TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Founders, VCs call for start-ups to innovate, look for opportunities amid COVID-19
An estimated 15 percent of the country’s start-ups were “severely affected” by the global health crisis between March to May, according to Venture Capital and Startup Indonesia Association (Amvesindo).
Change Size
According to the Research and Technology Ministry's National Research and Innovation Agency (BRIN), only 13 percent of around 1,037 start-ups in Indonesia can scale up their business, while most were reported to be stagnant or dissolved.
(Shutterstock/-)
I
ndustry players and venture capitalists have urged start-up founders to innovate and look for opportunities to survive the COVID-19 pandemic.
An estimated 15 percent of the country’s start-ups were “severely affected” by the global health crisis between March and May, according to the Venture Capital and Start-Up Indonesia Association (Amvesindo). The figure had gone up to 25 percent by August and is projected to further increase as the pandemic progresses.
“In every crisis, start-ups should look for new opportunities or entry points. For existing companies, you can pivot your business to stay resilient,” fintech start-up Investree founder Adrian Gunadi said during a webinar on Thursday.
Adrian advised start-ups in their early stages to focus on building their team and product-market fit, among other measures, while weathering the current situation.
Meanwhile, start-ups in the growth stage should focus on scalability and profitability to survive the health crisis and possibly attract new investors.
He added that to revive a start-up, founders must also first determine the underlying problem that started the company’s demise in the first place.
“If the company is facing a systemic problem, then founders need to rethink their teams, hire new people and build the company up again,” he said.
According to the Research and Technology Ministry's National Research and Innovation Agency (BRIN), only 13 percent of around 1,037 start-ups in Indonesia can scale up their business, while most were reported to be stagnant or dissolved.
Ride-hailing start-up giants Gojek and Grab have recently had to retire some of their non-core businesses because of the pandemic’s impact on the companies’ operations.
Singapore-based Grab announced in June that it would lay off 360 people, just under 5 percent of its region-wide employees, because of the ongoing crisis. Not long after, Gojek did a headcount cut of 430 workers or around 9 percent of its total workforce, as the company aims to focus on its ride-hailing, food delivery, e-payment and logistics services.
Fishery e-commerce start-up Aruna cofounder Utari Octavianty said during the webinar that she pivoted her business in just a week after Indonesia announced rising COVID-19 cases in the country.
“Almost all of our products are for exports, but as our logistics were disrupted, we quickly marketed our goods to domestic consumers,” she said. “In times of uncertainty, we can learn to ride the wave.”
Aruna recently received US$5.5 million in its latest funding round. The company also reported a 86 percent revenue growth in the first quarter of the year from the same period in 2019.
“Start-ups that are negatively affected can look at the room for improvements in their company first. Not every start-up needs to immediately pivot their business,” Amvesindo chairman Jefri Sirait said at the same event.
He went on to say that start-ups needed to maintain their liquidity and build runway, which is the calculation on how long a company can survive when income and expenses stay constant.
Start-ups need to determine and leverage their competitive advantage at the beginning to become the basis or scalability in the future, according to Jefri.
Some venture capital firms (VCs) will consolidate with other VCs to disburse funds amid the pandemic. However, some VCs may hold back their investment plan.
“If your start-up has a good product and it needs cash, you can meet with investors, preferably your existing ones, to build up your survival rate,” Jefri said, adding that founders needed to stay prudent but also make quick decisions during this time.
Meanwhile, former Jakarta deputy governor and entrepreneur Sandiaga Uno said he saw many start-ups emerge during the pandemic as a sign that Indonesian entrepreneurs could find opportunities in a crisis.
He said start-ups could become another kind of “vaccine” as it can provide job opportunities amid a wave of layoffs caused by the pandemic.
The government predicts that 2.9 million to 5.2 million workers could lose their jobs during the health crisis as almost all components of economic activities has fallen.
“I think we are going to face a new start-up landscape and we won’t experience the pre-COVID situation. Times are changing anyway, and we need to innovate,” he said. “In the current situation, good things come to those who move.”
