Press release

AC Ventures and Bain release comprehensive report on venture capital in Indonesia

AC Ventures and Bain release comprehensive report on venture capital in Indonesia

The joint report examines Indonesia's evolving VC landscape, revealing both challenges and maturation. Amid global uncertainties and an expected deal value decline for 2023, Indonesia shows resilience with structural enablers driving optimistic projections.

  • November 15, 2023
  • min read

Press release

AC Ventures and Bain release comprehensive report on venture capital in Indonesia
  • In their debut joint report, AC Ventures and Bain & Company detail Indonesia's VC landscape over the past year, with a 70% to 80% projected deal value decline in 2023.
  • After rapid growth during 2020-2021, the VC sector is progressing toward maturity as investors are favoring startups with strong unit economics and profitability.
  • Indonesia maintained its 2022 VC deal value at US$3.6 billion against global declines and saw a 20% YoY increase in deal volumes, backed by positive economic indicators.
  • Macro challenges include geopolitical tensions, a rise in interest rates, weaker consumer and business sentiment, and the 2024 elections. Major tech firms shift strategies, with investments leaning toward e-commerce, fintech, and direct-to-consumer (D2C) retail.
  • Trade sales are overshadowed by a rising IPO trend, but post-2022 conditions may affect mega-IPOs. Early-stage deals, especially in electric mobility and healthcare, are poised for growth with the local digital economy projected to reach US$360 billion by 2030.
  • Investors appear to shift focus toward new investment themes such as electric vehicles (EVs), energy transition, and healthcare.

JAKARTA - November 15, 2023 - Earlier today, AC Ventures and Bain & Company released their highly anticipated joint report on the venture capital (VC) landscape in Indonesia, offering deep insights into the prevailing trends, challenges, and future outlook of the industry.

The VC sector in Indonesia has experienced a significant transformation in recent years. The last 12 months witnessed a market recalibration driven largely by global macroeconomic headwinds. While deal flow picked up quickly in 2021, increasing macroeconomic uncertainty drove caution in investing momentum and the spillover effect from H2 2022 saw a lower number of deals and decline in deal sizes.

Despite a degree of cautious optimism at that time, projections for 2023 are now sobering with an anticipated 70% to 80% decline in deal value compared to the preceding year. The funding pace in 2023 remained sluggish through Q3, standing at 0.3x compared to Q3 2022. 

While the year has been difficult for the VC sector, the overall growth outlook is positive given that the Indonesian VC landscape is entering a more mature state overall. Following the surge in VC investments driven by rebounding investor confidence during 2020-2021, investors are now more measured and rational in their approaches. The report highlights a significant shift in investor priorities, emphasizing startups that showcase strong unit economics, leaner valuations, and clear paths to profitability. This is further evidenced by the declining conversion rates from seed to series A/B funding rounds.

One of the standout insights from the report is Indonesia's resilience against global trends. While the global VC deal value faced a decline of 20% to 40%, Indonesia maintained a stable VC deal value in 2022 on a year-over-year (YoY) basis at US$3.6 billion. Further, the archipelago registered a 20% YoY increase in deal volumes in the same year.

Attractive macroeconomic fundamentals suggest that Indonesia remains a bright spot in the region and will provide a favorable climate for startups in the country. With a young and burgeoning middle class, Indonesia's GDP per capita grew by 4.6% in 2022. Household consumption, a significant economic driver, accounted for 55.6% of the GDP. The digital economy is on an upward trajectory, reaching a notable US$77 billion in 2022. For Indonesia to stay on its growth trajectory, it needs to navigate macro headwinds such as the ongoing US-China tensions, the upcoming 2024 elections, increased pressure on major tech players to achieve profitability, and the evolving regulatory landscape.

The report also provides deep dives into key investment themes. While platform-based businesses in sectors like e-commerce and mobility dominated pre-2020, there was a discernible shift toward fintech subsectors and new retail models such as direct-to-consumer (D2C) during 2020-2022, mainly driven by the rapid increase in digital adoption during the Covid-19 pandemic. The emerging investment themes for 2023 and beyond point toward an increased focus on ESG, climate tech, electric vehicles, health tech, and D2C brands.

On the exit outlook, the traditional preference for trade sales is giving way to a rising trend in initial public offerings (IPOs). However, market pressures and a post-2022 funding environment could potentially dampen spirits around mega-IPOs.

The report suggests an imminent upswing in Indonesia’s VC industry. Early-stage deals, especially in burgeoning sectors like electric mobility and healthcare, are expected to dominate VC activity in the near term. Late-stage startups will likely update their strategies, emphasizing profitability above all else. With the digital economy projected to touch US$360 billion by 2030 and initiatives like the IDXCarbon launch signaling Indonesia's commitment to a net-zero future, global investors have reason to be optimistic about Indonesia.

Founder and Managing Partner of AC Ventures Adrian Li said, "Our joint report with Bain & Company captures Indonesia's VC evolution amidst global uncertainties. While challenges remain, Indonesia's resilience shines as investors prioritize startups with solid fundamentals and profitability. With multiple emerging sectors on the rise and a strong commitment to a sustainable future, Indonesia remains a promising hub for global tech investors."

Tom Kidd, Partner at Bain & Company, added, “Our research with AC Ventures highlights the shared optimism towards the long-term attractiveness of Indonesia as an investment destination. Macro headwinds and a tougher funding environment will help to shape a stronger and more resilient ecosystem and future growth will be delivered by a clear pipeline of opportunities in emerging sectors coupled with a maturing investor base ready to provide capital to those companies.”

Editor's Note: For more information or interview requests please contact: Tay Yan Xin, tel: +65 6228 5019, email:, Bain & Company

About Bain & Company

Bain & Company is a global consultancy that helps the world’s most ambitious change makers define the future.

Across 65 cities in 40 countries, we work alongside our clients as one team with a shared ambition to achieve extraordinary results, outperform the competition, and redefine industries. We complement our tailored, integrated expertise with a vibrant ecosystem of digital innovators to deliver better, faster, and more enduring outcomes. Our 10-year commitment to invest more than $1 billion in pro bono services brings our talent, expertise, and insight to organizations tackling today’s urgent challenges in education, racial equity, social justice, economic development, and the environment. We earned a platinum rating from EcoVadis, the leading platform for environmental, social, and ethical performance ratings for global supply chains, putting us in the top 1% of all companies. Since our founding in 1973, we have measured our success by the success of our clients, and we proudly maintain the highest level of client advocacy in the industry.