The evolution of Indonesia’s PE-VC ecosystem over the last decade

Equity dealmaking in Indonesia has been decelerating for 11 quarters on the trot as of the fourth quarter (Q4) of 2024.

According to data from the recent DealStreetAsia DATA VANTAGE report Mapping SEA & Indonesia’s 2024 Journey, Indonesian startups recorded only 13 deals in Q4 2024—the lowest quarterly deal volume in over six years. They raised a combined $59.2 million, the second lowest in at least six years.

The full-year deal volume in 2024 stood at 85 equity funding rounds, down 34% from the previous year. Total deal value, meanwhile, fell by 66% year-on-year to $437.8 million.

A pre-summit networking event, held in connection with the Indonesia PE-VC Summit 2025 and sponsored by Donnelley Financial Solutions (DFIN), featured an engaging panel discussion on the current investment climate in Indonesia. DFIN is a leading provider of innovative software- and technology-enabled financial regulatory and compliance solutions.

Held in Jakarta on Jan. 15 and moderated by Joji Thomas Phillip, Founder and Editor-in-Chief of DealStreetAsia, the discussion titled ‘Ups, Downs & Resets: A Decade of PE-VC Investing in Indonesia’ featured Pandu Sjahrir, Managing Partner of Indies Capital Partners, and Achmad Zaky, Founding Partner of Init-6.

Over 30 minutes, the panellists explored the dynamic shifts in Indonesia’s startup and investment ecosystem over the past decade.

Notably, 2024 also marks ten years since DealStreetAsia started covering the PE-VC landscape in Southeast Asia, making it an opportune moment to reflect on the successes and setbacks of the past decade while anticipating the future of Indonesia’s dealmaking and fundraising ecosystem.

“As we celebrate this significant juncture in the evolution of the PE-VC ecosystem, we recognise the synergy between our mission and the needs of Indonesia’s dynamic landscape. Our sponsorship of this event reflects our commitment to supporting the dealmaking communities, empowering dealmakers to accelerate processes and seize new opportunities. Whether it’s through IPOs, M&As, or other corporate actions, we strive to provide the software and expert support necessary for our clients to navigate an ever-evolving market. We look forward to continuing our partnership with Indonesia’s startup and investment ecosystem, ensuring our clients are future-ready in this competitive environment,” said Margaret Low, Senior Director of Global Capital Markets at DFIN.

The panel discussion was also attended by top leaders and key decision-makers in the Southeast Asian investment and startup landscape.

A decade of transformation in Indonesia’s startup landscape

The Indonesian startup ecosystem saw remarkable growth between 2012 and 2015, fueled by increasing investor interest and a supportive infrastructure. Reflecting on this evolution, Sjahrir highlighted the significance of celebrating entrepreneurial successes.

“[Achmad] Zaky has successfully transitioned into his second act with Init-6, focusing on venture capital and education,” said Sjahrir, who also serves as COO, Daya Anagata Nusantara Investment Management Agency (BPI Danantara); Founding Partner, AC Ventures; and Vice President Director, TBS Energi Utama.

Amidst the negative news in the startup ecosystem and concerns about an impending downturn, Sjahrir noted that it’s crucial to remember that downturns are an essential part of the cycle. They provide an opportunity for investors to identify and invest in the next wave of promising ventures.

Achmad Zaky, drawing from his experience as a successful startup founder, highlighted significant changes in the talent landscape. “When I started in 2010, roles like product managers and UX designers were rare. Today, we see a substantial supply of skilled talent across various sectors, marking a positive path for the ecosystem,”

Challenges and opportunities in market dynamics

While Indonesia’s large population and growing digital economy are often regarded highly, concerns about overestimations persist. Sjahrir stressed that many of us sometimes underestimate the speed of this change, particularly in terms of the players involved. He pointed out that the focus often lies on the three major sectors: e-commerce, fintech, and logistics.

“The market is growing, but the players have shifted. Beyond the dominant sectors like e-commerce, fintech, and logistics, emerging areas such as crypto and niche industries are showing profitability. These ‘hidden gems’ are rarely highlighted, yet they signify the evolving opportunities in the ecosystem.”

Zaky, who founded Init-6 four years ago, acknowledged that he has much to learn from experienced investors like Sjahrir. He explained that his firm differentiates itself by leveraging his ten years of experience as a founder.

“We focus on advising and operational support for our partners while maintaining strict evaluation standards. This disciplined approach helps companies grow efficiently, even in challenging liquidity conditions.”

Zaky also mentioned that Init-6 offers venture debt to help companies grow efficiently without requiring additional equity integrations, particularly for consumer-facing businesses that need to adapt. This approach, he believes, enables companies to grow more effectively while retaining capital.

Init-6 is an early-stage VC fund launched by Zaky and Nugroho Herucahyono (Xinuc), who were also co-founders of Bukalapak, to invest in seed and Series A-stage startups in Indonesia.

Bridging the startup funding gap

Addressing the current funding deficit, particularly for tech startups, the panel explored the roles of credit and venture capital. Sjahrir acknowledged that there is a gap between venture capital funding for Series A and Series B rounds, but the primary issue lies in the limited availability of credit.

“There is a significant gap in the credit space. While equity dominates, the lack of expertise in debt markets creates challenges for startups needing alternative financing options.”

Sjahrir explained that while everyone is involved in equity investments, the art of credit is often overlooked. Underwriting credit involves a different approach—focusing on potential risks and worst-case scenarios. He emphasised that there is a limited supply of talent skilled in debt underwriting, making it challenging to find individuals with the necessary expertise.

“There’s a limited pool of talent in the debt sector. In fact, finding individuals who are well-trained in debt and credit markets is incredibly challenging.”

This is why, given the nuances of debt, entrepreneurs often lean toward equity when presented with a venture opportunity. Sjahrir added that the reality is that many professionals aren’t adequately trained in the art of credit. That is why according to him, you often find an equity perspective posing as a credit strategy.

With regard to whether books are often co-represented, as seen in Singapore and other regions, the trend has raised questions about how it affects investor confidence in the market. Sjahrir acknowledged his role in a recent oversight where books were co-represented, emphasising the lack of due diligence and transparency in the process. Moving forward, he committed to a more active approach to managing businesses, with a focus on efficiency and responsibility toward legal partners and customers. “The way we conduct business will be very different from how we did it in the past few years,” Sjahrir added.

Meanwhile, Zaky stressed the importance of thorough checks and stricter vetting, acknowledging past lapses in caution. He expressed concern over Indonesia’s declining position in the ecosystem and called for a renewed focus on building strong, sustainable companies.

“Indonesia used to be number one. But now, Indonesia is no longer number one.” He called for improvements, urging, “We need to be aware and work hard on building the right companies with strong models.”

Navigating exit strategies

Examining recent IPOs and their underwhelming performance, the panel discussed the need for alternative exit strategies. Sjahrir reflected on the performance of notable IPOs, such as Bukalapak, and the challenges in the public markets. “Public market liquidity in Southeast Asia remains a concern. Solid exit options, including mergers and acquisitions, are crucial for sustaining investor confidence and enabling growth.”

Zaky also expressed agreement, adding that the M&A market is also relatively underdeveloped, with limited transaction volume. “The lack of public market liquidity impacts M&A activity. Many companies are acquired by global firms, as local markets cannot support large-scale transactions. Investors must set realistic entry and exit expectations to align with market conditions.”

This approach, he argued, could facilitate successful acquisitions and help overcome the valuation barrier. He suggested that acquisition expectations should be more modest. This would allow for more realistic entry valuations, enabling companies to overcome the valuation barrier and facilitate successful acquisitions.