The Jakarta Post
“What infrastructure would you build to support Indonesia’s unicorns?” President Joko “Jokowi” Widodo asked his contender Prabowo Subianto during a live-broadcast presidential debate on Sunday night.
A little bit baffled with the question, Prabowo replied, “When you say unicorns, do you mean the online things?”
Jokowi nodded vigorously.
Prabowo, who is officially candidate No. 2, eventually answered the question. But his innocuous reply was enough for internet users to flood Twitter with posts ridiculing him for mixing up unicorns as a business entity with unicorns as a mythical creature.
Twitter saw a new hashtag #02GagapUnicorn (No. 2 baffled over unicorns) show up in 43,500 tweets in less than 12 hours after the debate ended.
This raises a valid question: What are unicorns?
In the business sense, a unicorn is any privately held start-up valued at over US$1 billion. The choice of the mythical animal alludes to the rarity of such start-ups.
Indonesia currently has four unicorns: ride-hailing company Go-Jek, online travel agent Traveloka, e-commerce platform Tokopedia and e-commerce platform Bukalapak.
They are among the 10 Southeast Asian unicorns, four of which are from Singapore (Lazada, Grab, Trax and PropertyGuru), while Vietnam has VNG and the Philippines Revolution Precrafted.
Grab, notably, rose from unicorn to “decacorn” status last year after its valuation exceeded $10 billion.
Such unicorns secure their valuations through a series of funding rounds from either venture capital or private equity firms such as California-based Sequoia Capital and Jakarta-based East Ventures.
Indonesia’s unicorns alone secured at least $3.1 billion between 2017 and the first half of 2018. That amount is 17 percent of the $18.5 billion raised for all Southeast Asian start-ups in the same period.
Steven Okun, ASEAN representative of the Emerging Market Private Equity Association (EMPEA), said, if anything, it was the four unicorns that sparked investment in Indonesian start-ups.
“The trend of VC [venture capital] skyrocketed in Indonesia and will certainly continue into 2019 thanks to the proven successes of Go-Jek,” he said as previously reported by The Jakarta Post.
From a political-economic standpoint, Indonesia’s unicorns matter because they promise to bring the country greater economic growth and international attention in today’s increasingly digitized global economy.
This notion comes from American and Chinese technology companies such as Google, Amazon, Tencent and Alibaba, all of whom began as start-ups but have become one of the top 10 biggest companies worldwide in terms of market valuation, according to Statista.
In Indonesia’s case, a Google-Temasek report predicts that Indonesia’s digital economy may triple from $27 billion last year to $100 billion by 2025 led by the e-commerce, ride-hailing, online travel and online media sectors, all of which are covered by the four unicorns.
Riding on the global digital economy euphoria, President Jokowi and Communications and Information Minister Rudiantara have often positioned the government as champions of homegrown start-ups, including the four unicorns.
Rudiantara even helped Go-Jek with its regional expansion plans last year by trying to convince the Philippine government into letting the company enter its market.
The government’s pro-unicorn position explains why the media and internet users were stirred-up when Bukalapak chief executive officer Achmad Zaky tweeted last week that he wished for “the new president to fix this”, in reference to Indonesia’s low allocation of funds for research and development.
Meanwhile, the four unicorns have fueled the government and local media’s optimism over the digital economy by marketing themselves as patriotic businesses focused on helping Indonesia’s micro, small and medium enterprises (MSMEs) and middle-lower income citizens.
Go-Jek, for example, markets itself as a karya anak bangsa (made by Indonesia’s kids) that helps citizens earn extra income by either employing them as drivers or boosting their business revenue through delivery services.
Meanwhile, investment analyst Erik Hendrikus said the unicorns also mattered because they genuinely inspired many Indonesian youths to become entrepreneurs.
“Many young adults feel the impact of start-ups such as Go-Jek and Grab on their lives and are becoming inspired to create their own start-ups to solve other problems,” he said.