When a startup reaches a $1 billion USD valuation, it is referred to as a “unicorn”. This term, coined by venture capital investor Aileen Lee, is representative of how rare it is for a company to achieve such value. Over the past several years, there have been five companies that have achieved unicorn startup status in Indonesia: Gojek, Tokopedia, Bukalapak, Traveloka and OVO. These Indonesian unicorns have attracted investors from all over, but specifically from large tech companies seeking to establish a foothold in the region.
We take a closer look at Indonesia’s thriving startup ecosystem with a focus on these unicorns.
Gojek was the first Indonesian company to achieve unicorn status. The app is a play on the word ojek, the popular Indonesian motorcycle taxis. Starting out in 2009 as a call centre that connected couriers and people who needed a two-wheeled ride, the company launched an app in 2015 covering four primary services: ride-hailing, couriers, shopping and food delivery. Five years later, the company is now a Super App covering a wide array of services and satisfying all sorts of needs, from massages to auto repairs.
Furthermore, its GoPay feature is Indonesia’s fourth-biggest eWallet service. Its latest investment was from Facebook and Paypal for an undisclosed amount. It is the only company in Indonesia to have reached “decacorn” status, a term describing a company valued at over $10 billion USD.
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Launched in 2009, Tokopedia is an online marketplace with the mission of democratising commerce through technology. Combining the Indonesian word for shop and “encyclopedia”, it is a free consumer-to-consumer platform for merchants and buyers that has received funding from Chinese giant Alibaba in the past.
As the company becomes increasingly successful, it has extended its line of products to specialised markets, a notable example being its Muslim-based marketplace, Tokopedia Salam, with over 700,000 registered merchants and over 21 million available curated products. Its latest investment of $350 million USD, came from tech giant Google and Singapore’s state-managed investment holding, Temasek.
The next unicorn is Bukalapak, another eCommerce platform which was established in 2010. The platform allows users to buy and sell products between one another and it currently boasts over six million sellers. In the past two years, Bukalapak has launched a Business-to-Business e-procurement line and has explored the world of fintech by launching a mutual fund selling agent.
Microsoft established a strategic partnership with Bukalapak, along with investing $100 million USD in early November 2020.
Most of the unicorns in this article are eCommerce related, but Traveloka focuses on providing Indonesians with airline tickets and hotel booking services. It started out providing a single service, flight reservations and began to add more features as the company grew. It has now expanded to operate in a wide array of business areas, specifically event tickets, car rentals, and restaurant vouchers, and branched out internationally to Malaysia, Thailand, Philippines, Vietnam, Singapore, and Australia.
The pandemic initially affected Traveloka, resulting in 100 layoffs during the early stages of the worldwide lockdown of 2020. However, the company shifted gears to focus on short-term, in-country travel buoyed up by a $250 million USD investment from a global financial institution along with some of its existing investors.
The fifth and last of the Indonesian unicorns is OVO, a digital payment service founded in 2017. Also known as PT Visionet International, OVO is another fintech-related startup that has benefitted from the rise in digital payments due to the COVID-19 pandemic. With a presence in over 373 cities and administrative regencies in Indonesia, it currently has over 700,000 participating merchants and has been downloaded onto 115 million devices. Through this platform, customers can transfer funds, manage payments, top-up phone credit and make withdrawals, as well as perform asset and investment management.
After reviewing all of the Indonesian unicorns, one key point stands out. Many started as platform services that created core interactions between users and have evolved. Gojek initially connected ojek drivers and commuters until its transformation into a Super App, and Tokopedia and Bukalapak began by connecting merchants and buyers. While the pandemic has heavily affected the travel industry, some of Traveloka’s stakeholders still see the company’s potential and have doubled down on their investment.
Even though the statistical probability of reaching a billion-dollar valuation is very low, unicorn startups in Indonesia are a growing trend in Southeast Asia due to several factors. Indonesia, with its 274+ million inhabitants representing the fourth-largest internet population in the world, has the necessary numbers to convert a website or service quickly into a highly sought-after unicorn. This puts Indonesian unicorns on the world stage as important symbols of the country’s emerging economy.
Also, as major US and Chinese companies seek to gain a solid position in the region, they are investing as much as they can in these unicorns. This investment will only make the region stronger and benefit the growth of more startups in this part of the world, making the emergence of more unicorns in the future a certainty.