If you are an aspiring entrepreneur wondering how to create a startup or what the essential elements are to build a successful startup, gather ‘round!
While the idea of “startup” existed in Indonesia’s early tech scene, its widespread popularity is a recent boom. Fueled by internet access, pioneering companies like Tokopedia and Gojek, and government initiatives, the term blossomed from an insider buzzword to a national phenomenon in the late 2010s.
What is a startup?
A startup is a young company focused on rapid growth and developing a scalable business model. While some mature startups may be approaching profitability, most are still in the early stages of operations, investing in acquiring users, building infrastructure, and refining their products or services.
Due to its fast-growing young population, Indonesia is expected to reap the benefits of an agile, innovative, and increasingly digital economy. With nearly 2,500 established startups, Indonesia boasts nine unicorns, including East Ventures-backed GoTo, Traveloka, Xendit, and Carro, and two ‘decacorns’ – a testament to their pivotal role in driving economic growth. This momentum won’t be easily stalled.
Despite the global uncertainties, the 2023 SEA e-Conomy report by Google, Temasek, and Bain & Company, the nation’s digital economy (GMV) is projected to reach a whopping US$110 billion in 2025.
In the next 10 years, Indonesia will enter an early demographic dividend era, where nearly 206 million, or 65% of its population, will be in their productive age. This era presents an opportunity to catalyze the emergence of new businesses. Entrepreneurs and founders in the making (yes, that is you!) are expected to seize it.
However, building a successful startup that lasts is not a walk in the park. Those striving to create impactful changes in the tech scene might want to learn these essential lessons from East Ventures’ Partner, Melisa Irene, excerpted from the Makassar Startup Weekend.
“The products and services must deliver a positive, lasting impact to society. However, as startups must also consider healthy economics, they must ensure that the solution they are proposing also has a huge addressable market and can be delivered to the right consumers.”
Here are the four key criteria that aspiring entrepreneurs should consider to create a successful startup.
Before merging with Gojek and becoming GoTo, Tokopedia achieved a high valuation, comparable to that of a unicorn, due to its scale. With Tokopedia, starting a business is made easy, and businesses – the majority of them are MSMEs – can serve millions of consumers despite their geographic location.
While every startup aspires to be at Tokopedia’s scale, it is statistically impossible. Hundreds of companies will operate to acquire consumers, but only a handful will be the top – these companies can dominate market share.
“The market will decide the direction of the company. We have to understand the consumer and serve them well in order to be the market leader,” said Melisa.
There is a gap in the job supply and demand in Indonesia, which has resulted in difficulties in recruiting talent. Several factors drive the issues, including mismatched skills, especially in high-demand tech and digital sectors, leaving many graduates jobless. This mismatch has also resulted in slow employee turnover in several industries.
Other than that, establishing a strong company culture and vision is also crucial to ensure attracting the best talents who share the same vision.
“If our goal is to become a market leader, we need strong human resources or great talent to fuel growth. Recruiting should not be based on talent alone but on shared aspirations and values as well. When people have the same goals and values, they tend to stay longer and contribute more,” explained Melisa.
As most startups provide technology-based solutions, their assets are no longer physical but take the form of intellectual property (IP). IPs are the assets that give a company a competitive advantage in the market. These include using copyrights, trademarks, and patents. Managing and protecting the company’s intangible assets is important to continue being innovative and thriving.
The three components above are long-term investments that can only show results in the future. Venture Capitalists (VCs) play a massive role in providing capital for startups to acquire market share, hire the right talent, and build the right solutions. The capital supports and sustains the company.
“Every business model requires a different quantum of funding, and every founder has a different capital management style,” said Melisa.
What sets a great founder apart is their ability to manage capital efficiently, which, in essence, is their ability to deliver great performance at a cheaper cost.
All in all, East Ventures’ investment philosophy remains the same – we invest in the people: the founders and the outstanding team behind a startup. No matter the weather, the best drivers shall be able to navigate through any cloudy sky and stormy sea.