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Explainer: Venture capital firms upbeat about investments, IPOs
VC firms expect technology start-ups to continue growing this year and beyond as mobility restrictions in Southeast Asia spur the adoption of digital services for commerce, health, education and grocery shopping.
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Venture capital (VC) firms are bullish about investment growth in Indonesia and Southeast Asia in the medium term after seeing strong growth in start-up financing last year. (Shutterstock.com/fatmawati achmad zaenuri)
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enture capital (VC) firms are bullish about investment growth in Indonesia and Southeast Asia in the medium term after seeing strong growth in start-up financing last year.
Indonesian VC investments grew 6.3 percent year-on-year (yoy) to Rp 13.5 trillion (US$959.3 million) last year, Financial Services Authority (OJK) data shows, driven by the expansion of technology start-ups after countries imposed COVID-19 mobility restrictions in early 2020.
VC firms expect technology start-ups to continue growing this year and beyond as mobility restrictions in Southeast Asia spur the adoption of digital services for commerce, health, education and grocery shopping, among other areas.
“[The pandemic] has been an accelerator rather than a reset of the tech space, as overall digital adoption has grown immensely,” said Aldi Hartanto, investment vice president at MDI Ventures, the financing arm of telecommunications firm PT Telekomunikasi Indonesia (Telkom), on Feb. 19.
VC firms have also pointed to Indonesia as one of the key destinations for regional start-up investment going forward. As of the second quarter of 2020, the country had absorbed the biggest share – 45.8 percent – of the region’s $2.7 billion in fundraising, DealStreetAsia data shows.
Investment in Indonesia’s internet sector grew 50 percent to $2.8 billion in the first half of last year from $1.8 billion in the first half of 2019, according to the e-Conomy SEA 2020 report by Google, Temasek and Bain & Co.
VC firms helped the companies in their portfolios stay afloat during the pandemic, solidifying themselves as an integral part of the start-up ecosystem. But what exactly is venture capital? And what does the recent news of start-ups planning to go public mean for VC firms?
