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Smart capital will fuel Indonesia’s surging digital economy

Published on July 28, 2022


Adrian Li, founder and managing partner of AC Ventures, recently spoke on a panel at the AVCJ Private Equity & Venture Forum in Singapore. Addressing the region’s unfolding digital economy, the session was titled  “Venture capital in Southeast Asia: Shifting landscape.”

When asked by moderator Sean Murphy where the next exciting opportunities are coming from in the region’s tech scene, Adrian didn’t hesitate to explain that Indonesia’s budding digital economy is the single most exciting investment opportunity in the world right now. Smart capital is already there, with much more on the horizon, said the investor. 

“Being Indonesia specialists, we focus primarily on that market,” said Adrian. “If you look at last year being a US$70 billion digital market, we’re barely at 10% of total country GDP penetration. So there are leaps and bounds to go. We expect that is going to grow at least 3-5x by 2030. We’re investing in the digitization of Indonesia’s future economy.”

He went on to mention that, for AC Ventures, some of the most exciting opportunities today are in powering up the nation’s micro-, small, and medium-sized enterprises (MSMEs) with new tech. This is where the VC firm aims to dominate as an early-stage player.

A digital economy powered by an ocean of MSMEs

“Now, in Indonesia, there are 65 million of these enterprises. They contribute 60% of the country’s GDP and they hire 90% of its adult workforce,” he elaborated. “There is an incredible audience there. Historically, these small businesses didn’t use much technology. But now that they are, we’re getting all kinds of new verticals, where you can build massive companies. These include areas such as embedded finance, supply chain e-commerce, and unique distribution models. ” 

According to the investor, AC Ventures will continue to back companies that are driving the MSME category forward. One such company is Ula. The startup is an e-commerce enabler furnishing small businesses with the products and services they need to sell online successfully. These are important things that local MSMEs may not necessarily have easy access to.

“Beyond that, e-groceries is an absolutely massive category that currently has low single-digit market penetration when compared to traditional retail,” Adrian added. “There also continue to be big opportunities in fintech, given the still large size of the underbanked population in Indonesia.”    

Enjoy the full session and more by signing up to ACVJ.  

Covid-19 unlocked new capital for ASEAN’s tech investors

See also: Indonesian digital mortgage platform IDEAL locks in US$3.8M co-led by AC Ventures

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