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- Herausgeber: John Wiley & Sons
- Kategorie: Fachliteratur
- Sprache: Englisch
A practical and nuanced tour of the Indonesian technology markets
In Venture Capital in Emerging Markets: Lessons from Indonesia’s Digital Decade, a team of veteran investors and entrepreneurs delivers an insightful and practical new take on how to capitalize on opportunities in the world’s last big emerging tech market. The authors pull back the curtain on the evolution of Indonesia’s technology boom and look ahead to the next generation of investment and venture opportunities in an economy growing at 5% annually.
The book demystifies key Indonesian market dynamics and players, explaining its history, regulatory landscape, and idiosyncrasies. It also examines successful ventures in the market and sheds light on substantial growth opportunities on the digital frontier. You’ll also find:
- Detailed case studies of companies and market-tailored innovations
- A comprehensive guide on how to wisely deploy capital and interact with local stakeholders
- A unique and informed glimpse into the next ten years in the Indonesian tech sector
Perfect for international and institutional investors, pension and endowment investment professionals, professionals working at global tech conglomerates, private equity firms, and family offices, Venture Capital in Emerging Markets is also a must-read for high-net-worth individuals and anyone else interested in a nuanced and deep understanding of the Indonesian tech market.
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Seitenzahl: 287
Veröffentlichungsjahr: 2025
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Table of Contents
COVER
TABLE OF CONTENTS
TITLE PAGE
COPYRIGHT
DEDICATION
ABOUT THE AUTHORS
GLOSSARY
KEY INDONESIAN CONGLOMERATES IN TECH
ABOUT AC VENTURES
FOREWORD
PREFACE
CHAPTER ONE: E-COMMERCE EMERGES IN THE WILD
BEGINNINGS
THE MARKETING DUTCHMEN
ENTER THE UNICORN FOALS
THE INTERNET CAFE GRADUATE
THE JAPANESE CONNECTION
THE SERIAL ENTREPRENEUR
THE FAMILY-OWNED CONGLOMERATE
THE BOOTSTRAPPER
THE RETURNING DIASPORA
THE DOOR IS OPEN, AND EVERYONE IS WELCOME
CHAPTER TWO: A GERMAN ROCKET SHIP ARRIVES
NOT SUCH A CRAZY FROG AFTER ALL
ATTACK OF THE CLONES
SKEPTICAL GLOBAL INVESTORS VS GERMAN VISIONARIES
THE ROCKET INTERNET WAY
ROCKETING INTO INDONESIA: A BRIEF TIMELINE
DEEP POCKETS, LOYAL BACKERS
THE BOLD AND THE BRUTE FORCE
ROCKET MAFIA
ROCKET INDONESIA’S WIN–LOSS COLUMN
CHAPTER THREE: THE EARLY ERA OF E-COMMERCE BATTLES
TOKOPEDIA: EMBRACING FINTECH
BUKALAPAK: PIONEERING WARUNG TECH AND INVESTING IN LOCAL TALENT
BLIBLI: CATERING TO THE AFFLUENT AND GUARANTEEING AUTHENTICITY
LAZADA: FULL SUPPLY CHAIN CONTROL AND CROSS-BORDER TRADE
MATAHARI MALL: O2O BACKED BY BRICKS AND MORTAR
SHOPEE: A BRAND-FIRST AND GAMIFIED APPROACH
AN EVOLVING REGULATORY AND E-COMMERCE ECOSYSTEM
CHAPTER FOUR: PAYMENTS, LOGISTICS, AND POLICY SCRAMBLE TO KEEP PACE
DOKU: A PAYMENTS PIONEER EMERGES FROM BALI’S DARK PAST
IPAYMU: MARRYING A WIDE LOGISTICS FOOTPRINT WITH SECURE PAYMENTS
VERITRANS (MIDTRANS): QUICK INTEGRATION AND A SIMPLE USER INTERFACE
XENDIT: FROM MONEY TRANSFERS TO A B2B PAYMENTS FACILITATOR
17,000 ISLANDS MEANS DISTRIBUTION MAKES EVERYTHING WORK
A 300-YEAR-OLD NATIONAL COURIER EVOLVES
PRIVATE LOGISTICS PLAYERS PAIR UP WITH MARKETPLACES
EXPRESS COURIER SERVICES INTRODUCE THE TECH EDGE
PAYMENTS POLICY EVOLVES AT BREAKNECK SPEED
CHAPTER FIVE: GOJEK, GRAB, AND THE WAR FOR TWO-WHEELED DOMINANCE
FORMALIZING THE OJEK
TAKING THE (PRICE) FIGHT TO THE STREETS
TWO DIFFERENT ROUTES TO SUPER APP-HOOD
IRON SHARPENS IRON
CHAPTER SIX: INDONESIA’S VENTURE OPPORTUNITY, HIDDEN IN PLAIN SIGHT
THE SEQUOIA EFFECT
GOJEK PROVES INDONESIANS’ HUNGER FOR MORE DIGITAL SERVICES, AND INVESTORS ANSWER THE CALL
A SERIES OF FIRSTS ENSUE, AS US AND CHINESE INVESTORS PILE INTO INDONESIA
LOCAL INVESTORS STEP UP TO STRENGTHEN THE EARLY-STAGE PIPELINE
FOUNDERS-TURNED-VCS LEND EXPERTISE TO THE NEXT GENERATION
THE LONG-TERM EFFECTS OF BREAKING THE FUNDING DAM
CHAPTER SEVEN: THE EVOLUTION OF FINTECH IN INDONESIA
THE FINANCIAL INCLUSION STORY
A SNAPSHOT ACROSS TIME
DIGITAL LENDING LANDS IN INDONESIA
BNPL AND ONLINE CREDIT CARDS
AGENT BANKING
WORKING WITH, NOT AGAINST, BANKS
THE FUTURE SITS WITH SMES
CHAPTER EIGHT: COVID-19 BRINGS DIGITAL ADOPTION FORWARD BY 10 YEARS
A TALE OF TWO FUNDING HALVES
LOSSES IN TRAVEL, HOSPITALITY, OFFLINE RETAIL
SURVIVING ON SHORT-TERM PIVOTS
WINNING SECTORS GET THEIR TURN IN THE LIMELIGHT
WINNERS IN B2B AND MSME TECH
SECOND-ORDER EFFECTS
INDONESIA’S MSMES ARE THE NEXT BLUE OCEAN
CHAPTER NINE: IMPACT IN THE TIME OF DIGITIZED MICRO-BUSINESS
BRIDGING A US$63 BILLION FINANCING GAP
MSMES AND OUTSIZED SOCIETAL IMPACT
REVENUE GENERATION VS POVERTY ALLEVIATION
INDONESIA’S MSMES AND THE GLOBAL FOOD SUPPLY
SOCIAL INCLUSION AND SKILL DEVELOPMENT
WHAT STORIES WILL INDONESIA’S STARTUPS TELL OVER THE NEXT DECADE?
CHAPTER TEN: THE NEXT 10 YEARS: INDONESIA’S DIGITAL DECADE
FROM FINANCIAL INCLUSION TO WEALTH TECHNOLOGY
EXPANDING ACCESS TO CAPITAL
TECH TO SUPPORT A GROWING AND DISPERSED POPULATION
CATERING TO THE DIGITAL CONSUMER
A GREENER, MORE SUSTAINABLE FUTURE
TOMORROW BELONGS TO TRADITIONAL COMPANIES THAT EMBRACE NEW TECH
REFERENCES
INDEX
END USER LICENSE AGREEMENT
List of Illustrations
Chapter 7
Figure 7.1 Indonesia’s Fintech Space Has Seen Rapid Growth Over the Last Decade.
Figure 7.2 Rapid Rise of Digital Banks, Backed by Existing Banks, Business Group...
List of Tables
Chapter 2
Table 2.1 Rocket’s Arrival in Southeast Asia in 2011
Table 2.2 Summary of Key Fundraising Rounds of Rocket’s Indonesian/Southea...
Table 2.3 Summary of Key Indonesian Startups Backed by Global Founders Capital...
Chapter 5
Table 5.1 Gojek and Grab: A Decade of Hyper Growth
Chapter 6
Table 6.1 Chinese Tech Giants’ Investments in Indonesia (2010s)
Table 6.2 US Investors Enter Indonesia (2010s)
Chapter 7
Table 7.1 Fintech Tie-ups Across Indonesia
Chapter 8
Table 8.1 Select Startups That Shut Down Due to COVID-19
Table 8.2 A Few Startups That Pivoted Strategies or Services During the Pandemic
Table 8.3 A Few Startups That Thrived During the Pandemic
Guide
COVER
TABLE OF CONTENTS
TITLE PAGE
COPYRIGHT
DEDICATION
ABOUT THE AUTHORS
GLOSSARY
KEY INDONESIAN CONGLOMERATES IN TECH
ABOUT AC VENTURES
FOREWORD
PREFACE
BEGIN READING
REFERENCES
INDEX
END USER LICENSE AGREEMENT
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VENTURE CAPITAL IN EMERGING MARKETS
LESSONS FROM INDONESIA’S DIGITAL DECADE
ADRIAN LI AND LEIGHTON COSSEBOOM
Copyright © 2025 by John Wiley & Sons. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
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Library of Congress Cataloging-in-Publication Data Applied for:
Print ISBN: 9781394313655
ePDF ISBN: 9781394313662
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Cover Image: © ChonnieArtwork/stock.adobe.com
Cover Design: Jon Boylan
To Pandu Sjahrir, Michael Soerijadji, and Helen Wong, your visionary leadership, rooted in discipline, wisdom, and fortitude, has been the driving force behind our firm’s progress to date, serving as a beacon for entrepreneurs across the region. Your courage and conviction in furthering Indonesia’s digital ecosystem have made a profound impact on both the economy and society, and will continue to do so for years to come. It is a privilege to partner with you on this journey, and I offer my heartfelt gratitude.
— Adrian
To Annisa Bella Syana. S., your imaginative ideas and relentless focus inspire me every day, fueling my optimism about the next generation of creative minds. It is an honor to know you and to do this work with you.
To Aditya Hadi Pratama, thank you for helping to make this book possible through our fascinating coffee chats.
— Leighton
About the Authors
Adrian Li is a seasoned entrepreneur and investor in Southeast Asia’s tech sector with more than 20 years of experience. Since establishing one of Indonesia’s earliest venture capital firms in 2014, he has backed more than 80 companies to date, including some of the most renowned names in the region such as Stockbit, Xendit, Julo, Carsome, and others. With entrepreneurial roots in China and Indonesia, his first startup in China was in online English training which was acquired in 2010. He later created new ventures with Rocket Internet in China and Southeast Asia before laying the foundation for what would ultimately become one of Indonesia’s leading venture and growth equity firms AC Ventures in 2019. Adrian completed his undergraduate education at Cambridge University and his MBA at Stanford GSB. He is a Kauffman Fellow, Class of 2021, and a long-standing YPO member.
With more than 15 years of experience in Asia as a media and marketing entrepreneur, Leighton Cosseboom founded Southeast Asia’s leading tech PR firm Content Collision, with a deep roster of Fortune 500 clients like Alibaba, Western Digital, and Expedia Group. His ventures serve a variety of global blue-chip clients such as Cision, Axel Springer, South China Morning Post, and Boston Consulting Group. Leighton was a senior editor for Tech in Asia, where he broke stories on Indonesia’s first mega-rounds of funding and became known as the market’s top tech reporter. He double-majored in journalism and advertising at the University of Oregon, in recent years, he served as a senior leader at AC Ventures, overseeing owned and earned media programs and providing hands-on support to more than 120 portfolio companies. He is now the founder of Mission Media, a strategic marketing consultancy in Asia.
Glossary
API
Application programming interface
B2B
Business-to-business
B2C
Business-to-consumer
B2B2C
Business-to-business-to-consumer
BNPL
Buy-now-pay-later
BRI
Bank Rakyat Indonesia
C2C
Consumer-to-consumer
CAGR
Compound annual growth rate
COD
Cash-on-delivery
ESG
Environmental, social, and governance
GDP
Gross domestic product
GMV
Gross merchandise value
halal
Arabic for “permissible,” used in relation to
sharia
law, often with regard to the ingredients of foods, cosmetics, and other consumer products
IPO
Initial public offering
KPI
Key performance indicator
KYC
Know-your-customer
Mbps
Megabits per second
MSMEs
Micro, small, and medium enterprises
O2O
Online-to-offline
ojek
Indonesian word for motorbike taxis that are the transportation lifeblood of traffic-jammed Jakarta
OJK
Otoritas Jasa Keuangan
, Indonesia’s financial services authority
R&D
Research and development
sharia
Islamic religious law that governs aspects of day-to-day life for Muslims in addition to religious rituals
SME
Small to medium enterprise
VC
Venture capital
LP
Limited partner (and investor that put money into VC funds)
warung
Indonesian term for mom-and-pop shops and outdoor food stalls found throughout the archipelago
Key Indonesian Conglomerates in Tech
All Included in Forbes Top 50 Richest People and Companies in Indonesia
(Note: Table is not exhaustive)
Company
Description
Key People
Tech Investments
Astra International
Southeast Asia’s largest independent automotive group
Budi, Arya, and Ardi Setiadharma
Gojek, Presetia Dwidharma, OLX Indonesia
Djarum Group
One of Indonesia’s first
kretek
(clove cigarette) manufacturers; now highly diversified in banking, technology, retail, etc.
R. Budi, Michael and Martin Hartono
GDP Venture, Blibli, Gojek
Emtek Group
Technology, media, and telecommunications
Eddy, Alvin, and Adi Sariaatmadja
Grab, Bukalapak, Carro, Nium, Vidio
Kompas Gramedia Group
Mass media, hospitality, manufacturing, event organizing
Lilik and Geraldine Oetama
Skystar Capital
Lippo Group
Property development, retail, banking, hospitality, etc.
Mochtar, James, and John Riady
Venturra Capital, Matahari Mall, OVO
Mayapada Group
Financial services, healthcare, media, property development, retail, etc.
Ang Tjoen Ming, Grace Tahir, and family
IDN Media, Medico
Salim Group
FMCG, retail, property development, etc.
Anthoni and Axton Salim
Rocket Internet via PLDT
Sinar Mas Group
Paper and pulp, agribusiness, financial services, property development, energy, infrastructure, healthcare, etc.
Eka Tjipta Widjaja and family
Sinar Mas Digital Ventures, DANA, Living Lab Ventures
About AC Ventures
AC Ventures is a leading venture and growth equity investing in tech-enabled businesses focused on Indonesia and Southeast Asia. The firm’s mission is to partner with and empower entrepreneurs with more than capital to build valuable and enduring companies. It combines operational experience, industry knowledge, deep local networks, and resources to create value for startups. The firm’s vision is to be a generational partner to entrepreneurs driving positive societal change and economic impact in Indonesia and beyond.
AC Ventures leverages the Upright Project from Helsinki for ESG and impact measurement in accordance with Northern European standards. It uses a “net impact ratio” to assess impact across four dimensions, scoring an above-average +37%, compared to the Nasdaq Small Cap Index’s +29%.
To date, the firm has positively impacted more than 7.5 million lives and businesses in the region, including the improvement of lives for more than 4 million low and middle-income earners and MSMEs. Sixty-one percent of its companies are present in second- and third-tier cities, creating more than 200,000 jobs in the region.
Indonesia’s MSMEs represent 98% of all businesses in the nation, which contribute more than 61% to the market’s US$1.38 trillion economy. Estimates suggest that more than half of these are, in fact, women-owned. AC Ventures champions diversity and inclusion with women holding 50% of its in-house senior leadership roles. Across its portfolio, this figure comes in at 41%. It is an official signatory of the UN’s Women’s Empowerment Principles, the IFC’s Invest2Equal program, and the UN’s Principles for Responsible Investing.
AC Ventures currently has more than US$500 million in assets under management, invested across five funds. Since 2012, the firm’s partners have invested in more than 120 technology companies in the region, including some of the most iconic names in the ASEAN digital ecosystem. The firm’s partners Adrian Li, Michael Soerijadji, Helen Wong, and Pandu Sjahrir lead a team of more than 40 professionals with offices in Jakarta and Singapore.
Foreword
A Story of Digital Empowerment and Economic Agility
This book comes at a pivotal moment, as we stand at the crossroads of unprecedented global challenges and a transformative era in Indonesia’s digital landscape. Currently valued at US$82 billion, Indonesia’s digital economy remains on track to reach US$360 billion by 2030.
The past few years have been marked by significant international challenges that have reshaped the global economy. The Middle East conflict, the ongoing Ukraine–Russia war, the decoupling of US–China relations, and the repercussions of rising interest rates and inflation have all created uncertainty at the time of writing. These global dynamics have had far-reaching effects, influencing markets and investment climates worldwide.
Yet, amidst this turbulence, Indonesia has shown remarkable resilience. Our nation has managed to maintain strong economic growth, along with manageable inflation and low government debt, distinguishing itself as an emerging market leader.
Indonesia is experiencing rapid economic growth, primarily attributed to its favorable demographic composition, with over 70% of its 277 million inhabitants being between the ages of 15 and 64. This scenario, widely recognized as the “demographic dividend,” presents a significant opportunity for the nation to enhance its financial position on the world stage.
To fully capitalize on this advantage, Indonesia must concentrate on elevating the average income of its citizens. This endeavor transcends mere financial gain; it is a critical imperative for the nation’s future prosperity and stability.
Human capital development stands at the forefront of this growth trajectory. Our focus on improving human capital through technology, particularly in education and R&D, is integral. By leveraging technology, we can enhance the overall quality of local education and create a workforce ready for the global challenges of the digital age. The comparative data on international assessment scores show a pressing need to elevate our educational standards to global levels.
In terms of the economy at large, education, healthcare, and the environment emerge as critical areas for investment and growth. Digital transformation in these sectors is not just a matter of economic progress but also a commitment to the well-being and sustainability of our society.
The importance of technology and innovation cannot be overstated in driving Indonesia’s economic growth. Tech-enabled companies have become the backbone of our economy, propelling us into a new era. This is where our focus on nurturing a vibrant ecosystem for startups and innovation becomes pivotal. Investment in healthcare, including R&D, has the potential to revolutionize the sector, providing better services and improving overall public health.
Environmental commitments, particularly our dedication to decarbonization and reducing greenhouse gas emissions, reflect Indonesia’s role as a responsible global actor. It is an acknowledgment that economic growth should not come at the expense of our environment.
For the corporate sector, the message is clear: agility, cost-efficiency, and digital adaptability are key to navigating market uncertainties. The pandemic has underscored the need for businesses to be flexible and technologically equipped to face unexpected challenges.
The investment landscape, especially in the realm of mergers and acquisitions, offers vast opportunities, particularly for companies with strong cash positions. VC deal value in Indonesia has remained relatively stable year-over-year, with a keen focus on early-stage investments.
Indonesia’s attractiveness as an investment destination is multifaceted. Factors like geopolitical shifts, the burgeoning e-commerce sector, and supportive government policies, play a significant role in shaping this landscape. Though fragmented, the investment space has seen a growing interest in early-stage deals, indicative of the confidence in Indonesia’s long-term growth potential.
Our market, while still nascent, has shown promising signs of maturity, with exits via both trade sales and IPOs. This maturation is driven by sectors like e-commerce, mobility, and fintech, all of which have produced unicorns in recent years.
Indonesia’s long-term prospects as a venture capital investment destination remain promising. Strong market fundamentals, coupled with a maturing investor base, indicate a bright future for the local digital economy.
“Venture Capital in Emerging Markets” is not just a narrative of the past and present; it is a roadmap for the future. It encapsulates the journey of a nation that is rapidly adapting to digital transformation while navigating global economic challenges. As you digest this book, I invite you to explore the variety of opportunities and challenges ahead for Indonesia in this exciting time.
—Pandu Sjahrir
Chief Investment Officer
Danantara
Preface
Over a decade ago, Indonesia’s digital ecosystem was an emerging vision, with internet penetration hovering around 23% and e-commerce sales barely touching US$1 billion. Fast forward to today and internet penetration has surged to more than 65%, with e-commerce sales projected to surpass US$55 billion. The sheer magnitude of this transformation is astonishing, and as I look across the rapidly changing skyline of Jakarta Metro’s megalopolis of more than 20 million people, I feel an overwhelming sense of déjà vu, reminiscent of my earlier days in China.
While the landscapes are different, the vibrancy and entrepreneurial spirit are undeniably present. Indonesia has not only embarked on a transformative journey but also one that will create a new generation of entrepreneurs, bringing about broader social and economic impacts than previously possible. I have had the privilege of witnessing and participating in this metamorphosis firsthand as an entrepreneur and investor. I hope to capture in this book the nuances of its digital narrative from its emergence in 2010.
This book is a testament to that journey, diving deep into the heart of Indonesia’s digital transformation over the past decade. Through firsthand experiences and on-ground insights, we explore the key sectors that have come to define the nation’s digital narrative.
The book begins with the nascent days of online retail when young startups were venturing into uncharted territories. The subsequent arrival of Rocket Internet shook up the landscape, introducing new dynamics and challenges.
The evolution continues, chronicling the fierce battles that marked the early era of e-commerce in Indonesia. Payments, logistics, and policies, pivotal aspects of the ecosystem, scrambled to keep pace, setting the stage for further development.
We then dive into the intertwined story of the rivalry between titans—Gojek and Grab—their strategies, innovations, and the impact of their two-wheeled takeover on Indonesia’s streets. This narrative serves as a precursor to where we uncover the hidden opportunities for global venture investors in the archipelago that many had previously overlooked.
We then zoom in on the evolution of fintech, revealing its growth trajectory and pivotal role in Indonesia’s digital journey. The seismic events of the COVID-19 pandemic spotlight how a crisis expedited digital adoption and altered consumer behavior dramatically.
Transitioning to the grassroots level, we emphasize the growing significance of micro-businesses in a digitized era and the impact of these enterprises on the economy at large. The book concludes with a vision of the next 10 years, setting the stage for what may be Indonesia’s most transformative decade yet.
Throughout these chapters, we’ve woven in personal narratives, insights, and observations. Drawing from our experiences both within and outside the country, the heart of this story remains deeply Indonesian.
In sharing these experiences, I hope to offer a window into the world of digital development in a rapidly emerging market: its challenges, opportunities, and above all, its transformative power. May this book serve as both an inspiration and a guide for those keen to be part of the next chapter of Indonesia’s digital story as the country moves boldly on to become the world’s fourth-largest economy in the next 25 years.
Here’s to the entrepreneurs, investors, and stakeholders leading Indonesia’s digital transformation in the years to come.
Adrian Li
Founder and Managing Partner
AC Ventures
This book is about the emergence of Indonesia’s digital ecosystem. While its roots can be traced back more than a single decade, the true essence of these pages is about the present and the foreseeable future.
We use the term “Venture Capital in Emerging Markets” in the context of the next 10 years, an exciting future brimming with the promise of revolutionary advancements in areas like climate tech, renewable energy, the dynamic shift of economic empowerment favoring the nation’s burgeoning middle class, and beyond.
As a former tech journalist, I had the fortuitous timing of covering the local VC space just a few months before Indonesia’s first mega-round of startup funding. This unique positioning allowed me to not only document but also actively participate in and influence the defining moments of an industry undergoing a seismic shift.
In crafting this narrative, I’ve strived to amalgamate the hard facts and key events that shaped the industry’s trajectory. Yet, to offer a holistic and intimate portrayal, I have also done my best to channel the perspectives and insights of Adrian, providing a bird’s-eye view from the investor’s vantage point. When you come across first-person anecdotes in this book, they are shown through his eyes.
It is our combined aspiration that this book establishes itself as a useful guide for global investors casting their gaze toward emerging markets in Asia. The narrative is a record of the past, but also a compass pointing toward untapped opportunities.
After reading it, I urge you to share your thoughts, reflections, and critiques. Indonesia’s digital story is still evolving, and your voice is an integral part of it.
Leighton Cosseboom
Founder
Mission Media
Chapter OneE-commerce Emerges in the Wild
As ASEAN’s single largest market, Indonesia has long held incredible economic potential, underpinned by powerful demographic fundamentals, such as a young and growing population of more than 280 million people.1
In less than 10 years, Indonesia’s digital economy has grown from its infancy to a forecast of US$360 billion by 2030.2 This value creation has happened across many industries: commerce, finance, MSMEs (micro, small, and medium enterprises), climate technology, and more. But one thing they all have in common is that they were created by visionary founders who persisted through the many challenges faced on the entrepreneurial journey.
In the early stages of internet adoption, startups in Indonesia encountered not only external challenges like limited internet penetration but also significant issues with payment systems and logistics. These foundational hurdles were compounded by a scarcity of capital for startups and hence funding to create robust, scalable businesses.
This chapter examines the emergence of Indonesia’s digital economy, highlighting influential individuals, pivotal companies, and defining events that catalyzed its growth. The narrative begins with the early internet forums that linked Indonesian diaspora communities and progresses to the establishment of the nation’s first major e-commerce platforms. It recounts how Indonesia’s digital landscape was meticulously crafted by pioneering entities like Kaskus, Tokobagus, Tokopedia, and Bukalapak amidst a backdrop of cultural, economic, and technological transformations.
As we examine the rise of Indonesia’s first unicorns and the impact of foreign investors and returning diaspora, this chapter shows the forces behind the country’s digital boom. Indonesia’s e-commerce evolution testifies to the power of entrepreneurial spirit and the transformative potential of technology in shaping the future of a nation.
Beginnings
To fully understand the birth and evolution of Indonesia’s digital economy, we need to look back to the turn of the millennium.
By the start of 2001, some 150 licensed internet service providers were offering 150 Mbps of bandwidth—certainly not insignificant for a country that first connected to the internet in 1994.3 The majority of users were using dial-up to check their email, chat, or catch up on news, so it was only a matter of time before the transition to e-commerce took place.
However, that transition might have taken longer had there not been a few key players already on the move and a couple of foreign serial entrepreneurs to pave the way. In late 1999, six years before Reddit was founded, three Indonesian students in Seattle, Washington, came up with Kaskus (short for “kasak kusuk” or gossip news in Indonesian), an informal forum for the large Indonesian student diaspora.4
An early social media progenitor, Kaskus was a strong community builder for the many Indonesians to stay in touch with developments back home while making English news accessible by translating it into Bahasa Indonesia. Kaskus cofounders Andrew Darwis, Ronald Stephanus, and Budi Darmawan also recognized the potential of the nascent web advertising sales market, as local news site Detik.com boasted 6.42 million visits in 1999.
However, battling Detik proved too expensive, leading Andrew’s two cofounders to drop out of the project. In 2000, Andrew transformed Kaskus into its forum-like iteration, moving away from journalism into user-generated content.
That same year, Indonesia’s famous tourist island of Bali became home to BaliCamp, the nation’s first startup incubator, and a haven for software developers.
The Marketing Dutchmen
It was against this backdrop that Tokobagus (now called OLX Indonesia) launched in Bali in 2005. Combining the Indonesian words for “shop” (toko) and “great” (bagus), the e-classifieds site was the brainchild of Remco Lupker and Arnold Egg, two young entrepreneurs from the Netherlands who had discovered Bali’s internet cafes on holiday and saw Indonesia’s incredible e-commerce potential.5
Two decades ago, Indonesia had barely any startup infrastructure, so Remco and Arnold quickly learned Bahasa Indonesia and found that this opened doors when introducing e-commerce to the government and local business partners.
In those early days, the task of introducing Tokobagus to consumers was formidable. Trust was in short supply all around, and brand recognition was essentially nonexistent for the company at that point. As such, Remco thought of a simple solution to the problem: bring Tokobagus and e-commerce straight into Indonesians’ living rooms.
In October 2005, Tokobagus launched the first of its many nationwide television campaigns.6 This was followed quickly by online and out-of-home advertising. Soon enough, Tokobagus was in homes, in elevators, on billboards, and visible via Google and Facebook. The all-out advertising strategy paid off, as page views and unique visits soared.
As Tokobagus slowly increased its foothold in the C2C (consumer-to-consumer) space, Andrew continued building out Kaskus while studying in the United States. In 2008, armed with a new investor and CEO in Ken Dean Lawadinata, Andrew and Ken returned to Indonesia to give Kaskus a branding overhaul, resulting in Kaskus ending the year with 350,000 registered members generating 2.4 million page views daily.7 Not only were Indonesians increasingly online, but they were also online for longer periods.
In 2011, Kaskus accepted its first investment from GDP Venture, a digital investment subsidiary of Djarum Group, a diversified conglomerate owned by the influential and wealthy Hartono family.8 The investment allowed Kaskus to transform itself into a place where people could formally buy and sell from one another via a C2C e-commerce model. It was a natural progression, as many Kaskus users were already doing this informally.
The rising tide of C2C e-commerce served as an accelerant. By mid-2011, Tokobagus was recording 160 million monthly page views and growing by 100% year over year.9 Tokobagus was also quick to embrace mobile, encouraging sales via its Blackberry app in May 2011.10
Even after Remco and Arnold exited the company to pursue other business opportunities (via an acquisition by South African conglomerate Naspers in 2012), the site continued to grow, hitting 1 billion page views by the end of 2013.11 By then, Tokobagus was acknowledged as the front-runner of Indonesian e-commerce.
Both Remco and Arnold remained active in the Indonesian venture space after exiting Tokobagus, separately founding new ventures, investing in startups, and coaching young entrepreneurs. Remco has since passed away, but Arnold is still active in the venture capital (VC) space. He became an Indonesian citizen in 2013, and now spearheads a venture builder tied to Wright Partners and digital consultancy firm Sprout Digital Labs.12
Enter the Unicorn Foals
Though Tokobagus had become part of a larger conglomerate with both its founders having moved on, their efforts to introduce e-commerce to Indonesian consumers, policymakers, and the business community paved the way for the first batch of homegrown e-commerce companies in the archipelago.
While many new e-commerce entrants ultimately died off, the trend did lead to the formation of two of Indonesia’s earliest unicorns: Tokopedia and Bukalapak.
The Internet Cafe Graduate
From 1999 until 2003, William Tanuwijaya was pursuing his degree at Binus University—a private college in Jakarta—when his father fell ill and was unable to continue supporting him financially.13 As a result, William started to pull the graveyard shift at internet cafes to cover his tuition.
It was during those nights that he came up with the idea for Tokopedia, an all-encompassing marketplace that would bring e-commerce to MSMEs across Indonesia’s more than 17,000 islands—a major reason why logistics costs in Indonesia account for a significant portion of the country’s economy.
William and his cofounder, Leontinus Alpha Edison, believed their C2C marketplace would democratize commerce through technology. The goal was to ensure that consumers across Indonesia could clearly see and understand the prices of a wide range of goods. Tokopedia aimed to offer them the ability to safely buy these products online from any location in the country.
Before Tokopedia’s arrival, consumers were paying different prices for the same goods depending on where they lived. Meanwhile, merchants in smaller cities had to overcome higher capital barriers to get their businesses off the ground and gain access to the larger national market.
The two cofounders began toying with their venture idea in 2007, deciding that combining “toko
