Indonesia Venture Capital Report 2023
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Executive Summary

The past 12+ months have seen a reset in the Indonesian venture capital (VC) industry, with investors adjusting the pace, scale, and focus of capital deployment in the face of market uncertainty.

Written in collaboration with

Written in collaboration with


Following a boom in 2021 that extended into the first half of 2022, capital deployment began to slow in the back half of 2022 as investors reacted to a deteriorating global macro environment driven by geopolitical tensions, rapidly rising interest rates and weaker consumer and business sentiment. Focus on deployment was further muted as capital allocators moved resources to portfolio support. This trend has continued in 2023, with data through August 2023 indicating that the Indonesian capital market will experience a 70% to 80% decline in deal value this year vs. 2022.

Investors have also adjusted their filters for appropriate investments they are funding (in line with public equities as well as VCs in other regions). Generally, investors have sought lower valuation multiples, stronger unit economics and ability for companies to reach breakeven. This trend can be seen in the worsening conversion rate from seed funding to Series A and Series B funding. As a result, there is pressure on start-ups to pivot from a growth-at-all-costs mentality to a focus on capital efficiency and profitability.

 Despite these challenges, Indonesia remains a bright spot in the regional VC landscape. Attractive market fundamentals helped overall VC deal value in Indonesia hold up reasonably well in 2022 (flat year over year) vs. other markets globally (20% to 40% declines). Deal volumes also climbed around 20% year over year in 2022 as investors increased focus on early-stage opportunities.

A series of structural factors have helped support this relative resilience: (a) macro fundamentals in the country remain stable and the country continues to have the most promising demographic tailwinds of any ASEAN economy; (b) the digital economy continues to expand, with consumer and SME adoption growing steadily.

Another attractive aspect of the Indonesian VC market is the diverse set of international and local investors deploying capital in the market. In particular, venture investors with Indonesia as their primary mandate have taken a growing share of deal flow in the country, mostly focusing on early-stage deals and deals under $50 million. These locally focused investors have emerged with a strong foothold in the market. Their share of deal value grew from around 3% in 2018 to 14% and 16% in 2022 and 2023 respectively. They have also been able to raise larger amounts in successive funds, indicating a good investment track record from earlier vintages. Assuming the quality of start-ups backed by these investors do not deteriorate, there will be a healthy pipeline of mid- and late-stage opportunities from their portfolio in the next three to five years.

One area of the Indonesian start-up ecosystem that remains nascent is exits. Given the relatively small scale of the market, exits have been lumpy and largely skewed toward strategic trade sales. In recent years (2021 onwards), initial public offerings (IPOs) have seen a pickup, largely caused by exits of e-commerce and mobility players Blibli, GoTo, and Bukalapak. It remains to be seen if start-ups can sustain this momentum, given increasing focus on profitability track records in the public markets. The next important step for these public big tech companies is to reach breakeven and generate cash flow in the near future. When these companies are able to produce cash flow, they may be able to create additional channels for exits by fueling their growth through inorganic ways.

On the regulatory front, the Indonesian government has balanced adopting a business-friendly posture (e.g., strengthened digital infrastructure, facilitative policies on Indonesia Stock Exchange [IDX] listing) with protecting consumer and small business interests (e.g., recent social-commerce ban, stricter privacy regulations on fintechs).

In the future, a more resilient venture ecosystem is likely to emerge as stakeholders remain optimistic for long-term prospects coupled with attractive asset prices. Here are several trends that may gain traction:

  • Early-stage deals will likely stay prominent, especially in emerging sectors such as EV and energy (including the broader climate tech), consumer, healthcare, and agritech
  • Growth and later-stage start-ups will prioritize profitability and cash conservation to ensure a longer runway. This shift is influenced by investor demands for quality metrics, such as profitability, over mere top-line metrics. However, many will continue to struggle with valuation overhangs. Those which are well-capitalized will seek opportunistic acquisition targets that help bring in synergistic products, markets, and talent, but likely only for distressed deals.
  • The consolidation of digital infrastructure, through platforms like QRIS, SatuSehat, and the electronic national ID card, will pave the way for tech companies to further disrupt the national economy using digital tools.
  • The local tech talent pool of “second generation founders,” or people who previously held leadership positions in first generation start-ups, will continue to grow and create their own start-ups.
  • There will be a heightened focus on environmental, social, and governance (ESG), both in terms of investment interest in the ESG space, aligned with a growing trend of new climate funds raised, as well as stronger emphasis on corporate governance in start-ups.

Overall, the outlook for the Indonesian VC market is bright. The market growth fundamentals remain intact, there is a clear pipeline of opportunities in emerging sectors, and there is a maturing investor base ready to provide capital to those companies. Together with a greater readiness of both the consumer and SME to adopt digital platforms for consumption and productivity and continued asset downward asset pricing pressure is likely to create conditions for strong vintage of venture investment for newly deploying investors.

About AC Ventures

AC Ventures (ACV) is a top Southeast Asian venture capital firm that invests in early-stage start-ups focused on Indonesia and ASEAN, with over US$500 million in assets under management. The firm’s mission is to empower entrepreneurs with more than just capital by combining operational experience, industry knowledge, deep local networks, and resources. ACV’s team has invested in over 120 tech companies in the region since 2012. With a team of more than 35 professionals led by Adrian Li, Michael Soerijadji, Helen Wong, and Pandu Sjahrir, it has offices in Jakarta and Singapore. For more information, visit


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