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Tech unicorns lost for direction amid funding drought, unclear exits
Some Indonesian start-ups have lost their decacorn and unicorn status due to great drops in their valuation.
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The icons of Indonesia's six unicorns are shown on a screen on Aug. 3, 2021. The six are ride-hailing company Gojek, e-wallet OVO, online travel agency Traveloka, logistics company J&T Express and e-commerce platforms Tokopedia and Bukalapak. (JP/Norman Harsono)
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ndonesian unicorns, once thriving start-ups valued at over US$1 billion, seem to have lost their direction over the past few years with funding becoming increasingly difficult to find, while some have seen their market capitalization plummet years after going public.
Follow-up funding for tech companies has become less and less frequent, for late-stage or early-stage companies, with additional venture rounds for existing unicorns taking place at lower valuations.
Edward Ismawan Chamdani, treasurer of the Venture Capital and Start-up Indonesia Association (Amvesindo) told The Jakarta Post on Aug. 19 that this was a result of the burst of the valuation bubble that formed before mid-2022 when there was “too much capital chasing too few winners”.
Back then, the market trusted heavily on this metric to gauge rising start-ups, but now many companies found themselves under intense pressure to justify their inflated valuations after the trend passed.
“For some others, this led to down-rounds, where additional funding was raised at lower valuations. Others, with less capital and shorter runways, struggled to secure follow-on funding, forcing them to either slash spending, merge or close down,” he said.
Funding for start-ups declined to just US$400 million from 100 deals in the first half of last year according to the annual e-Conomy Southeast Asia report published on Nov. 1, 2023, by tech giant Google, Singapore-based Temasek and the United States-based research firm Bain & Company. Previously, it was $3.3 billion from 302 deals in the same period of the previous year.
Read also: Moving on from e-wallets, GoTo, Grab look to digital banking
