Indonesia may see more partnerships and mergers between start-ups operating in the country following merger talks between ride hailing firm Gojek and e-commerce platform Tokopedia as they seek efficiencies of scale.

Willson Cuaca, cofounder and managing partner of East Ventures, an early backer of Tokopedia, said the COVID-19 pandemic had forced start-ups to think less with their egos and more with a collaborative spirit.

“COVID-19 is a major cause that forces bigger start-ups to plan strategically,” he wrote on Tuesday.

The pandemic has disrupted businesses and supply chains throughout the world, including in Indonesia. However, several start-ups and technology companies have managed to grow during the outbreak as consumers turn to digital services to fulfill their daily needs.

The e-Conomy SEA 2020 report by Google, Temasek and Bain & Company predicted that Indonesia’s digital economy would grow 11 percent year-on-year to US$44 billion last year despite the headwinds and would grow to $124 billion by 2025.

“Platforms are now refocusing on their core businesses to prioritize a path to profitability, and they are addressing consumers’ broad range of needs through partnerships,” the report read.

“The emerging DFS [digital financial services] battleground is one of the few spaces where the super-services do collide, and though it’s too early to tell the outcome, we expect continued funding and a strong cash-generating core business to be key, including for the five Indonesian unicorns.”

Homegrown firms Gojek and Tokopedia are reportedly in merger talks ahead of plans to list their shares publicly. The merger would create an Indonesian tech giant with a combined valuation of more than US$18 billion, Reuters reported.

A listing of the combined businesses could raise as much as $2 billion, two sources told Reuters, in what would be one of the biggest initial public offerings (IPOs) ever by an Indonesian company.

Tokopedia, backed by SoftBank Group and Alibaba Group Holding, declared its intention to go public last year. The company had appointed Morgan Stanley and Citi to advise on the possibility of a merger with a special purpose acquisition company (SPAC).

Both Gojek and Tokopedia representatives declined on Tuesday to comment on the possible merger talks.

“If Tokopedia and Gojek merge and go public, their offering may attract more young investors,” Wilson said, citing the rise of young retail investors in the local bourse since last year.

A merger or acquisition was viable, he added, if both companies were able to manage the working culture and improve their business.

Institute for the Development of Economics and Finance (Indef) economist Nailul Huda expressed a similar view on Wednesday.

“It is common for tech companies in other countries to do mergers and acquisitions because they are aiming for efficiency. Gojek and Tokopedia, in this case, can merge their bill-paying features or they can share each other’s technology,” he said.

Gojek has its own payment service called GoPay, while Tokopedia has partnered with e-wallet OVO, which is backed by Gojek’s rival, Grab.

“From a business competition point of view, I think the merger and acquisition plan will become an added strength for both companies to compete with their respective rivals,” Nailul said, adding that the merger could boost their valuation and attract more investors in a public listing.

Online aggregator iPrice found that Tokopedia had the highest number of monthly web visitors in the country until Shopee, part of SEA Group, surpassed it in the fourth quarter of 2019. The trend continued until the third quarter of last year with Shopee’s visitors reaching 72.9 million and Tokopedia’s reaching 67.9 million.

“I believe Tokopedia’s plan for an IPO is to also catch up with Shopee’s success. With this merger plan, Indonesians will see the two powerful players competing for the top position,” Nailul said.

Last year, Gojek and Tokopedia secured new infusions of funding from big tech companies.