The term “centaur” has been coined to describe startups that have reached valuations of more than USD 100 million (IDR 1.4 trillion) but aren’t unicorns yet. One way to measure a company’s valuation is based on funding obtained from investors.
The rapid development of Indonesia’s tech ecosystem has brought many startups to later stages of funding—series A or beyond. The positive implication is that many Indonesian startups have become centaurs.
According to a report produced by Temasek, Google, and Bain & Company, there are around 70 centaur startups in Southeast Asia. As for Indonesia specifically, based on research conducted by DSResearch earlier this year, there are at least 27 startups in the country that have valuations above USD 100 million.
Listed below are the country’s centaur startups:
Vertical business analysis
In terms of business verticals, the scope is diverse, even though it’s dominated by fintech and e-commerce. That mirrors the business of local unicorns—three out of six players are in the e-commerce sector. Among the centaurs, there are 13 startups implementing B2C business models, ten startups that draw B2B revenue, and the remaining four target both through B2B2C channels.
The companies with B2B business plans include three fintech lenders, two SaaS providers, and one each for e-commerce, logistics, media, and fintech payments. Although each of them offers services to businesses, some are closely related to transactional businesses at the consumer level.
Market momentum
The fundamental reason behind the successes of centaur businesses is market readiness. If certain business formats were implemented five or ten years ago, we may not see such rapid growth in startups’ valuations. Take Payfazz as an example. It’s one of the startups whose business has been accelerating.
Payfazz’s application allows partners (shop owners) to put various virtual items up for sale, such as phone credit, electricity tokens, insurance payments, money transfers, and so on. According to the Ministry of Cooperatives and Small and Medium Enterprises (Kemenkopukm), there are around 64 million SMEs in Indonesia, with 46.27% engaged in trading, including stall owners. Payfazz’s services that are provided align with customers’ daily needs. There is value in providing these commodities.
The big pie is now being fought over by giant digital players. E-commerce platforms like Bukalapak, Tokopedia, and Shopee are flocking to develop partnership programs with kiosks.
Online shopping has shaped new culture within e-commerce. For example, HappyFresh fostered new expectations among the public by guaranteeing fresh food. Indonesia’s e-commerce sector is expected to have a value of USD 82 billion by 2025 .
At least 92 million adults in Indonesia remain unbanked. Fintech services will woo them to become clients.
The right direction
Plenty of Indonesia’s startups have yet to become centaurs. At the moment, there is a funding gap, and many early-stage companies are struggling to move their operations forward by matching up with investors.
For now, Indonesia’s 27 centaurs persist based on their founders’ intuition. And they might just catch up with the country’s larger player and become unicorns.
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