Indonesia’s startup ecosystem has been touted as Asia’s next breakout market. With a youthful, mobile-first population, rapid digital adoption, and increasing smartphone penetration, the fundamentals appear strong. These indicators have led global investors and commentators to position Indonesia as a tech frontier that mirrors the early days of Silicon Valley, China, or India. On paper, the potential seems boundless.
However, beneath the surface of this optimism lies a more complex reality. The ecosystem’s foundations are not entirely homegrown. Many of the strategies, structures, and funding models being applied are borrowed from vastly different economic and cultural contexts. The assumption that these models will transplant seamlessly into Indonesia deserves more scrutiny. While local champions proudly reference “Indonesian solutions,” especially when things are going well, the conversation often pivots back to global comparisons when courting venture capital or media attention.
This contradiction reveals a deeper identity issue. If we genuinely believe Indonesia is different then we must ask whether it makes sense to continue following a one-size-fits-all playbook. Perhaps it is time to reimagine an Indonesia startup ecosystem that is built to reflect our own environment, institutions, and realities.
"If founders cash out and capital flows offshore, was it ever about building Indonesia?"
The Narrative Arbitrage: Global Ambition, Local Excuse
It is easy to understand why Indonesia’s startup ecosystem is so often framed through comparisons to Silicon Valley, China, or India. These parallels offer a clean narrative for global capital: they imply predictable returns, known pathways, and scalable success. But those regions were shaped by unique and non-replicable conditions. Silicon Valley grew out of Cold War-era research spending, U.S. university-military partnerships, and a permissive legal environment. China’s tech dominance was engineered through top-down state intervention and tightly controlled industrial planning. India benefited from a deep pool of technical talent and decades of software outsourcing that laid the groundwork for its startup expansion.
Indonesia shares few of these structural ingredients. It is a post-colonial, resource-dependent economy with a fragmented archipelagic geography, uneven digital infrastructure, and informal labor systems that don’t map neatly onto platform-based growth models. Yet many of the country’s most prominent startups continue to follow the same playbook: venture capital-funded blitzscaling, rapid market share grabs, and founder profiles designed to appeal to global investors rather than local realities.
When these strategies fail the response is often a pivot in rhetoric: “Indonesia is different.” This rhetorical shift raises a critical question. If Indonesia truly is different, then why continue importing models that ignore its realities?
This toggling between global aspiration and local excuse creates instability in the Indonesia startup funding model. It lacks coherence, and more importantly, it lacks conviction. A system built on borrowed logic cannot develop the institutional depth, cultural trust, or sectoral alignment needed for long-term resilience.
To build a meaningful and lasting Indonesia startup ecosystem, we must commit to a new framework that is shaped by the country’s own economic structure, social fabric, and development needs.
Venture Capital: A Misfit Model in Local Soil
The institution of venture capital in Indonesia has largely been shaped by models born in Silicon Valley. There, VC thrives on risk tolerance, equity-driven returns, and reinvestment from successful entrepreneurs. The system is designed to create compounding cycles of capital, talent, and innovation.
But venture capital in Indonesia operates under different conditions. The capital is overwhelmingly sourced from foreign limited partners, typically based in Singapore, Japan, or China. This results in short-term expectations, performance pressures, and an inherent distance from the on-the-ground realities of Indonesian businesses. The model prioritizes rapid scale and fast exits, but these conditions are rarely available or suitable in the local economy.
A telling indicator is what happens after an exit. Instead of reinvesting into the ecosystem, founders often move their proceeds offshore, placing them in private banking or hard assets like real estate. This breaks the regenerative loop that makes venture ecosystems self-sustaining. In Indonesia, a startup exit is often viewed as a personal liquidity event, not an opportunity to fuel the next generation of innovation.
The heavy reliance on “other people’s money” also reveals a lack of domestic confidence in venture capital. Local high-net-worth individuals and institutional investors remain reluctant to allocate meaningful capital into startups. Traditional sectors such as property and commodities are still seen as safer bets. As a result, the Indonesia startup funding model remains narrow, externally driven, and fragile.
To evolve, Indonesia may need to expand its capital toolkit. Mechanisms like venture debt, profit-sharing, and cooperative investment could offer more appropriate risk-return dynamics. These alternatives may provide a better foundation for a more durable and inclusive Indonesia startup ecosystem.
Founder Profiles and the Filter of Privilege
Alongside the wholesale import of venture logic, Indonesia’s startup ecosystem has also absorbed a narrow and often exclusionary definition of what a founder should look like. Today’s typical founder is urban-based, often foreign-educated, and well-versed in the language of global startup culture. They are polished in presentation, fluent in English, and familiar with the expectations of international venture capital. This profile reassures investors because it mirrors successful entrepreneurs in Silicon Valley or Singapore.
However, this narrow filter unintentionally excludes a vast segment of Indonesia’s entrepreneurial base. Many of the country’s most urgent challenges are not well understood by founders disconnected from the environments in which these problems exist. Those living within these systems, such as smallholder farmers, informal traders, or local educators, rarely have access to capital, networks, or the cultural fluency required to be seen as “venture-backable.”
Indonesia is a country where informal labor accounts for more than 50 percent of the workforce. Yet few startup teams include individuals with experience in this sector. This lack of representation creates a mismatch between the solutions being funded and the realities they aim to address.
To build a more resilient Indonesia startup ecosystem, the founder pipeline must expand. This means going beyond elite institutions and Jakarta-based incubators. Investment needs to reach vocational school graduates, regional entrepreneurs, and informal sector operators. These individuals may lack pitch polish but possess deep operational insight.
Supporting these founders requires a shift in how talent is identified and developed. It calls for funding mechanisms, such as regional venture studios and community-focused accelerators, that value domain knowledge over credentials. Without this change, the ecosystem risks becoming an echo chamber, disconnected from the very market it claims to serve.
The Alternative Model: Slower, Smaller, More Indonesian
If we put aside the narrative of being “the next Silicon Valley” or “the next India,” we can begin to imagine what a truly Indonesia-first startup ecosystem might look like. This model would not chase rapid valuations or the spotlight of global media coverage. Instead, it would take root in the practical, everyday sectors that define the country’s economic backbone: agriculture, logistics, health, education, and informal financial services.
This alternative ecosystem would grow at a slower pace, and its startups would be smaller by design. Scale would be measured not just by revenue or users, but by real-world impact and sustainability. Companies would focus on strong unit economics rather than subsidizing expansion through continuous rounds of equity financing. Founders would come from within the communities they aim to serve. A fisherman modernizing a local supply chain or a teacher digitizing regional curricula would not be outliers—they would be the new norm.
Crucially, this approach would require a different kind of capital. The Indonesia startup funding model would need to shift away from exit-driven venture capital and toward long-term, patient capital. Local institutional investors, cooperatives, and Islamic finance bodies could play a greater role in shaping this future. Liquidity events might take the form of shared revenue arrangements, community-based equity ownership, or controlled buyouts by regional enterprises.
Financing tools like venture debt and revenue-based funding would offer founders more flexibility and protection, while aligning investor expectations with the realities of Indonesian markets. These mechanisms are especially well-suited to businesses that generate stable cash flows but may never become unicorns.
To bring this vision to life, the ecosystem must also address who gets funded. Greater inclusion of underrepresented founders is essential. Institutions that support these founders must be designed to assess potential beyond pedigree or presentation.
Success in this model is defined differently. It values depth over speed, relevance over scale, and shared prosperity over singular outcomes. While it may not dominate global headlines, it may be the only Indonesia startup ecosystem model capable of delivering the kind of enduring national development the country aspires to.
The Indonesia startup ecosystem faces a fundamental identity challenge. As long as it continues to oscillate between copying global models and selectively asserting local uniqueness, it will struggle to build long-term resilience. This inconsistency creates an ecosystem that is reactive rather than strategic, guided more by short-term sentiment than by a clear, grounded vision. If Indonesia is to build something enduring, it must commit to designing for itself.
This means accepting that Indonesia is not just different in narrative, but in structure, culture, and capital behavior. These differences should not be viewed as limitations, but as the foundation for a new kind of model that reflects the country’s economic realities and societal priorities.
We must define our own success metrics, develop funding mechanisms suited to local conditions, and support founders who represent a broader cross-section of the population.
The journey will be complex, and the results will take time. But a consistent, grounded approach offers the only real path to a truly self-sustaining Indonesia startup ecosystem.
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