Insight into the startup landscape of Indonesia from Aryo P. Ariotedjo, Managing Partner, Grupara Inc.

Indonesia is famous for its beautiful landscapes, rich culture. It is also gaining attention for its rapidly growing numbers of social media users. After all, it has one of the top 10 user bases in the world when it comes to Facebook. Of course, we love beautiful landscapes and social media but what was of even more interest to us in Indonesia was the buzz about startups. To know what is happening in the Indonesian startup space, we conversed with Aryo P. Ariotedjo. Aryo is the Managing Partner of Grupara Inc, an Indonesian startup incubator and venture capital fund. He is a very young and active investor in Indonesia who is enthusiastic about the market opportunities and wants to create a collaborative startup community in Indonesia. Here is what Aryo had to say about Indonesian startups:

YS: How is the startup eco-system maturing in Indonesia?Startup community is still developing and not yet established in Indonesia. Lack of mentors & funding, negligible support from most of the universities, and the Indonesian affection towards foreign products as compared to local ones are some of the major hurdles that need to be overcome. For any startup in Indonesia or anyone planning to start up here, the first and foremost need is to understand the culture and the way Indonesians think.

YS: Which sectors are currently booming in the startup eco-system in Indonesia and what do you think are the reasons behind their growth?

E-Commerce is growing really fast. Two years back the market share was $560 million and currently it is $1.79 billion and is expected to reach $3.5 billion by 2015. Absence of the payment gateways was one of the biggest problems holding back Indonesian e-commerce. Now, that more online payment options are now available, we are seeing a sudden growth. Internet users have also become more educated in terms of buying things online. They are realizing that online shopping is cheaper and takes less work and time. And of course, the emerging middle class is also one of the main factors behind e-commerce boom.

YS: What was the startup scenario like in the last 5 years and what is current state?

In 2008, we saw a lot of startup companies emerge and a lot of them died very soon too but from last year things are much better. Many quality startups are now emerging in e-commerce - fashion, online travel agents, beauty products etc, classified advertisements, mobile apps and video games market. With around 50 million internet users in the country, one may think that social media is a sexy business in Indonesia but due to challenges in monetization in this space, it is actually not. More focus is definitely on B2C instead of B2B.

YS: What are the best places to startup and who are some of the mentors to approach in Indonesia?

All the action happens in Jakarta but it is very expensive to run a bootstrapped venture here. Bandung is the home of the top programmers in Indonesia and Yogyakarta is the city of students, the city of right energetic talent. If you want a place to just concentrate and build your product, it is definitely Bali, laidback & relaxed.

Danny Oei Wirianto of Kaskus & Mindtalk, Andy Zain of The Founder Institute and Christian Sutardi of Lolabox are the people to go to for right mentoring.

YS: Which incubators and accelerators are supporting or developing the ecosystem? Tell us about some startup success stories from Indonesia.

Only a few active incubators and accelerators are present such Grupara Inc, Batavia Incubator, Ideosource, Systec, and some others. But we also have our own local Founders Institute program that is run by Mr. Andy Zain, the founder of Mobile Monday Indonesia.

Startup success has been seen in Indonesia with Disdus acquisition by Groupon, Kaskus by Djarum Group ($60 Million deal) and Koprol by Yahoo.

YS: What would be your advice to anybody planning on starting up a venture in Indonesia?

If Indonesia is a foreign land to you, starting up alone is not a very right idea. In Indonesia, it's all about connections. As the startup community is still nascent, having a local partner on board is a must for any startup. Now there are even foreign funds coming to Indonesia such as Japanese, Chinese, Singaporean, British, Australian, and even USA. Indonesia is a very early and developing market in terms of startups but the potential is very huge in the next 5 to 10 years. Investors, do invest in Indonesia soon or you will miss the train.

Stay tuned for more startup action from Indonesia.