Indonesia’s next unicorns are dying?

The article originally appeared in Chinese on Momentum Works WeChat platform, translated into English here by MW team. 

At the beginning of this month, an event with the name “Next Indonesian Unicorn” took place in Bali, where a lot of founders and investors went.

You can feel the power of the event through its poster:

“Unleasing Web3 Potential, Advancing Next Indonesian Unicorns”

The event, organised by a company named PT Next Indonesian Unicorn, was a joyful one, according to a number of our friends who were present.

Everyone had a good time – which is nice given the macro uncertainties surrounding the whole tech ecosystem, globally.

Until… after the party. Nicko Widjaja, who founded MDI Ventures and is currently the CEO of BRI Ventures, and who is known for his straightforwardness, wrote the following post on his LinkedIn:

Not sure about the circumstances of this post (or of this post’s writing), but it certainly gained a lot of attention, and likes.

A number of overseas US$ fund GPs have visited Indonesia lately, and it seems the current wave of visits is more serious, especially for the Chinese GPs, compared to the previous wave of 2017-2018. The last wave was dubbed as a wave of ‘tourism’, while this time round, Chinese GPs face the pressure to deploy and there aren’t many good opportunities for them to deploy in China this year.

The feedback we commonly get from these GPs are “We feel the market is full of opportunities, but short of projects/companies that we can actually invest in.”

The key reason, according to them, is that many of the sectors or business models have been proven to not work in China, and it is very difficult for them to convince ICs that the same model would work in Indonesia – a market with less mature infrastructure and far bigger friction.

They are debating with themselves “Did I miss anything when I see the models such as community group buy, dark stores, and B2B supply chain still being funded in Indonesia?”

They are also facing the competition from Southeast Asian VCs, many of which have raised their latest funds at US$300-800m – not smaller than mainstream VC funds in China.

As a result, companies by Chinese founders who have worked in the market for a long time become hot pursuits of these Chinese GPs. Those incubated by the J&T/OPPO ecosystem, such as HEBE beauty and Tomoro Coffee, are prime examples.

We are also in the belief that there are indeed a lot of consumption and fintech related opportunities in Indonesia, and Southeast Asia in general, to be explored.

You just need to take a look at how popular Mixue has become: