This interview originally appeared in the DealStreetAsia DATA VANTAGE report Mapping SEA & Indonesia’s 2024 Journey released during Indonesia PE-VC Summit 2025.
Indonesia’s startup ecosystem is in a prolonged downturn, with equity dealmaking slowing for 11 consecutive quarters. The decline deepened in Q4 2024, with just 13 deals on record—the lowest in over six years—raising $59.2 million.
For the full year, deal volume fell 34% to 85, while total funding plunged 66% year-on-year to $437.8 million, marking the steepest contraction among Southeast Asia’s six largest venture markets in 2024. With weak investor appetite and limited liquidity, the challenging investment climate is expected to persist through 2025.
As US capital markets are expected to reach a feverish pitch this year, emerging markets like Indonesia will be overlooked, said Patrick Yip, the founding partner of venture capital firm Intudo Ventures, which invests only in the archipelago, in an interview for the DealStreetAsia DATA VANTAGE report Mapping SEA & Indonesia’s 2024 Journey.
On the flip side, however, such a scenario should provide Indonesia’s VC market enough time to complete its recalibration of valuations and expectations for the next cycle, said Yip.
“The prolonged downturn initially affected startups but has since extended to VCs themselves, forcing changes in strategy, layoffs, and a recognition that 2021 was an exception, while conditions in 2024 are more aligned with market realities. It has been a bitter pill for many to swallow, but as the adage goes—good medicine tastes bitter,” says Yip.
Intudo was among the few Indonesian VCs to close new investment funds in 2024. These include Intudo Ventures IV, LP, which closed at $75 million, alongside a $50 million vehicle targeting natural resources and renewable energy plays, pushing the company’s total AUM to over $350 million.
The following are excerpts from the interview with Yip:
Indonesia has struggled to attract robust VC investments this year, raising concerns about key market fundamentals, including the stability of consumer purchasing power and the sustainability of the middle-class growth narrative. How do you evaluate these challenges, and what might they signal for Indonesia’s investment climate and long-term growth trajectory?
The softness in consumer spending and middle-class growth narrative is a mix of truths and exaggerations. First, let’s focus on the good—Indonesia has weathered inflation better than most economies at around the 2% range for 2024 and has maintained a strong economic outlook for the foreseeable future with around 5% annual GDP growth.
Where we see weakness is in the digital economy. Indonesian consumers have always been price-sensitive.
Where we see weakness is in the digital economy. Indonesian consumers have always been price-sensitive. Many digital services have been subsidised with venture capital money over the years, and with many of these companies now publicly listed, the costs are being adjusted to market rates. This is something we see in the US and other markets with consumer tech companies, and Indonesia is following suit. It is a reset of expectations and these changes in consumer behaviour are directly correlated with the reset of expectations for tech companies and startups to achieve profitability and adopt better business fundamentals.
How might shifting global geopolitical dynamics, including the return of Trump as US president, impact the flow of venture capital into Indonesia? What adjustments should fund managers make to mitigate risks and leverage opportunities in this evolving landscape?
The past decade has been defined by increased global headwinds across the board—political unpredictability and anti-incumbent bias, macroeconomic concerns (inflation, interest rates, and spectres of recessions), regional wars, a global pandemic, and shifting supply chains—with the emergence of new technologies exerting varying levels of influence on how these circumstances unfold. These challenges cut both ways, providing both opportunities and risks for investors and founders alike.
“Indonesia is a safe alternative destination for areas such as manufacturing and natural resource extraction.”
For many of these issues, Indonesia is on the right side of the equation, benefitting from overall political stability and relative continuity between administrations. For Indonesia, it plays down the middle with the United States, China, and other regional powers—becoming a safe alternative destination for areas such as manufacturing and natural resource extraction. For venture, Indonesia will remain off-the-radar for many investors as a non-consensus market that is recovering from its first real fundraising downturn. With anticipation around US capital markets reaching a fever pitch, we expect capital to flow heavily into Wall Street and Silicon Valley, leaving emerging markets like Indonesia overlooked, but giving the Indonesia venture market in particular enough time to complete its recalibration of valuations and expectations for the next cycle.
“Conditions in 2024 are more aligned with market realities.”
Fund managers have adapted over the years to expect greater unpredictability and embrace a degree of agility in strategy. It requires fund managers to adopt more institutionalised approaches, improve communication with LPs, and speak more candidly about expectations.
The prolonged downturn initially affected startups but has since extended to VCs themselves, forcing changes in strategy, layoffs, and recognition that 2021 was an exception, while conditions in 2024 are more aligned with market realities. It has been a bitter pill for many to swallow, but as the adage goes—good medicine tastes bitter.
For Intudo to raise $125 million across two vehicles in a challenging fundraising environment is no small feat. What key factors contributed to this success, and how does this new capital position Intudo for 2025, particularly after a subdued 2024 in terms of deal volume?
First, for anyone who fundraised for non-consensus mandates in 2024, closing a fund of any size is a huge achievement in itself. It takes a high degree of conviction and self-discipline to make it to the finish line. For us, we take nothing for granted and are grateful to all of our LPs and founders for supporting us throughout the process. Intudo has benefitted from strong continuity with our investment team—with nearly zero turnover since our inception—and many of our team members have taken on new and bigger responsibilities in our fourth fund and played integral parts throughout the fundraising process.
“Intudo has always invested at a steady cadence, making roughly four deals a year.”
Intudo has always invested at a steady cadence, making roughly four deals a year. This provides strong market coverage and vintage diversification. With the largest dedicated early-stage investment team covering Indonesia, we are able to screen 80% of all Indonesian companies that ultimately raise capital. In peak years, we invested at the same pace as 2023 and 2024—if the market heats up into 2025 and 2026, we expect to invest in roughly four deals for those respective years as well. With this concentrated portfolio strategy, it frees up the team from being overstretched as we often see with more “index” style approaches. As such, we are able to be more involved with our portfolio companies and help founders achieve better outcomes.
Fintech, enterprise software solutions, e-commerce, green tech, data analytics, and AI/ML emerged as leading sectors in 2024. How do you think macroeconomic factors and shifts in funding availability will influence the growth trajectory and investment priorities of these sectors in 2025?
Indonesia has already captured much of the low-hanging fruit in terms of building out the infrastructure and foundational platforms that define the country’s digital economy. The things that people look for when jumping into an emerging market have already been addressed, and Indonesia is now showing a different opportunity set from the markets where founders historically borrowed inspiration—Silicon Valley and China.
Tapping into “hot” areas that trickle down from mature markets will always attract founders and investors and lead to a degree of success, but it requires people to wait for trends to emerge and follow them—rather than proactively trying to create the trends themselves. With the change of the calendar, the list of hot sectors will inevitably change as last year’s darlings reach a different stage of growth and expectations.
“Intudo is a sector-agnostic firm. We don’t wait to see what’s hot and allocate based on crowd consensus.”
Intudo is a sector-agnostic firm. We don’t wait to see what’s hot and allocate based on crowd consensus. Rather, in addition to founder character and business fundamentals, we seek out investment opportunities that tap into overarching themes that define Indonesia’s economic and social development. We have boiled that down into three key dimensions that drive value creation in Indonesia, including: 1) Bringing the world to Indonesia (leveraging Indonesia as a growth opportunity for global businesses); 2) Bringing Indonesia to the world (Leveraging areas where Indonesia has a global advantage); and 3) Investing in Indonesia for Indonesia (Tapping into Indonesia’s domestic advantages and discovering new and innovative indigenous ideas).
What is your outlook on startup valuations in 2025, and which sectors do you expect to experience the most notable shifts? Are industries like AI/ML, fintech, or green tech positioned to sustain robust valuations, or could we see emerging challenges that reshape investor confidence across these and other sectors?
Right now, it feels like Indonesia is a market of “haves” and “have-nots”. Southeast Asia more broadly is a buyer’s market—and those willing to spend capital are setting the expectations. This is dampening valuations, especially in later stages and in secondary markets.
For early-stage deals, we have seen a return to rising valuations, as companies that show the typical signals for investment attract bidding wars. Startups that are raising capital in busy sectors today benefit from these dynamics, but once their sectors fall out of favour or they face competition from startups that follow the same trend-driven value creation process, they may struggle to find suitors.
It is in later stages where valuations continue to stagnate as investors look for opportunities to invest at a discount. Many of these companies have improved their business fundamentals and are sitting on capital, providing no impetus to go back to the market. There are also many startups that continue to trudge along and may shut down in the coming years. While unfortunate, this process will pump talent back into the market and clarify market expectations.
