Indonesia is the second largest start-up hub in Southeast Asia, after Singapore. This chapter presents an overview of the start-up scene in Indonesia, it highlights its distinctive features, including the international orientation of its start-up ecosystem, the emergence of impact investment for start-ups, the rise of a vibrant cultural and creative industries cluster, and the need to streamline policy support as multiple ministries and agencies are looking at unlocking the country’s innovation potential through start-up development.
Start‑up Asia
Chasing the Innovation Frontier
Abstract
Within a few years, Indonesia has emerged as the second largest start-up hub in Southeast Asia after Singapore both in terms of number of start-ups and of total venture capital investments. With 275 million people, Indonesia has the world’s fourth largest population [after India, the People’s Republic of China (hereafter “China”) and the United States] and combined with favourable local policies, its market potential has grabbed the attention of investors who are flocking to take advantage of the emerging opportunities (ASEAN and UNCTAD, 2022[1]; KPMG and HSBC, 2022[2]).
Start-ups have become a key driver for Indonesia’s strategy to foster digitalisation and entrepreneurship since 2016. The past decade has seen increasing efforts in the country to reduce its reliance on natural-resource exports, modernise and expand infrastructure and encourage private sector development (OECD, 2020[3]; OECD, 2018[4]). By developing programmes to promote start-ups across different ministries, Indonesia aims to increase awareness and investment opportunities in its start-up scene.
This chapter presents an overview of Indonesia’s current start-up ecosystem and the country’s policies to support start-up development, including a spotlight on cultural and creative industries. It concludes by identifying challenges for the future.
Indonesia’s start-up ecosystem has grown at record speed. Start-ups began to emerge in the country in the 2000s but the pace of growth has accelerated since 2010 (Bachtiar et al., 2023[5]). In 2014, venture capital (VC) investments surpassed USD 100 million for the first time, in a landmark deal for Tokopedia, an e-commerce company and one of Indonesia’s first unicorns. Within the space of just a few years, investments increased 10-fold, equal to about 0.1% of Indonesia’s GDP. Since then, Indonesia’s ecosystem has continued to expand, with investments accounting for around 0.23% of GDP in 2021-23, just below the OECD average (0.32%) (Figure 3.1). Indonesia’s start-up boom took place at a time when investor interest started flowing not only to China, India and Singapore, which are among Asia’s oldest start-up hubs, but also to other Southeast Asian countries, such as Thailand and Viet Nam. However, in 2022 and 2023 in Indonesia, similar to other hubs in the region, investment levels cooled, owing to a global capital downturn, as interest rates rose and global instability sharpened (Dailysocial, 2022[6]; Google, Temasek and Bain, 2023[7]).
Indonesia is the second largest hub in Southeast Asia after Singapore, and the fifth largest in Asia. The country accounts for 24% of Southeast Asian venture capital investments (2021-2023) and 19% of start-ups, second behind Singapore (58% and 47%, respectively). Despite its overall size and speed, Indonesia’s ecosystem is characterised by a relatively low density of start-ups, a feature shared by other emerging hubs in the region. Indonesia is home to 1.4 start-ups per 100 000 people, similar to Thailand (1.5) whereas the OECD average is approximately 40 (Figure 3.1).
Note: Panels B and D: based on active start-ups founded between 2014-2023. Panels C and D: Asia and OECD values are regional averages. Panel D: the Asian average is computed on countries with over 50 active start-ups and excludes Singapore.
Source: Authors’ elaboration based on Crunchbase (2024[8]), database, https://www.crunchbase.com and IMF (2024[9]), World Economic Outlook, https://www.imf.org/external/datamapper/NGDPD@WEO/OEMDC/ADVEC/WEOWORLD.
Some Indonesian start-ups are reaching global scale: the country is home to eight unicorns, almost the same as Singapore (9) (Figure 3.2). Among the country’s first, in addition to Tokopedia, was Gojek a car-sharing and fintech unicorn, and Bukalapak, an e-commerce website established in 2010 (Tokopedia and Gojek merged to form GoTo before going public in 2021). Beyond e-commerce, Indonesia’s current unicorns are active in fintech, including companies in brokerage and credit (Ajaib, Akulaku) and payment apps (Xendit, DANA, OVO), food-tech (eFishery and Kopi Kenangan) and logistics (J&T Express).
Note: Only unicorns founded after 2013.
Source: Authors’ elaboration based on CB Insights (2023[10]), The complete list of unicorn companies (database), https://www.cbinsights.com/research-unicorn-companies.
Indonesia’s start-up ecosystem is characterised by three main features: (1) investments and start-ups concentrate in e-commerce and fintech; (2) there is a vibrant investor scene; (3) start-ups are emerging beyond Jakarta
Investments and start-ups tend to concentrate in fintech and e-commerce
The majority of VC in Indonesia concentrates in fintech (40% of total during 2021-23) and e-commerce (16%), tapping into a growing local market (Figure 3.3). Indonesia remains a lucrative market: it combines a big population with a demographic dividend and a growing disposable income (GDP per capita in 2015 prices doubled from USD 1 845 in 2000 to USD 4 193 in 2023) [based on (UNCTAD, 2024[11])]. It is also a population that is still becoming connected, opening up opportunities for digital, mobile-first businesses. Since the COVID-19 pandemic, between 2019 and 2023 an estimated 65 million people gained access to the Internet, bringing the total to 69.2% of the population in 2023. Nevertheless, there is room to grow in order to catch up to regional hubs such as Thailand (90%) and Viet Nam (78%) [authors’ elaboration based on (ITU, 2024[12])]. Indonesia is now home to 3 of the top 20 largest e-commerce websites in Southeast Asia (Figure 3.4), which are attempting to adapt business models to local conditions to gain market share (Box 3.1). Fintech has risen in parallel to e-commerce, generating payment solutions for platforms in a country where only half the population has a bank account (51% compared to Asian average of 57%) [authors’ elaboration based on (World Bank, 2022[13])]. For instance, Gojek, originally a ride-sharing platform, has developed GoPay. Indonesia’s pattern of investments is similar to that of the Asian average in terms, but is less diversified, pointing to a still maturing ecosystem where investments are dominated by few large deals. Moreover, investments in high-tech activities are lower than in more advanced hubs, such as those in the OECD. For instance, health and biotechnology absorbed 13% of VC in the OECD on average compared to 4% in Indonesia, and AI and data analytics 8% versus 0.5%.
In contrast to investments, start-ups in Indonesia follow a more diversified pattern. IT and software concentrate 24% of start-ups in Indonesia, which is in line with the Asian and OECD averages, followed by fintech (13) and business services (10%) (Figure 3.3). Agro-food stands out as an activity that attracted more start-ups and investments in Indonesia than the regional average (5% of start-ups and 9% of VC in Indonesia versus 3% respectively in Asia), pointing to linkages with the local food production ecosystem as well as with the local cultural and creative scene.
Note: All active start-ups founded between January 2014 and December 2023. Asia average includes countries with over 50 start-ups and over 10 annual VC deals.
Source: Authors’ elaboration based on Crunchbase (2024[8]), database, https://www.crunchbase.com.
Top 20 e-commerce sites in Asia by number of visits per month (millions), 2023
Note: Only websites with more than 1 million visits per month.
Source: Authors’ elaboration based on Web Retailer (2023[14]), “The World’s Top Online Marketplaces 2023”, https://www.webretailer.com/marketplaces-worldwide/online-marketplaces.
Several of Indonesia’s e-commerce start-ups have been adapting their models to fit Indonesia’s specific market needs. One of the biggest challenges has been Indonesia’s challenging geography: with 17 500 islands, it is costly to operate a large warehouse-node model, which has been popularised by global e-commerce leaders such as Amazon.
Tokopedia, established in 2009 as a customer-to-customer (C2C) platform, is now Indonesia’s largest e-commerce site (top 10th in Asia, by number of visits). Tokopedia developed a business model that combined partnerships with multiple logistics providers (15 at the time of writing) together with its own portable smart fulfilment centres for merchants located in high-demand areas. Tokopedia merged with Gojek in 2021, a ride-service and e-payment firm, to harness synergies.
Bukalapak, established in 2010, is Indonesia’s third largest e-commerce site (no. 17 in Asia, by number of monthly visits). Bukalapak launched in 2016 a new model that aims to connect online small street stalls (warungs), by offering online services such as payments and phone top ups and connecting them to local distributors, thereby pushing down costs.
Source: Authors’ elaboration based on companies’ websites.
A vibrant and varied investor scene has emerged in Indonesia
The investor scene in Indonesia has become increasingly dense and diverse. Foreign investors are prominent: about 45% of VC deals with known investor location in 2020-22 were done with investor(s) headquartered abroad, similar to Singapore (50%) and lower than Viet Nam (55%) where foreign funds are among the more prominent in the region. They also co-invested with local investors in a further 40% of deals. Singaporean investors are the most prominent, in line with the country’s role as a regional finance hub for VC and start-ups, participating in 31% of rounds in Indonesia during 2020-22, followed by investors from the United States (20%) and Japan (3%) [authors’ elaboration based on (Crunchbase, 2024[8])]. Local funds are also active, particularly for early-stage investments. Among the most prominent local investors are Alpha JWC and AC Ventures. Indonesia also has a relatively high participation of corporate venture capitals (CVC), which participated in about 30% of venture rounds during 2020-22, one of the highest shares among regional peers, following Thailand (46%), and much higher than for instance the United States where 8% of VC investments were by CVCs (Figure 3.5). Venture funds have been launched by some of Indonesia’s largest firms, such as Telkom Indonesia (Indigo, MDI Ventures) and Sinar Mas and large start-ups that are engaging in their own search for financing innovative opportunities, such as GoTo with its accelerator GojekXcelerate. In Indonesia, angels and wealthy individuals are increasingly involved in financing start-ups.
Source: Authors’ elaboration based on Crunchbase (2024[8]), database, https://www.crunchbase.com and additional research.
A distinctive feature of Indonesia’s scene is the attention to investments that are sustainable and inclusive. Globally, there is a trend towards social investing (or impact investing as it is often described), with an increasing number of funds targeting so-called social start-ups, i.e. those that have a dual mandate: to tackle a social or environmental goal while generating profit (Bocken, 2015[15]; OECD, 2022[16]). They are therefore conceived as well placed to find efficient, market-based and innovative solutions to local problems at the grassroots level. There is more than one definition of social start-ups, but evidence suggests that they are still a very limited phenomenon. Nevertheless, in Indonesia there is a relatively high awareness of social start-ups, with more of them self-identifying as striving to create a social impact compared to other regional hubs, in line with findings on the prevalence of social impact firms overall (British Council, AVPN, UNESCAP and DICE, 2020[17]).
In Indonesia nearly 6 of every 1 000 start-ups self-identified as a social start-up, higher than the Asian and OECD averages (5 and 4 respectively) and the third highest in Asia after Singapore and Malaysia (7.6 and 6.6 respectively) (Figure 3.6). Social start-ups have been supported in Indonesia, not least through the formalisation and legal recognition of the sector in the country as early as 2015. While venture capital to social start-ups still remains at low levels, a growing ecosystem is fostering social start-ups, including the Asian Venture Philanthropy Network (AVPN) and specialised private sector impact funds (Box 3.2).
Note: Includes active start-ups founded between 2014-2023, which self-describe as being or having one or more of the following: environmental business; environmental enterprise; environmental impact; environmental startup (or start-up); environmental venture; social business; social enterprise; social impact; social startup (or start-up); social venture; sustainable business; sustainable enterprise, sustainable impact; sustainable startup (or start-up); sustainable venture, as a proportion of total active start-ups founded during the same period, by country. Only countries with over 5 social start-ups identified in Crunchbase are included.
Source: Authors’ elaboration based on Crunchbase (2024[8]), database, https://www.crunchbase.com.
The Asian Venture Philanthropy Network (AVPN) was founded in 2011, following the success of the European Venture Philanthropy Association (EVPA). AVPN is the largest social impact ecosystem builder on the continent, with over 600 members from 34 markets in the region. It works to facilitate multi-sector collaboration between the private, public and people sectors and strengthen the blended finance ecosystem. The network has been instrumental in mobilising capital towards new social-impact businesses in Indonesia – an especially promising social investment market in Southeast Asia. AVPN aims to develop the ecosystem of social investors, building on the country’s strong “tradition of giving”, supporting inclusive business, and closing the SDGs financing gap.
The Indonesia Impact Fund (IIF), founded in 2021, was the first private social impact fund in Indonesia to focus on start-ups. It partners with the United Nations Development Programme (UNDP) in Indonesia to ensure allocated funds respect wider Sustainable Development Goals (SDGs). Indonesia is seen as a highly attractive market for high return social impact investing. So far, the IIF has invested in three companies (Cakap, Delos and Greenhope) each of which have found innovative solutions in the education, fishery, and plastic waste sectors. The IIF’s total funding is expected to reach USD 5 million by 2024 – a sizable amount, but not enough on its own to reach the estimated USD 1 trillion of investment needed to fulfil the country’s SDGs financing gap by 2030 (Bappenas, 2022[18]).
In Indonesia the government is facilitating social entrepreneurship, beyond the start-up ecosystem. The Presidential Regulation Number 2 of 2022 concerning National Entrepreneurship Development 2020-2024 provided legal recognition for social enterprises. It has defined social entrepreneurship as a firm achieving at least one goal in the SDGs and reinvesting at least 51% of its net profits for at least one social mission.
Source: Dini Indrawati Septiani, Indonesia Country Director, Asian Venture Philanthropy Network, AVPN, presentation during the High-Level Roundtable on Start-up Asia – Chasing the innovation frontier: the case of Indonesia, held on 5 April 2023; additional research and company websites.
New hubs are emerging beyond Jakarta
Jakarta is the main hub for start-ups in Indonesia, but new ones are on the rise. The capital metropolitan region concentrates as much as 55% of start-ups in the country, with smaller nearby hubs emerging, including Bandung (4%), Yogyakarta (2%) and Bali (centred on Bali’s capital, Denpasar) (1%) [authors’ elaboration based on (Crunchbase, 2024[8])]. New start-up hubs exploit different assets (Bachtiar, Vandenberg and Sawiji, 2022[19]). For instance, Bandung is drawing on its relative proximity to Jakarta and its status as a more tech-oriented research hub. Bandung, the fourth largest city in Indonesia, is about two hours away from Jakarta and is home to several research institutions and parks, such as Institut Teknologi Bandung (founded in 1920), and Bandung Techno Park (BTP), as well as several state-owned technology companies, such as Telkom, which is a major investor in Indonesia’s start-up ecosystem beyond Bandung, and PT Indi. Bali on the other hand is looking to leverage its attractiveness as a tourist destination to diversify its economy, particularly after sharp drops in revenues during the COVID-19 pandemic, by betting on so-called “digital nomads”.
The emergence of start-up support organisations, such as incubators and accelerators, beyond Jakarta has been critical for fostering start-ups in regions. Government programmes have been encouraging the growth of support organisations, particularly for universities to set up incubators during the last decade (Asian Development Bank, 2021[20]). Some university incubators have reached scale, such as those by Universitas Indonesia and BINUS university, but most programmes, particularly those outside the capital, tend to be small and oriented towards student projects. A look at data from Crunchbase and GSMA, which tend to capture larger institutions, show that Jakarta continues to account for about 53% of incubators and accelerators in the country, followed by Bandung (13%), Surabaya (6%), Bali (5%) and Yogyakarta (3%) (Figure 3.7). However, Jakarta still concentrates more advanced services: around 30 out of 35 organisations that offered acceleration activities were based there. A number of ecosystem builders have also been emerging in Indonesia, who often play multiple roles, including providing spaces for collaboration, networking and mentoring, dissemination of information, implementation of various support programmes for start-ups (including as implementation partners of public ones) among others. For example, KUMPUL.ID, established in 2015 in Jakarta, has been partnering with public actors, such as the Ministry of Tourism and Creative Economy (split into two different Ministries in 2024), and private ones, such as Sinar Mas, to implement a wide array of programmes that offer information, mentoring, consulting and networking, among other services, to start-ups in Indonesia.
Note: Coverage excludes small university incubators.
Source: Authors’ elaboration based on Crunchbase (2024[8]), database, https://www.crunchbase.com/, XYZ Lab (2023[21]), “Start-up accelerators & incubators”, https://www.xyzlab.com/startup-accelerators-incubators, GSMA (2021[22]), Indo-Pacific Tech Hubs (database), https://www.gsma.com/mobilefordevelopment/wp-content/uploads/2021/11/GSMA-Ecosystem-Accelerator-Indo-Pacific-Tech-Hubs-List.xlsx and additional research.
Digital connectivity gaps are prevalent and could hamper the growth of hubs in regions. Overall, Indonesia has made fast progress in connecting its population online, but access is not evenly spread. Being an archipelago of over 17 000 islands, also impacts on connectivity together with other logistical and transport infrastructure. Only 49% of the rural population was connected in Indonesia, compared to 71% for urban areas, a large gap compared to Thailand (82% vs 90%) and Viet Nam (65% vs 82%), for instance [based on (ITU, 2024[12])]. Speed, which is necessary for tech-oriented start-ups, was also low, standing at 27.11 Mbps, eight times slower than Thailand and nearly four times slower than Malaysia. There is also wide regional variation, in line with other countries in the region: the fastest internet is in Jakarta (36 Mbps) and the lowest in Bengkulu with 19.39, nearly half as fast. Rural areas suffer from additional connectivity problems (Figure 3.8).
Note: Data collected on July 2023.
Source: Authors’ elaboration based on Ookla (2023[23]), Ookla Market Reports, https://www.ookla.com/research/market-reports.
Indonesia aims to switch gears and move from an exporter of resource-based products, towards am innovative, inclusive and sustainable economy. Indonesia has grown at an average of 5% annually since the 1990s, in line with the regional average, and has achieved remarkable poverty reduction: the poverty gap at USD 2.15 a day reduced from 20.5% in 1990 to 0.3% in 2023 (World Bank, 2024[24]). This transformation has been accompanied by a growing orientation towards foreign markets and investments, and an exploitation of the country’s vast natural resources – primary goods accounted for 56% of exports in 2021-23, with oil and gas, and palm oil among the main exports [authors’ elaboration based on (UNCTAD, 2024[11])]. Start-ups have the potential to infuse Indonesia with new ideas and talents, as the country looks to tap into the potential of digital technologies to encourage sustainable and inclusive innovation and entrepreneurship.
Supporting start-ups has been a policy priority in Indonesia since 2016. The year marked a landmark for Indonesian policymaking for start-ups, with a Presidential visit to Silicon Valley that sought to raise awareness of the need to promote start-ups and the launch of the 1 000 Digital Start-ups Programme right after. This programme, co-ordinated by the Ministry of Communication and Digital (Komdigi) (previously named Ministry of Communications and Information Technology), was the first large-scale and systematic programme on start-ups launched by the government, with the aim of popularising the concept of start-ups in Indonesia through talks, bootcamps and mentoring of start-ups, across Indonesia. Since then, programmes and policies have flourished with the engagement of an array of Ministries and public agencies. The high-level political commitment also helped galvanise private sector efforts to support start-ups and coincided with a sharp growth in investments and venture creation in the country. The Indonesia Venture Capital Association for Startups (Amvesindo) was established in 2016 to foster collaboration among its members (currently 85), aiming to build a robust venture capital industry. The Angel Investment Network Indonesia (Angin) was also created in 2016, building on the work of the USAID-supported GEPI (Global Entrepreneurship Programme Indonesia) since 2011. ANGIN provides a bridge between start-ups and investors, helping to connect interested parties.
The emphasis on start-ups has been indicative of a growing focus of development policy in Indonesia since the mid-2010s on inclusive growth, productivity, and competitiveness. These goals were outlined in the National Medium Term Development Plan for 2015-2019, which signalled a growing commitment towards supporting private sector entrepreneurship and an increasing openness towards foreign trade and investments. The revised National Medium Term Development Plan 2020-2024 built on this heritage and sought to further support innovation, digitalisation and higher value addition with concrete goals for start-up development. It aimed to increase the number of start-ups five-fold, from 748 in 2019 to a targeted 3 500 in 2024 and to provide space for eight new unicorns. While the Plan did not outline specific details for implementation, it outlined the government’s intention to facilitate the start-up development agenda through entrepreneurship training, incubation, strengthening business services, developing small- and medium-sized industrial clusters and fiscal incentives. Implementation initiatives have been left to be designed by the relevant ministries and agencies. In December 2023, Indonesia published a White Paper on National Strategy for Development of Indonesia's Digital Economy 2030, which envisages further growth of the start-up ecosystem across its pillars, through a dedicated incubator and accelerator programme, developing infrastructure for experimentation and pursuing a start-up co-investment programme. Also relevant for start-up development in the country has been Presidential Regulation Number 2 of 2022 on National Entrepreneurship Development for 2021-2024, which focused on technology, youth, social, women, and village entrepreneurship.
The renewed focus on start-ups has been accompanied by the development of start-up portfolios in the country’s different ministries (Figure 3.9). In Indonesia, ministries have both strategy-making and implementation mandates, which means they combine broad policymaking for their beneficiaries with concrete support programmes. Different ministries have integrated start-up programmes into their existing portfolios, unlike countries in the region that either mandated existing agencies with promoting start-ups or created new ones for this task (e.g. SPRING Singapore was created in 2002 to support innovative entrepreneurship and was succeeded by Enterprise Singapore in 2018, both under the Ministry of Trade and Industry in Singapore). This has led to a somewhat complex support structure for start-ups. The Ministry of SMEs takes a co-ordination role, with start-ups considered a subset of SMEs, and works mostly on incubation initiatives. Komdigi supports digital start-ups, and the Ministry of Creative Economy start-ups in digital, tourism and creative sectors. The Ministry of Social Affairs also supports start-up creation for marginalised and vulnerable populations as a way to improve sustainable livelihoods. Start-up portfolios also exist within the Ministry of Higher Education, Science and Technology, the Ministry of Industry, the Ministry of Youth and Sports and the President’s Office itself.
Note: In 2024 the Ministry of Tourism and Creative Economy was split into the Ministry of Creative Economy/Creative Economy Agency and the Ministry of Tourism. The Ministry of Communication and Information Technology was renamed into Ministry of Communications and Digital. The Ministry of Cooperatives and SMEs was also split into the Ministry of Cooperatives and the Ministry of SMEs.
Source: Authors’ elaboration based on official sources.
Despite the proliferation of start-up support programmes, there is no single definition of start-ups in the country (Box 3.3). Generally, start-ups are seen as a sub-set of MSMEs, although specific programmes define start-ups differently. For instance, the Ministry of Communications and Digital (Komdigi) defines start-ups as a qualitatively different type of firm (one that is in the development phase, trying to innovate and still looking for the right business model to scale up). By contrast, several countries in the region have been working to provide a definition to better identify potential beneficiaries and clarify their legal status. For instance, in India, a mixed definition is used [a company that is less than 10 years old with an annual turnover not exceeding INR 100 crore (approx. USD 13.2 million) and working towards development or improvement of a product, process or service and/or with a scalable business model]. Start-ups can apply for a certification, which provides them with access to various policy support tools. The Philippines passed an Innovation Act in 2018 that defined start-ups as any person or registered entity that aims to develop an innovative product, process or business model.
In Indonesia there is no common definition of start-ups for public policies. Start-ups are often grouped together with micro, small and medium enterprises (MSMEs), with criteria spanning capital assets (excluding land and buildings) and annual revenue. Article 35 of Government Regulation No. 7/2021 sets out the following classifications:
Micro Enterprise: capital assets up to Rp 1 billion and annual revenue up to Rp 2 billion
Small Enterprise: capital assets up to Rp 5 billion and annual revenue up to Rp 15 billion
Medium Enterprise: capital assets up to Rp 10 billion and annual revenue up to Rp 50 billion
Nevertheless, some public agencies use an ad-hoc definition in the design of their strategies and programmes. For example, the Ministry of Communications and Digital (former Ministry of communications and Information Technology) defines start-ups as a company that is in the development phase, trying to innovate and still looking for the right business model to scale up. The 2023 White Paper on National Strategy for Development of Indonesia's Digital Economy 2030 offers a definition of start-ups as those founded to develop a unique product or service that suits the target market.
Source: OECD (2022[25]), "Indonesia", in Financing SMEs and Entrepreneurs 2022: An OECD Scoreboard, https://doi.org/10.1787/13753156-en, Komdigi (2021[26]), https://1000startupdigital.id/ and official information.
The Indonesian government has been working in recent years on reforms to tackle one of the perceived challenges for the private sector in the country: regulatory barriers to operating businesses and accessing foreign investments. Making licensing easier in Indonesia has been a long-standing priority in Indonesia (OECD, 2020[3]). The introduction of regional one-stop shops and the launch of the Online Single Submission (OSS) in 2018 were concrete steps in that direction. As such, the time to start a business has declined in Indonesia from 77 days in 2013 to 13 in 2019 (authors’ elaboration based on World Bank). This compares favourably to Viet Nam (16) but is double the time required in Thailand (6) and six times the number of days required in Singapore (2). Indonesia also continued to have the highest number of procedures to start a business compared to these regional peers (11). The different roles taken by local and central governments, which also differ regionally, add a further layer of complexity. Foreign investments also remain complex, particularly for smaller firms. FDI is only possible for an Indonesian-owned PT company with a minimum authorised capital of IDR 50 million (by contrast, an MSME has a capital of up to IDR 10 billion) (OECD, 2020[3]). As a result, a common strategy for firms and VCs is to register elsewhere and structure their local operations as subsidiaries, with Singapore as a common platform for this. Firms raise financing and even exit in Singapore, while their main operations are in Indonesia. While it is still too early to assess its impact, more changes are expected with the Omnibus Law on Job Creation was passed in March 2023, repealing a 2021 law, that is set to simplify regulations across a wide array of issues (including business licensing procedure, labour regulations, immigration and tax regulations). Advancing on simplifying the business framework could have benefits for start-up activity (OECD, 2024[27]).
Other regulatory initiatives have aimed to provide a framework for emerging tech and business models, such as fintech and e-commerce. The Bank of Indonesia (PBI) and the Financial Services Authority (OJK) started regulating the lending peer-to-peer (P2P) market as early as 2016 (Regulation No.77/POJK.01/2016), first recognising it as a new form of financing and later establishing limits to ensure higher protection (a limit to lending of approx. USD 140 000 was set in 2017) (Batunanggar, 2019[28]). Specific regulations on fintech (No.19/12/PBI/2017), e-money (No.20/6/PBI/2018), crowdfunding (No.37/POJK.04/2018) followed. An umbrella regulation in 2018 (No.13/POJK.02/2018) specified that financial innovation enterprises not already regulated have to register with OJK to get a sandbox approval, aiming to encourage new financing models on the one hand, but also ensuring consumer protection and security on the other. Regarding e-commerce, the Government Regulation on Trade and the Electronic System (GR 80/2019) (under the responsibility of the Ministry of Trade) provided legal certainty for actors engaged in e-commerce and defined obligations for consumer protection, among other stipulations. Indonesia has also adopted the Law No.27 of 2022 on Personal Data Protection, which has given higher certainty to consumers in terms of their privacy and security.
Finally, the development of exit options in the country has been critical in supporting investments. The Indonesia Stock Exchange (created in 2007 through the merger of the Jakarta and Surabaya stock exchanges) has been relaxing regulations on loss-making firms to allow start-ups that are not yet profit-making to list. Kioson, an e-commerce firm, was the first start-up to go public in 2017, raising USD 3.4 million, and this was followed by Bukalapak in 2021 that raised USD 1.5 billion, one of the largest IPOs in Indonesia. Other firms to list have been GoTo, Blibli (that acquired travel agency Tiket and chain store Ranch Market prior) and Cashlez (Dailysocial, 2022[6]). Moreover, a new acceleration board was created in 2019 for SMEs and start-ups. IPOs were also encouraged by Regulation No.22/POJK.04/2021 that introduced Multiple Voting Shares to public companies, making it possible for start-up owners to retain more control after a public listing (ASEAN Briefing, 2022[29]). However, current tax incentives are not structured in a way that encourages exits. In Indonesia, venture capital is exempt from tax from dividends for a period of 10 years (since the mid-1990s and updated with 48/PMK.010/2018), but capital gains are taxed under the normal corporate income tax. This is the same as other countries in the region (e.g., Thailand, Japan and Korea) but different from Singapore, which stands out as granting tax exemptions to capital gains and interest accruing from convertible loan stock.
Beyond regulatory reforms, the Indonesian policy mix for start-ups is characterised by an emphasis on awareness raising and incubation programmes (Figure 3.10):
Awareness days and events: Ministries have launched different events to raise visibility of the start-up ecosystem and provide opportunities for networking among stakeholders. These include the Bekraf Developer Day (BDD), launched in 2016 by the Ministry of Creative Economy/Creative Economy Agency with an emphasis on creative start-ups, particularly for the application, games, and web subsectors, and the Indonesia Digital MeetUp, an SME digitalisation event organised by the Ministry of SMEs.
Bootcamps and incubation services for pre-seed start-ups: The 1001 Digital Start-up Movement launched in 2019 as a follow-up to the 2016 programme, is co-ordinated by the Ministry of Communications and Digital. It includes networking events, workshops, bootcamps and incubation services geared towards start-ups that are at the ideation stage. Funding covers the cost of pre-incubation workshops, boot-camps and hackathons, three months in the incubator, and post start-up follow-up. The number of cities where this programme is run has expanded from just 10 cities to events in 34 of Indonesia’s 38 provinces.
Incubators and mentoring services for seed and early-stage start-ups: The Ministry of SMEs launched an incubator programme in 2021 with a focus on capacity building that culminates in a session involving pitches and business matchmaking for tech-based start-ups that have at least a prototype and are in the product development phase. The Programme operates in co-operation with 20 university and technology institute incubators in regions beyond Jakarta, including Bali, Bandung, Tangerang, Yogyakarta, Surabaya, Solo, Makassar, Padang and Bogor, Banda, Aceh, Medan, South Tengerang, Semarang and West Lombok. Following the incubation of 54 start-ups in 2021, the programme expanded to 172 new start-ups in 2023. The Ministry has also developed an accreditation service for incubators in partnership with the Association of Indonesian Business Incubators (AiBI) (OECD, 2018[4]). An information registration and incubation evaluation system (SIPENSI) has been created, to track incubators. At the time of writing, Indonesia counted with 366 such institutions with 3201 tenants. In addition, the Ministry of Creative Economy/Creative Economy Agency launched BEKUP in 2017, which provides guidance for digital start-ups. The programme has grown beyond Jakarta to include a roadshow in three other cities, as well as facilitating online participation. Programmes, such as Start-up Studio and Hub.ID. Incubator programmes, are also run by the Ministry of Education, Science and Technology and the National Research and Innovation Agency aiming to support technology-oriented start-ups and collaborations between these, research institutions and industry (Inkubasi Bisnis Teknologi, IBT) (OECD, 2018[4]). Finally, some programmes focus solely on mentoring, particularly for business strategy and branding, such as Start-up Studio and HUB.ID., which are operated by the Ministry of Communication and Digital.
Competitions: The Startup4Industry by the Ministry of Industry (Kemenperin) was launched in 2018 with a focus on manufacturing industry start-ups. In the 2023 edition of the competition, 20 finalists shared a total of 750 million (USD 50 000) in project funding. The Top 5 start-ups received prizes of 100 million each (USD 7 000).
A distinctive feature of the policy mix in Indonesia is the combination of start-up programmes with poverty alleviation and rural development objectives. For example, the Pahlawan Ekonomi Nusantara (PENA) programme by the Ministry of Social Affairs, which aims to distribute business capital to beneficiary families to encourage them to boost their incomes through entrepreneurship and graduate from social assistance. PENA is relatively large scale, with a budget of around USD 4 million from the state budget and USD 250 000 from the Bank of Indonesia. Between November 2022 and March 2023, about 5 209 firms had benefited from the programme, which offers coaching, mentorship, and technical skills, with the support of strategic partners from public and private sector and civil society. Classes are also provided online through PENA TV, which is broadcast through Youtube, Facebook and other platforms. Start-ups supported are in food, crafts, farming, agriculture, and various small-scale business services.
Indonesia is looking to change the tools it is using by strengthening the provision of local venture capital, particularly for large-scale deals. The country has recently launched a substantial public sector fund with the aim of investing directly in start-ups with a focus on large-scale investments. In December 2021, the Merah Putih Fund (MPF) was launched under the auspices of the President and with the support of the Ministry SOEs to invest in “soon-to-be-unicorns” or “soonicorns” by providing sizable investments of USD 10–50 million. During the first phase, funds were raised by five state-owned CVC investors: Mandiri Capital, MDI Ventures, BNI Ventures, BRI Ventures and Telkomsel Innovation, with a view to expanding to other CVCs and the private sector at a later stage. In 2023, it was announced that MPF had raised USD 300 million, but no investment had been made at the time of this document’s publication.
Note: * Indicates a private sector initiative. Komdigi: Ministry of Communications and Digital. SMECO: Cooperative and Small and Medium Enterprise Marketing Services Institution.
Source: Authors’ elaboration based on official sources.
Start-ups are contributing to the transformation of cultural and creative industries (CCI). New business models based on the use of emerging, digital technologies are changing how we consume cultural and creative products and services. There is an increasing shift from the consumption of physical goods to digital distribution and the prioritisation of cultural and creative experiences. For example, in the music business in 2022, 67% of revenues came from streaming and 9.5% from performance rights, whereas in 2000 almost the entirety of revenues came from the sale of physical compact discs and other media (IFPI, 2023[30]). These changes are also observed in Asia, where CCI is a sizeable economic activity. Asia has a rich cultural heritage and a vibrant contemporary creative scene, from India’s Bollywood to traditional fabrics, such as the Batik in Indonesia, local cuisines and the rise of fashion and performing artists (Asian Development Bank Institute, 2022[31]). The creative economy makes up a large part of GDP in Asian countries. While there is no systematic global accounts of CCI, national estimates suggest it accounts for 7.3% GDP in Indonesia (MTCE, 2021[32]) and 9.1% in Thailand (Creative Economy Agency, 2021[33]). As a comparison, in the OECD, CCI contributed on average some 2.2% of gross business value added (OECD, 2022[34]). The potential for CCI is also attracting investors – global FDI in the sector increased by 42% in the last decade. The bulk of FDI in CCI in Asia goes to China (33% of total), Singapore (16%) and India (15%) (Figure 3.11).
Source: Authors’ elaboration based on UNCTAD (2024[11]), UNCTADstat (database), https://unctadstat.unctad.org/ and the Financial Times (2023[35]), fDi Markets (database), https://www.fdimarkets.com.
Indonesia is a big CCI start-up hub, but securing financing is a challenge. A preliminary analysis based on assigning industries to CCI activities using data from Crunchbase shows that Indonesia has a relatively high number of CCI start-ups: about 7.5% of all start-ups, above the regional average of 5%, and on par with Korea (7.9%) and Japan (7.5%) – the top two in the OECD (Figure 3.12). However, CCI start-ups accounted for about 1.3% of venture capital in Indonesia, which while in line with regional trends is below that of Korea (6%) and the OECD average of 3.3%. CCI start-ups find it more difficult to scale and see fewer late-stage deals – about 69% of deals of all VC deals for CCI were seed stage, compared to 59% for non-CCI deals in Asia overall, and a similar trend is observed in Indonesia, too (77% vs 62%). The CCI barriers experienced by firms with regard to financing are not unique to the region. Surveys in Europe for instance have noted the lack of willingness of investors to fund CCI start-ups, citing longer horizons for recouping investments, a lack of familiarity with the industry, the fear that creativity is too linked to the founder rather than the company, and hesitation to fund activities that are not inherently patent-intensive (Di Novo et al., 2022[36]; IDEA, 2013[37]).
Note: CCI has been defined by manually assigning industries listed on Crunchbase following the OECD definition for cultural and creative economy as a basis. Start-ups include only active firms founded between 2014-2023.
Source: Authors’ elaboration based on Crunchbase (2024[8]), database, https://www.crunchbase.com.
The development of CCI is a priority for Indonesia. The government first recognised the term “cultural and creative economy” in 2007 and founded BEKRAF (the Indonesian Creative Economy Agency) in 2014. This was merged with the Ministry of Tourism in 2019 to create the Ministry of Tourism and Creative Economy, and then separated again in 2024, leaving the Ministry of Creative Economy/Creative Economy Agency. The Ministry formulates and stipulates policy in the cultural and creative sector, seeking to diversify the country’s economy beyond manufacturing and natural resources, including the “Blueprint for the Development of the Indonesian Creative Economy 2025”. This document outlines various goals and a dedicated Law on Creative Economy (no.24 of 2019) aims to strengthen the creative economy in Indonesia. It aims to do so by promoting R&D, providing infrastructure, simplifying IP, facilitating financing, granting tax incentives, etc. The Ministry runs two main programmes for creative businesses. The first is Apresiasi Kreasi Indonesia (Appreciation of Indonesian Creation), which facilitates capacity-building for entrepreneurs through bootcamp and mentoring sessions. It also organises exhibitions in 16 cities across Indonesia in sectors that are perceived as among the top in Indonesia for CCI: culinary, craft, fashion, applications/games, film and music. The second programme is KaTa Kreatif (Creative Regency/City), which includes the assessment of different cities for the creation of creative clusters with a view to enhancing collaborations. It also provides financial assistance for creative spaces to community and government organisations and NGOs (between IDR 200 million and 2 billion depending on the project). In addition, the Ministry implements BEKUP, which provides mentoring and scale-up guidance to creative start-ups. Promoting CCI start-ups is one of the goals of the draft National Medium Term Development Plan 2025-2045 as a means to boost growth and creativity.
The country could benefit from the introduction of tools that address the financing challenges faced by CCI start-ups. While the programmes provided by Ministry of Creative Economy/Creative Economy Agency are an important step to increase the visibility of Indonesia’s creative start-ups and provide concrete support, the addition of specialised finance instruments could help address some of the unique challenges in accessing financing faced by CCI start-ups and crowd-in private investments in the future by investing in the elements of the ecosystem that are still missing. Countries with more mature CCI ecosystems have made use of public investments in venture capital for CCI, either by setting up new specialised funds or by encouraging existing actors to prioritise CCI in their existing portfolios according to policy priorities (Box 3.4). For example, in Korea the public venture capital fund Motae has provided large-scale investments in partnership with the private sector with the aim of creating entire value chains around the production of key cultural goods, such as films. In France, the national development bank Bpifrance, is also looking to bring new brands to the fore by combining venture financing with mentoring and linkages to other public support programmes, such as for exports.
There is scope to strengthen the capacity of CCI start-ups to revitalise existing industries in Indonesia. Globally, there is a shift in value-added generation towards data monetisation, digitally-enabled intellectual property, including software, and an increased relevance for creative experiences. CCI start-ups could help the Indonesian production ecosystem move in a similar direction and support Indonesia towards developing a unique reputation and image as an increasingly innovative producer of quality products. However, this will also necessitate investments in research and development (R&D), intellectual property and a more conscious brand-building strategy. For instance, the Thailand Creative Economy Agency has been looking to leverage CCI start-ups for national branding, including in key industries such as food. One example is that of rice production: despite there being over 500 native rice species in just one region of Thailand (Isan), only around 20 varieties are available on the common market. By investing in research in rice, processing and marketing, Thailand has been able to create substantial value added in the sector, increasing the value of rice by up to 16 times. The Creative Economy Agency has worked to raise awareness of rice as a high-value product, hosting rice tasting events and educating and inspiring the general public.
The Korea Motae Fund
In 2006, the SME Ministry of Korea developed the Motae Fund (funds of funds) with the aim of investing in VC funds for start-ups in different industries, including culture. It also works on behalf of the Ministry of Culture and the Film Council. This move was characteristic of the times, with the government active in nurturing the nascent VC scene and fostering the creation of several public-private VC funds. Motae co-invests in cultural and film VC funds, together with private investors. Usually a fund is made up of investments by Motae (50-60%), a selected venture capital that is a general partner (1-10%), and 3-4 private investors that are limited partners. The funds are run by professional fund managers. It runs for a period of five years and invests in priority areas set by Motae. The advantage of the Motae approach is that it has crowded in private investment in cultural production in Korea and enabled investments in areas that have been perceived as higher risk and lower profit, thereby expanding the ecosystem over time.
Bpifrance CCI fund (La French Touch)
La French Touch was launched in 2020 by Bpifrance, as a community of around 150 entrepreneurs that look to develop the creative sector in France. It scales up the financing and overall support available to CCI firms while increasing awareness of their activities in France and abroad. In partnership with La French Touch, Bpifrance, the French national development bank, set up a special fund for CCI that makes equity and quasi-equity investments of between EUR 0.4 to EUR 10 million (seed, Series A and B, and investments in funds of funds) in French SMEs and start-ups. It has EUR 430 million in assets under management and has supported 90 projects to date by investing in cinemas and audiovisual production, fashion and design, video games, music and performance, visual and lifestyle arts, and publishing. La French Touch also provides export financing tools, such as loans, export credits, guarantees, as well as export insurance instruments to actors in the cultural and creative sectors.
Source: Hye-Kyung Lee (2021[38]), “Supporting the cultural industries using venture capital: a policy experiment from South Korea, Cultural Trends”, (OECD, 2022[34]), and https://www.bpifrance.com/products/cultural-and-creative-industries/, OECD (2023[39]), "Leveraging cultural and creative sectors for development in the European Union outermost regions", OECD Local Economic and Employment Development (LEED) Papers, No. 2023/21.
Since 2016, Indonesia has introduced major reforms and public policy tools to support its growing start-up ecosystem. Continuing working on regulatory reforms to make it easier for businesses to open and close, and receive investments in Indonesia will be crucial. In parallel, to unleash its start-up potential, Indonesia should consider addressing the following:
Improving the institutional co-ordination for start-up support. Currently, in Indonesia there is a multitude of similar start-up support programmes that focus on raising awareness of start-ups and on providing incubation support for different, sometimes overlapping, beneficiaries. Streamlining support across agencies could help to better target resources to strategic areas and would facilitate learning from implemented programmes over time (ERIA/OECD, 2024[40]). Start-up support programmes can come in many forms. New institutional setups would need to fit the Indonesian context and add value to the current structure. Some countries empower dedicated institutions with this task, such as the National Agency for Technology Entrepreneurship and Commercialisation in Viet Nam or Singapore Enterprise in the city-state. Others have attempted to create new bodies to ensure inter-agency co-ordination. For instance, in Thailand, Start-up Thailand was created in 2016. It is made up of representatives of various government agencies that are involved in promoting start-up agencies with a view to making those agencies more streamlined and consistent. Developing a unique definition for start-ups across the board could be a first step towards better tracking start-up actions and budgets. It would also help better target policies to the needs of start-ups, which are often grouped under MSMEs. Beyond start-up programmes, Indonesia could also benefit from continuing to streamline and simplify regulations that impact start-up operations, including registration, taxation and intellectual property rules.
Moving towards a place-based approach to start-up policy-making. Despite the country’s significant fiscal decentralisation since 2000 – about 29% of state expenditures take place at the local level (Ministry of Finance, 2023[41]) – local governments have yet to take an active role in supporting start-ups in their jurisdiction. Policy initiatives at the regency and municipal level tend to focus on managing administrative issues, such as business licensing, as scope for revenue raising is small (most taxes are raised by the central government with few alternative financing options allowed for local governments) (Nasution, 2016[42]) (Nugroho and Sujarwoto, 2021[43]). However, there is more that local governments could do to strengthen budding start-up ecosystems and complement the regional focus of some of the central government’s start-up tools, utilising their capacities as regulators and facilitators, in line with existing policy frameworks (e.g. Regulation No.7/2021 concerning the convenience, protection, and empowerment of MSMEs and Presidential Regulation No.2/2022 concerning National Entrepreneurship Development). For instance, strengthening information sharing at the local level, networking initiatives, and working to provide smooth business regulatory environments could be crucial. Local governments’ role in stimulating demand for start-up products and services could also be further exploited. While making local governments active actors in start-up policy creation and implementation, it will be important to ensure they have the resources and capacities necessary to succeed. International partnerships have been important in this respect. For instance, the Jakarta Smart Change project, implemented through a partnership between the Berlin Senate Department for Economics, Energy and Enterprises (SenWEB) and the Jakarta Provincial Government, and funded by the European Commission, has supported Jakarta in developing a sustainable support system for start-ups (Box 3.5).
The Jakarta Smart Change project aims to advance good governance and sustainable urban development, in line with the 2030 Sustainable Development Goals. The programme is implemented through a partnership between the Berlin Senate Department for Economics, Energy and Enterprises (SenWEB) and the Jakarta Provincial Government, with Bangkok as an associate partner, and is funded by the European Commission. The Smart Change project is oriented towards knowledge transfer and capacity building for the Jakarta Provincial Government and local stakeholders and encompasses two pillars: (1) enhancing good governance through the development of Jakarta's innovation strategy, international networking, and sustainable support for start-ups, and (2) establishing a sustainable support system for start-ups involved in innovation and Smart City initiatives.
The Jakarta Future City Hub and Future City Accelerator are among the project’s key activities to promote start-ups. They present collaborative spaces for economic growth, corporate and public innovation, and talent sourcing. The Program Designers Lab offers “Train-the-trainer” sessions, certification for start-up support organisations, and training in quality indicators. Additionally, online learning initiatives cover entrepreneurial basics, urban tech, innovation case studies, and success stories, with certification in Smart City Entrepreneurship. The partnership also provides policy recommendations for local governments on entrepreneurship policies.
Source: Kariem El-Ali, Senior Policy Advisor, Jakarta Provincial Government-GIZ/Team Lead, Smart Change Jakarta, presentation in High-Level Roundtable on Start-up Asia – Chasing the innovation frontier: the case of Indonesia, held on 5 April 2023.
Ensuring the policy mix is aligned with policy objectives. Indonesia has articulated an ambitious vision for a more prosperous, inclusive and innovative economy, and yet the country’s toolbox could be better aligned to ensure those goals are met. For example, none of the main start-up tools implemented geared towards start-ups operate in more sophisticated, higher-risk areas. With the exception of the PENA subsidy from the Ministry of Social Affairs, few programmes are designed to increase inclusivity in start-up entrepreneurship. The use of conditionalities could be crucial in galvanising support in order to ensure that start-up policies are better aligned with the national development agenda (Box 3.6). In addition, expanding the typology and variety of instruments that Indonesia is using to foster start-ups could help the country achieve its objectives. Innovation is complex and risky, and existing studies show that firms need a plethora of tools to match their needs. Next to existing programmes of incubation and mentorship, the introduction of seed and start-up grants could provide a space for start-ups that are working towards breakthrough technologies but struggling to break into the current venture capital scene, which is relatively risk-averse and unwilling to back innovation-oriented start-ups. Such instruments will need to be supported by wider investments in building a dense and deep innovation ecosystem to really make start-ups thrive and bring frontier technologies to market including public education and research, talent and digital infrastructure (OECD, 2024[27]). Indonesia needs to invest in a bigger pipeline of talent to feed its growing economy: in Indonesia only 19.42% of graduates were from STEM areas (Science, Technology, Engineering and Mathematics), compared to for instance Singapore (36%) and India (29.3%) (UNESCO, 2023[44]). Investments in talent need to go hand-in-hand with those in innovation: only about 0.28% of Indonesia’s GDP was invested in R&D in 2020, about ten times less than the average for East and Southeast Asia (2.3%) (UNESCO, 2023[44]).
Singapore: raising the technological level of the start-up ecosystem
Singapore introduced Enterprise Singapore (EnterpriseSG) in 2018, an agency under the Ministry of Trade and Industry, with the aim of bolstering the technological and innovation capabilities of the local start-up and SME ecosystem. Startup SG, launched in 2017, became one of the key initiatives of EnterpriseSG. It strives to introduce instruments that are targeted to the needs of local start-uppers including mentorship, funding and global connections. Startup SG introduced new financing instruments (grants and equity tools) to encourage the development of start-ups that are engaged in sophisticated, high-tech activities by place-specific conditionalities regarding the technological level and areas of activities of start-ups. Given the risky nature of such ventures, these instruments are also typically released in tranches and are subject to meeting various milestones. More specifically:
Startup SG Tech offers a grant of SGD 250 000 for proof-of-concept projects, and up to SGD 500 000 for proof-of-value ones, to start-ups that are developing breakthrough innovations, and building proprietary technology in a range of advanced industries, such as advanced manufacturing and robotics, biotech, cleantech, ICT, precision engineering and agri-food tech. Start-ups must have registered in Singapore during the past 10 years and carry out their core R&D activities in the country. To ensure effective utilisation of funds, start-ups must also make increases in paid-up capital (by 10% to 20%) and the funds are released in traches depending on business or technological milestones. In addition, EnterpriseSG (or its selected nominee) has a share subscription right of 50% of the awarded grant amount (up to 49% of the shareholding of the company) and this takes effect when a qualifying equity financing round takes place.
Startup SG Equity, implemented by SEEDS Capital, SGinnovate and EDBI, is an instrument that co-invests with third party investors into Singapore-based technology start-ups that have intellectual property and global market potential (including holding a patent or engaged in ongoing research collaboration). It focuses on deep tech start-ups in advanced manufacturing pharma, biotech and medtech and agri-food tech. While for general technologies there is a cap at SGD 2 million, for deep tech ones it goes up to SGD 8 million.
Chile: fostering start-ups in regions
Chile introduced the Start-Up Chile programme in 2010, which put start-up policy at the heart of the country’s production development strategy. Start-up Chile provided non-repayable seed capital to new entrepreneurs, access to basic infrastructure for initial operations, and simpler visa procedures for foreign beneficiaries, among other tools. Within a couple of years of its launch, Chile started to redefine the criteria for supporting start-ups to better meet the needs of entrepreneurs and better align support with its national development objectives.
One of the key challenges observed was that start-ups in regions outside Santiago’s metropolitan area were faced with a wider gap in terms of access to funding and services. Furthermore, because there was not a region-based approach, there was a disconnection between production development priorities in strategic industries (often located outside Santiago’s metropolitan area) and pro-startup measures, which, at the user level, focus mainly on the capital city. As a result, Start-Up Chile introduced reforms to improve regional inclusion. It opened regional offices in Valparaíso and Concepción, and in 2015 it began to offer the Go-Regional incentive, which consisted of a CLP 5 million (USD 6 800) non-repayable contribution – in addition to the CLP 20 million (USD 27 500) under the Start-Up Chile Seed programme – for start-ups to set up base in the regions (Go-Regional incentive).
Source: Authors’ elaboration based on Startup SG (2023), website, https://www.startupsg.gov.sg/ and OECD (2016[45]), Start-up Latin America 2016: Building an Innovative Future, Development Centre Studies, OECD Publishing, Paris, https://doi.org/10.1787/9789264265660-en.
Indonesia’s start-up ecosystem has grown at record speed, becoming Asia’s fifth largest hub after China, India, Japan and Singapore in the span of a few years. On the one hand, Indonesia is representative of the investors’ intense search for the ‘next Asian unicorn’, leading to large valuations in those start-ups that have been capturing the country’s immense consumer potential. On the other hand, Indonesia’s start-up scene is much more than its unicorns, featuring a diverse set of entrepreneurs and investors. Indonesia has a high share of start-ups that prioritise social and environmental sustainability and look to utilise the country’s unique assets, such as its cultural and creative heritage. Policies in Indonesia have supported start-up development since 2016, with various ministries developing their own portfolios to support them in their own areas of work. However, to unleash Indonesia’s start-up potential and stimulate innovation, Indonesia will need to streamline and diversify its policy mix for start-ups and step up efforts to grow ecosystems beyond Jakarta.
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