Day: November 16, 2023

Indonesia’s VC industry has experienced a significant transformation in recent years, with the past 12 months witnessing a market recalibration mainly driven by global macroeconomic headwinds, according to a new joint report by AC Ventures and Bain & Company.

While deal flow picked up quickly in 2021, increasing macroeconomic uncertainty urged caution in investing momentum, and the spillover effect from H2 2022 saw a lower number of deals and a decline in deal sizes.

The Indonesia Venture Capital Report 2023 offers deep insights into the industry’s prevailing trends, challenges, and future outlook.

Also Read: Wealthtech, insurtech, SaaS fintech are the new hot verticals in Indonesia: AC Ventures report

Despite a degree of cautious optimism at that time, projections for 2023 are now sobering, with an anticipated 70-80 per cent decline in deal value compared to the preceding year. The funding pace in 2023 remained sluggish through Q3, standing at 0.3x compared to Q3 2022.

While the year has been challenging for the VC sector, the overall growth outlook is positive, given that the Indonesian VC landscape is becoming more mature. Following the surge in VC investments driven by rebounding investor confidence during 2020-2021, investors are now more measured and rational in their approaches.

The report highlights a significant shift in investor priorities, emphasising startups that showcase strong unit economics, leaner valuations, and clear paths to profitability. This is further evidenced by the declining conversion rates from seed to Series A/B funding rounds.

One of the standout insights from the report is Indonesia’s resilience against global trends. While the global VC deal value declined by 20-40 per cent, Indonesia maintained a stable VC deal value in 2022 on a year-over-year (YoY) basis at US$3.6 billion. Further, the archipelago registered a 20 per cent YoY increase in deal volumes in the same year.

Attractive macroeconomic fundamentals suggest that Indonesia remains a bright spot in the region and will provide a favourable climate for startups. With a young and burgeoning middle class, Indonesia’s GDP per capita grew by 4.6 per cent in 2022. Household consumption, a significant economic driver, accounted for 55.6 per cent of the GDP. The digital economy is on an upward trajectory, reaching a notable US$77 billion in 2022.

For Indonesia to stay on its growth trajectory, it must navigate macro headwinds such as the ongoing US-China tensions, the upcoming 2024 elections, increased pressure on major tech players to achieve profitability, and the evolving regulatory landscape.

The report also provides deep dives into key investment themes. While platform-based businesses in sectors like e-commerce and mobility dominated pre-2020, there was a discernible shift toward fintech subsectors and new retail models such as direct-to-consumer (D2C) during 2020-2022, mainly driven by the rapid increase in digital adoption during the Covid-19 pandemic. The emerging investment themes for 2023 and beyond point toward an increased focus on ESG, climate tech, electric vehicles, health tech, and D2C brands.

Also Read: Indonesia needs more female investors willing to back female founders: Helen Wong of AC Ventures

On the exit outlook, the traditional preference for trade sales gives way to a rising trend in initial public offerings (IPOs). However, market pressures and a post-2022 funding environment could dampen spirits around mega-IPOs.

The report suggests an imminent upswing in Indonesia’s VC industry. Early-stage deals, especially in burgeoning sectors like electric mobility and healthcare, are expected to dominate VC activity soon. Late-stage startups will likely update their strategies, emphasising profitability above all else. Global investors are optimistic about Indonesia, with the digital economy projected to touch US$360 billion by 2030 and initiatives like the IDXCarbon launch signalling Indonesia’s commitment to a net-zero future.

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On the culmination of its 2023 edition on November 9, startup competition X-PITCH named REVIVO BioSystems as the Deeptech Startup of the Year award winner.

The competition’s final round at the National Gallery Singapore showcased 10 finalists handpicked from a pool of over 3,000 startups globally. It aims to provide a platform for converging cutting-edge ideas and entrepreneurial brilliance, captivating a packed audience. The pinnacle of the event was the recognition of four groundbreaking deep-tech startups, each set to receive a substantial total investment of US$1 million.

Deeptech Startup of the Year REVIVO BioSystems specialises in realistic 4D human tissue testing models. These models not only replicate the intricate functions of the human body, including blood flow but also eliminate human error from the sampling process. According to the competition, the innovation displayed by REVIVO BioSystems has the potential to revolutionise medical research and testing methodologies.

The Best Advanced Manufacturing Startup award went to Augmentus, a company at the forefront of advancing manufacturing processes through innovative technologies.

Meanwhile, REVIVO BioSystems secured another victory, claiming the Best Healthcare Startup title. This is an acknowledgment to its transformative contributions to the healthcare industry.

Also Read: Runa Capital plans to propel Asian deep tech startups onto the global stage

Simple Planet emerged victorious in the sustainability sector as the Best Sustainability Startup, showcasing the increasing importance of environmentally conscious solutions in the startup landscape.

Recognising excellence in the digital economy, Kodifly claimed the Best Digital Economy Startup award.

The event also highlighted standout performances in the pitch competition, with Qmed Asia crowned as the Number Pitch Champion and SoBanHang earning the esteemed People’s Choice award for their pitch.

K. Yu, the Organizing Committee Chair of X-PITCH 2023 and Founding Partner of XCEL NEXT, said in a press statement, “At X-PITCH, we redefine startup competition every year, transforming it into the X Games of innovation. This year, we took it to the water! X-PITCH is not just an event, but a journey into the extraordinary.”

In hosting the event, X-PITCH 2023 works with supporting organisations A*StartCentral, Enterprise Singapore, and IMDA, emphasising the collaborative effort that made the event successful.

It also works with co-host e27 and co-organisers Block71 Singapore, BSSC, Cool Japan Fund, DOST-PCIEERD, HKSTP, HUB.ID, KOVA, MDEC, TA, TINVA, TusStar, and VITTBI. The event is sponsored by AIOX Apex Angel Fund, Foxconn Technology, Media OutReach Newswire, Quan Ding Consulting, and Yulon Motor.

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Image Credit: X-PITCH

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Singapore-based BeeX, which provides autonomous robotics solutions to safeguard underwater infrastructure, has closed a US$2 million bridge funding round.

Earth Venture Capital and ShipsFocus Ventures co-led the round, with the participation of SEEDS Capital, NUS Technology Holdings, and Infinita VC.

Also Read: Why robotics is just entering its prime phase

The startup will use the funds to accelerate BeeX’s go-to-market for autonomous offshore wind farm inspections in Europe.

BeeX is the developer of the Hovering Autonomous Underwater Vehicle (HAUV) — A.IKANBILIS. Its robots and software solutions help energy developers, ship owners, and governments save costs to inspect their critical structures and protect their people from risky operations.

By the end of 2024, BeeX aims to launch the next-gen HAUV, BETTA, to address the demands of offshore wind inspection. The startup claims BETTA will have 10x greater power, 3x more endurance and 4x higher computing prowess. The system will leverage the fast iteration of autonomy on its smaller sibling, A.IKANBILIS.

To date, BeeX has changed how ship hulls, underwater infrastructures, and floating solar inspections are conducted in Singapore, along with the solid tractions in Germany, the Netherlands, and the US.

Also Read: We see prevalence of robotics, IoT solutions across the globe: SIMPPLE CEO

“Our customers have reported up to 95 per cent less CO2 emission, 50 per cent lower risk-to-life, and 10x better efficiency compared to conventional methods,” claimed Grace Chia, CEO and Co-Founder of BeeX.

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Image Credit: BeeX.

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Tech companies in Southeast Asia secured US$684 million across 36 rounds in October 2023, according to a report by startup research platform Tracxn. This is a 205 per cent jump over the total investments raised in September and a 5.26 per cent drop from October 2022.

Also Read: Fintech investments in SEA see record drop in Q3: Tracxn

Seed-stage rounds dominated the overall deals with 22 deals, followed by early-stage (13) and late-stage rounds (4). In terms of the deal size, Investree topped the chart with a US$231 million raise, followed by Gojek (US$150 million), Qosmosys (US$100 million), YouTrip (US$50 million), and Inteluck (34 million).

See the infographic below for more details:

 

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Despite the prevalence of the fintech industry in Southeast Asia (SEA), women are revealed to hold just 13 per cent of management, board, and investor roles across the fintech ecosystem. This finding was revealed in a study titled Taking Stock & Looking Ahead: Gender Diversity in Southeast Asia’s FinTech Landscape by Russell Reynolds Associates (RRA), a global leader in board leadership and executive search, in collaboration with the Singapore FinTech Festival (SFA).

The findings of this study shed light on the gender disparities prevalent across various levels of the fintech ecosystem in SEA.

Delving deeper, the study revealed that the representation of women is higher at earlier-stage companies (Series A to C), standing at 16-18 per cent in management roles. However, this percentage declines to 11 per cent in Series D and drops even further to 10 per cent in public companies.

Interestingly, regarding board representation, the percentages are comparatively higher for Series D and public companies, at 15 per cent and 24 per cent, respectively.

SEA’s fintech landscape is dynamic, driven by growing economies and expanding populations. The region has witnessed a fourfold increase in fintech deals from 2015 to 2022, reaching a pinnacle in 2021. With such robust growth, private capital, particularly venture capital (VC) and private equity (PE), holds significant influence.

Also Read: Unlocking green fintech prosperity in Asia: Navigating the top 4 challenges

If these investment entities prioritise diversity, equity, and inclusion (DEI) in their portfolios, they can wield a transformative impact on leadership and management practices in the region.

The study further revealed that only 33 women founders or CEOs are identified across SEA fintech companies, constituting a mere nine per cent. Post-Series-B funding, this number dwindles to just six per cent, highlighting the challenges women face in attaining leadership roles as companies mature.

Notably, gender diversity at the investor level mirrors that at the management level. Women comprise an average of only 14 per cent of lead partners on deals, showcasing a need for increased representation and opportunities for women in decision-making roles.

The study offers valuable insights into potential solutions for enhancing gender diversity in fintech leadership.

Role modelling emerges as a crucial factor, emphasising the importance of visible diversity in inspiring and encouraging others. The study also underscores the significance of mentorship and a supportive network for women leaders.

Overcoming self-confidence and self-promotion challenges is identified as a common struggle among women leaders in the fintech sector.

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Image Credit: RunwayML

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