Indonesia’s Second Wave of Founder-led disruption: How overseas Talents, Startup “Mafias” and local-grown Entrepreneurs and Angels will reshape the landscape

Indonesia’s Second Wave of Founder-led disruption: How overseas talents, startup “mafias” and local-grown entrepreneurs and angels will reshape the landscape

In 2021, our colleague Abhijit Gupta wrote about the “The Dawn of a Founder-led Startup Ecosystem in India: Mafias, Angels, Communities , and More” and there were overwhelming responses from founders who found it immensely useful. This year, in 2022, we would like to highlight another nascent and promising startup hotbed here in Southeast Asia – Indonesia. In this article, we’re shedding light on how founders are leading the charge for Indonesia’s tech innovation in 2022 and beyond.

The Indonesian ecosystem has grown quickly over the past decade and is now a mature space for business and tech innovation with successful unicorns and up-and-coming startups following in their predecessors’ footsteps.

Vertex Ventures Southeast Asia & India (VVSEAI) first started investing into Indonesia since almost a decade ago. Over the years, we have witnessed tremendous growth in Indonesia’s now-booming startup ecosystem. Here are some of the top reasons why:

• Southeast Asia’s largest consumer market with rising consumption power: At $1.05 trillion GDP and 15th largest economy in the world with GDP per Capita: $4,038, Indonesia’s market of more than 270 million citizens represents a huge opportunity for startups to achieve critical mass and widespread market adoption.
• Increasing digital-native consumer population: Smartphone penetration stands at 75.4%, projected to reach 82.45% in 2026. (Source: Statista) and the internet penetration stands at 75.47%, projected to reach 82.53% in 2026. (Source: ibid)
• Rapidly growing digital services technology sector

The country's internet-based economy’s gross merchandise value (GMV) is expected to reach US$133 billion in 2025, according to estimates by Google, Temasek, and Bain. With over 197 million internet users, Indonesia’s digital economy is a stronghold for startups looking to quickly scale

• Favorable Government Business Policy Introduction of the Omnibus Law in 2020 to revise barriers to investments and improve the ease of doing business
• Strong track record and viability of exits, Jakarta alone had a combined startup valuation USD 34 billion, headlined by great homegrown and publicly listed tech companies like Bukalapak and GoTo Group, also strong companies like Traveloka, Tiket.com, Aruna, and Efishery are next in line.

Economic, political and market factors are all important reasons for Indonesia’s meteoric rise – however, at the heart of this digital revolution is the human capital and startup talent that had led the successful businesses and executed expertly on their vision.

The First Wave of “SEA Turtles”: Indonesian talent returning from overseas

The most successful startups in the region: GoTo and Traveloka are founded by Indonesian returnees – individuals who studied overseas and/or worked in the US tech ecosystem before bringing their talents home.

(credits to Tian Wen Tay and Techinasia for the Data)

Nadiem Makrim, founder of Go-Jek, studied international business at Brown University, before working at McKinsey Jakarta. After working for McKinsey and state-owned enterprises, he joined Harvard Business School in 2009. Founders like Nadiem Makarim (Go-Jek) and Ryu Kawano Suliawan (Midtrans) believe their time overseas was transformative because of the inspiration they gained from seeing other entrepreneurs create companies in the US, which had a much more mature VC ecosystem back in 2009. The social capital from global programmes like Harvard Business School is also crucial for founders – both Nadiem and Ryu were in the same cohort for Harvard and eventually ended up working together after Go-Jek acquired MidTrans in 2017.

Nadiem and Ryu are examples of the growing number of ‘SEA Turtles’ – Southeast Asian returnees from overseas work and study opportunities. The term is a play on the Chinese expression for foreign-educated returnees coined in the early 2000s.

Both startups and venture capital funds are strongly confident in the value of Indonesian returnees with global exposure. Go-Jek and Bukalapak are leading hiring campaigns amongst top schools in the US to encourage Indonesians to return and bring their talents home. Intudo Ventures leads the Pulkam SEA Turtle Fellowship to help returning Indonesians with their home-grown aspirations and business vision in Indonesia.

The Second Wave: The impacts of Startup Mafias in Indonesia

The alumni of successful startup companies have often gone on to kickstart their own scale-ups and tech ventures. PayPal ex-employees or the ‘PayPal Mafia’ include prominent names like Elon Musk (Tesla, SpaceX), Peter Thiel (Palantir, Valar Ventures) and Steven Chen (YouTube). Similarly, we are seeing a second wave of founders in Indonesia led by the ex-employees of Go-Jek who are pushing the frontiers of innovation in verticals like PropTech, Edtech, Fintech and even HealthTech. The GoJek mafia is an example of the second stage of founder-led growth for Indonesia’s startup landscape.

(Credits to Tian Wen Tay and Techinasia for the Data)

Several reasons for this growing ‘mafia’ phenomenon can be identified: (1) Timing and opportunity, (2) startup-investor partnerships and (3) opportunities to learn from the best in the business.

(1)   Timing and opportunity

As startups like Go-Jek reach unicorn status, they often must transition from founder-led growth towards successor-led future growth. When founders are exiting the company, this can define career-change moments for long-time superstar employees to decide to strike it out on their own. Dayu Dara Permata transitioned from Senior VP of GoJek to being a Proptech founder, growing the business to post-Series-B valuation of $225M. After building a strong team that could carry out GoJek’s operations, Dara found the momentum to transition from being an intrapreneur to being an entrepreneur.

Similarly, PropTech CTO, Ahmed Aljunied, described how GoJek was structured in a way that allowed each individual subsidiary business to run like individual startups. They would present plans to senior leadership and raise funding to carry out product development and various business projects.

(2)  Startup-investor partnerships

It is common for investors to be strongly connected with the founding team and leadership members of their portfolio companies. Even when these leadership members express interest in leaving the company to try their own ventures, investors often partner and remain connected with these alumni. These network effects are crucial to growing the ‘startup mafia’ in Indonesia.

(3)  Opportunities to learn

Perhaps the most important point – alumni describe their previous unicorn companies as a ‘entrepreneurship academy’ for them to network, learn about how to build culture, and how to build professional and structured processes in the early stages of a startup.

Best of both worlds: Marrying local expertise with global experience

While SEA Turtles and ex-unicorn alumni employees are an important factor for Indonesia’s blossoming tech ecosystem, it would be remiss to leave out the many homegrown founders who are tapping into their deep local market experience and knowledge to successfully scale their product.

Indonesia is a country that faces high levels of geographic and financial dysconnectivity, with its 273 million population spread across 6,000 habitable islands. This means that startups need to possess strong knowledge of local business practices, habits and market trends to achieve critical mass.

One example of this is homegrown startup and VVSEAI portfolio’s Pintarnya, founded by three senior executives Nelly Nurmalasari, Henry Hendrawan and Ghirish Pokardas. Pintarnya helps Indonesia’s rising working class get employed, become more employable and access better financial services. Since its launch in May 2022, Pintarnya has connected more than 6,000 employers with more than 100,000 job seekers looking for opportunities in the F&B, Retail, Logistics and Hospitality sectors.

Nelly and Henry were former senior executives at Traveloka, while Pokardaas was a KKR executive working in financial services. The team was largely inspired by Nurmalasari’s experience as a owner of a hair salon, where she experienced the pain points of hiring and finding applicants for blue-collar jobs first hand. Many of her employees also struggled with applications of loans and access to financial products due to a lack of income history.

Having first-hand experience has been crucial for strengthening Pintarnya’s vision and execution for creating a one-stop digital platform for grey-collar job applications and financial services.  Pintarnya is just one example of the next generation of founders who are combining local market experience, past startup operator experiences and global exposure to form strong teams who can execute on their vision in Indonesia.

Besides Pintarnya, we have also invested in Tiptip, founded by Albert Lucius, who founded Kudo (acquired by Grab) in Indonesia and in Gredu, founded by Arya Budi Nugraha who was from GoTo.

Moving forward, VVSEAI is excited to support teams strongly connected to local markets and their user’s problems – as well as supporting the next wave of talent (both local experts and SEA Turtles!) in Indonesia.

The burgeoning Angel investment ecosystem in Indonesia

Due to the wealth generated from startups, various founders and leaders are reinvesting this capital into new startups, many of which are part of the mafias shown above. Reinvestments from founders with a pay-it-forward mindset have also helped create a vibrant ecosystem for budding entrepreneurs.

The rise of angels, syndicates, and founder-led funds has catalyzed the pre-seed/seed stage investing landscape. Founders who are just getting started now have access to a ‘capital++’ model, with angels mentoring them, opening doors to clients, VCs etc, as well as their companies becoming early clients.

The most prominent angel network is ANGIN, which stands for Angel Investment Network Indonesia, which means wind in Indonesian. According to a recent Techinasia article, “Angin now consists of a group of 34 investors and counts nine portfolio companies in total, including the investments made out of the first, women-focused fund… The focus is predominantly on pre-seed to seed stage startups, with an average ticket size of US$50,000” and through their syndicate network, “up to US$500,000 for larger rounds.”

The other major angels who are ex-employees from tech firms include as well as from:

AgriAku: Irvan Kolonas (AgriAku)

Bukalapak: Achmad Zaky

Emtek: Sariaatmadja family (SCTV)

GoTo: Aldi Haryopratomo. Andre Soelistyo, Kevin Aluwi, Rama Notowidigdo

Grab/Ovo: Aaron Gill, Albert Lucius, Wenyou Tan

Koinworks: Willy Arifin

Kopi Kenangan: Kenangan Fund, Edward Tirtanata, Chris Sutardi

Kredivo: Akshay Garg

Taralite: Abraham Viktor, Wenyou Tan, Robin Tan

Traveloka: Henry Hendrawan

Payfazz: Hendra Kwik

Xendit: Moses Lo

Other active angels:

• Arya Setiadharma (Prasetia Dwidharma)
• Pandu Sjahrir
• Jerry Ng

We hope this is useful. It will be great to curate more data points above and make this a helpful resource for everyone. If you wish to contribute to and add more data points to the lists above, do reach out to me on Linkedin if you are interested!

Big thank you to Brandon Neo, Wenyou Tan Nathan Budiutomo Aparna Bhatnagar Saxena Nelly Nurmalasari Agustiadi Lee for contributing to the article.

Edited by Elise Tan

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