARTA: Life has never been the same for Vanessa Soetedja ever since the COVID-19 pandemic hit the country in March 2020.

This meant that some technology companies in the country are seeing tremendous growth even as Indonesia faced a recession between mid-2020 and early 2021 when its economy contracted by as much as 5 per cent. Other new unicorns include e-commerce platform Blibli, ticket booking platform Tiket, lending company Kredivo, courier company J&T and coffee chain Kopi Kenangan.

This all changed when the pandemic happened which forced everyone to do much of their day-to-day activities at home. Some of the new unicorns were also impacted by the pandemic, particularly in its early days, before they rose from the ashes and enjoyed substantial growth by pivoting their business strategies and target markets.

The company then switched its focus to providing more consumer loans by working together with e-commerce platforms. Another strategy is to focus on underpenetrated markets, which present its own challenges. “The pandemic had a significant impact on our business,” Xendit co-founder and CEO, Moses Lo told CNA.However, the pandemic has also attracted more and more small and medium-size enterprises to go online and adopt digital payment gateways like Xendit. The company also enjoyed an influx of transactions from digital products offered by the gaming industry as people spend more time at home.

It took six years for GoJek to become Indonesia’s first unicorn in 2016 while it took e-commerce companies Bukalapak and Tokopedia seven and eight years respectively before they hit US$1 billion valuation in 2017. According to the company, the pandemic has caused a surge in tech investments in Southeast Asia, with US$14.2 billion worth of capital investment flowing into the region's tech industry last year.

“These start-ups are pushing the boundaries of innovation in retail. This is just one example of how post-pandemic life in Indonesia is different and more innovative,” Mamuaya told CNA. “In addition to this, the ecosystem is also seeing founders, who’ve built and scaled business before, start-up again. This is a sign of the ecosystem truly maturing,” Anand said.

“Not everyone will handle this transition well. Companies need to be smarter to really create value for their customers,” she added.E-commerce giant Tokopedia is among those which enjoyed tremendous growth during the pandemic but now has to find new avenues to keep its users engaged online. The company also launched an instant commerce feature last November. The feature allows users to have purchases from select merchants within their respective vicinity delivered in under two hours.

 

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