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ndonesia, like China in 2008, has many ingredients for tremendous digital disruption. I arrived in Indonesia in 2012 attracted by the opportunity of a giant market untouched by disruptive internet-enabled businesses.

Fast forward five years later, the digital landscape of Indonesia has grown remarkably. A trio of “unicorns”— Go-Jek, Tokopedia and Traveloka (GTT) — have become household names, acquired multi-billion dollar valuations and transformed the way people move, shop and travel.  

While this trio may be on the path to a “mega” platform for Indonesia resembling the BATs (Baidu, Alibaba, Tencent) of China and FANGs (Facebook, Amazon, Netflix and Google) of the United States.

We believe there are still many verticals that can be revolutionized through the application of internet technologies.

When assessing the potential in Indonesia, it is important to bear in mind some first principals. Firstly, it is an enormous domestic market. It has a population of 260 million people, 70 percent of whom are under the age of 35, and it is forecast to be the world’s fifth-largest economy by 2030.

Secondly, it is a relatively open market that has seen strong adoption and penetration of several global internet businesses. Most notably Google and Facebook have highly entrenched products that can severely limit the potential for local ventures offering similar services.

Hence, businesses that require strong localization, on-the-ground operations and address large consumer needs will represent the greatest opportunities for entrepreneurs in the next five years. So what are the areas that we are most excited about?

The first wave of digital commerce platforms went for the large horizontal opportunities in models that are similar to Amazon or Alibaba’s Taobao. Tokopedia and Bukalapak are the two examples of Indonesian local platforms that have created billion-dollar businesses using such a model.
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In more mature markets, content portals and online news largely replaced print media.

However, in their wake, specialist vertical commerce businesses have an opportunity to capture users by providing a more category-specific and customized user experience.

This is similar to how we see verticals arise in China like Jumei for cosmetics and Vancl for fashion. Indonesia will therefore see high-performing technology-enabled commerce businesses in verticals such as female fashion, home and living and automotive products, to name a few.

One of the earliest sectors to be disrupted by the internet is traditional media. In more mature markets, content portals and online news largely replaced print media. Then on-demand video in the form of YouTube and Netflix took on television. Similar platforms have also taken off in China, for example Sina and Youku.

In the coming five years we will see the last remaining print media companies switch fully to digital. While this represents an opportunity; one of the key challenges for media tech businesses in Indonesia has been the dominating presence of Facebook and Google. That said, incumbent local web 1.0 platforms such as
Detik and Kompas to this day continue to have a large share of traffic and users.

This shows that through sufficient localization of content, it is still possible to create a large platform in the media space.

In particular, we believe there is a strong opportunity for the trifecta of live streaming, short video and on-demand video to disrupt traditional TV in Indonesia.

In this category, we have seen the tremendous growth of live streaming in the region through a company that we are investors in called M17 and believe that the astonishing growth the company has achieved is just the beginning.

One of the largest opportunities in Indonesia focuses on extending financial inclusion and fixing the inefficient financial infrastructure.

This large category includes everything from creating smooth and efficient payments between banks, businesses and people to the creation of branchless banking and digital channels for financial products.

With less than 3 percent of the population owning credit cards and only 36 percent of the adult population with a bank account; the opportunities for digitally enabled ventures to create valuable products is immense.

Key businesses that we believe have huge potential include alternative lending businesses, risk profiling/credit scoring technology and pure play digital banks and financial product
providers.

Correspondingly we have backed fast-growing ventures in this industry including Julo and Payfazz.

A final area to mention we believe will feel the disruptive effects of digital is real estate. As one of the largest asset classes in the country it has prevailed relatively untouched by technology.

As we have seen through the rise of co-working, co-living and smart home platforms, there are remarkable business models and technologies that can create a far superior experience for how we work, live and engage with others.

It is highly likely that a local business will succeed in this sector in Indonesia using technology to make space a platform and unlocking huge value as a result.

Similarly to how we believe ultimately e-commerce will grow from 3 percent to double-digit percentages of total retail sales, co-work spaces, which make up less than 0.5 percent of office supply, will also rise to double-digit percentages.

As big believers in the “space as a service” sector we have invested in Go-Rework a leading Indonesian premium co-working space.

There are many more areas that local technology businesses will create much value in Indonesia, not all which are described here.

Some other industries may also take more time such as health care and education.

However, what is certain is that with the fundamentals of Indonesia there are plenty of opportunities in the digital sector coming up and the early rise of the GTT is only the beginning.
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The writer is founder and managing partner of Convergence Ventures (CV), Indonesia’s largest local focused early stage venture fund.