The Funding Gap for Environmental-Impact Startups in Indonesia
Updated: Dec 22, 2020
The Indonesian startup scene is very much crowded with startups ranging from e-commece, ride-haling, fintech, logistic, edtech, and healthtech. These past few years, however, startups originating from the environmental sector - whether it be renewable energy, biodegradable packaging, and waste management - have started to emerge. Even with this new trend, there seem to be not enough traction from VCs to enter this sector.
According to Kolibra Capital's senior investment analyst, William Auwines there are two possible reasons why this might be the case. First, environmentally-focused companies tend to require more time to grow. This could halt the commercialization progress, which in turn exposes the company and investors to higher risk. Environmental startups also tend to require huge CapEx. This is a huge consideration factor for VCs since they tend to prefer businesses that are tech-enabled and therefore have a higher chance of being scalable.
It is still possible to both bring positive impact and at the same time bring value to VCs. William gave examples such as Too Good to Go and Karma, both originating from Europe. In Indonesia, for now at least, it is still hard to find startups that can effectively serve both purposes. This doesn't mean VCs will strictly avoid this sector in the coming future. He stated that there are many environmentally friendly startups that are growing to achieve both ends of the spectrum as the time goes on. The potential is huge, all that's left is the right timing.