Written by Donald Wihardja
As my first post in our Convergence Accel’s website, let me to begin by justifying why am I doing Venture Capital in Indonesia, with a fund that is so Indonesian Centric that we only invest in companies that has an Indonesian Story. Well, because Indonesia (and that Indonesian Story) is BIG, and its just kept getting BIGGER. How big? I’m glad you ask…
Indonesia is the world 4th most populous nation, with 252 million of (monetizable) citizens. With 230 million phone subscribers, more than half of the people has a mobile phone, and the other half can find someone next to them who does. Internet stands at 71 million subscribers (about 28% penetration).
35% of urban Indonesian (and we’re 40% urban and growing) has smartphones, and knows how to use it. a lot. Facebook, Twitter, BBM, Path, Instagram, Whatsapp, Line, KakaoTalk, all supported the fact that Indonesian loves the Internet (and love it twice as much as the world’s average). We just don’t have that much money… Yet…
Indonesia’s rapidly growing GDP ($843 billion in 2013) is still on track to make indonesia world’s 11th largest economy in 2030 (from 16th today), though not the 7th, as projected by BCG before. Currently, 74 million of those are of “Middle and Affluent” class according to BCG in 2013. Furthermore, they are some of the most confident consumers in the world.
Indonesia’s retail market is over $230 billion in 2013. Thus Indonesia’s $10 billion internet assisted commerce (including travel) in 2013 still makes less than 5% of the total. Lots of room to grow.
In advertising (the traditional way internet company makes money) Indonesia is ahead of its peers. Indonesia’s annual (offline) ad spent is $8.4 billion in 2013. To put that into perspective, that’s the same amount as India’s in 2013, and India has 4 times the number of people. Indonesia Digital Ad spent is estimated at $420 million and is expected to grow over 65% per annum (mostly though Google paid search, though).
And, after all this time, the Tech Boom in Indonesia is finally here. In 2013, TechInAsia announced over 30 investments in Indonesia. This year, with over 6 new South East Asian funds (with strong focus in Indonesia) being launched, I feel that we can easily double that number.
Lastly, As this post obviously shows, I’m the number guy in Convergence Accel. I experience first hand how hard it is to find number data in Indonesia, thus I intend to link those sources I found most valuable to this site. For those of you who loves numbers like I do (or is being forced to justify their valuations, ha ha ha) keep your eyes on this space.
Now go make some money.