Indonesia Tech Deals Vol. 6 | January 2023

In continuation to our previous Tech Deals series (Tech Deals Vol. 1, Vol. 2, Vol. 3, Vol. 4, and Vol. 5), we provide herein, the recent tech deals completed between 16 July and 31 December 2022, and our brief commentary regarding the tech investment environment in Indonesia during the period.

During the third and fourth quarters of 2022, the tech investment environment in Indonesia remained affected by the current climate of the global economy, inflation, and crisis of the cost of living on the other side of the world. We have frequently seen news on layoffs in tech sector and decrease in funding for many start-ups. Despite these challenges and economic downturn, fundraising in tech sector in Indonesia has remained active. Some businesses have even managed to secure significant amounts of funding.

The Indonesian government has remained committed to develop the technology sector and continued to actively promoting it. The government has issued new regulations on this sector, including the one issued by the Financial Services Authority (Otoritas Jasa Keuangan or "OJK"), which imposes a maximum loan interest rate of 0,46% per day on the fintech lending sector (the previous limit was 0.4% per day), also business actors who are members of Indonesia Co- Financing Fintech Association (Asosiasi Fintech Pendanaan Bersama Indonesia or "AFPI"). OJK also issued OJK Regulation No. 10 of 2022 on Information Technology-Based Co-Financing Services stipulating that peer-to-peer lending providers must maintain a minimum capital of IDR 25 billion, with any capital increase in the form of cash, cash deposit, or stock dividend.

On a related matter, the governing authority for crypto assets, BAPPEBTI, would be moved to OJK to anticipate risks and protect customers and investors. It has been viewed that crypto assets have grown significantly and affected the economic stability.

I. Start Up and Tech Investment Deals in the period between 16 July and 31 December 2022

Please refer to the table below on the list of completed Tech Deals in the period from 16 July to 31 December 2022:

II. NLP Commentary on the Recent Tech Deals

Throughout 2022, the economic slowdown impacted many industries, including start-ups. In the latter part of the year, there were reports of layoffs, closures, and pivots. The reasons for this uncertainty are varied. Conflicts and hyperinflation in some countries, as well as difficulties in recovering from the COVID-19 pandemic, are just a few of the causes.

There has been a significant decline in the total value of investments in Indonesian start-ups. The total amount raised by Indonesian start-ups from the beginning of the year until November 2022 was USD 3.7 billion, with some 347 investors participating in the fundraising. It represents a 67.4% decrease of investment compared to that of the previous year, when the total amount reached USD 11.35 billion with 308 investors.

In Asia, decreasing venture capital funding for Asian start-ups and low liquidity activities have resulted in a wave of layoffs impacting more than 111,000 workers in various start-ups across the region. Businesses with the most layoffs in Southeast Asia were those in edtech and fintech sectors. Many start-ups that cut their workforce were in the development phase, particularly affecting those with Series B funding.

Due to the rapid changes in economic conditions, some start-ups, including Chope, JD.ID, Shipper, and Glints, have had to make the difficult decision to lay off employees. In terms of investment deals, the sectors with the most funding announcements were fintech lending and software as a service (SaaS), each of which, with 13 announcements. The start-up that raised the largest amount of investment was Xendit, with USD 300 million. Traveloka, which also received a large investment, could secure funding through a strategic agreement with investors including the Indonesia Investment Authority (INA). October saw the most investment deals, while December had the fewest. The total disclosed funding for the period was USD 1 billion.

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