Indonesia's Startup Epoch: From Exuberance to Discipline
Indonesia Startup Ecosystem 2025 Review
Dear subscribers,
Happy New Year!
We enter 2026 with renewed optimism as Indonesia’s startup ecosystem steps into a phase of true maturation, moving beyond exuberance into a more disciplined, resilient market.
The past year reaffirmed the strength of our fundamentals, marked by milestones such as Fore Coffee’s successful IPO and the entry of global players like Robinhood, underscoring Indonesia’s growing appeal to international capital.
In this edition, we highlight the “Merger Renaissance” and the reopening of the IPO window, expanding pathways for founders and investors alike. With a renewed focus on sustainable growth and integrity, the ecosystem is sharpening its filter for excellence and long-term value.
The opportunity ahead is immense, and we’re excited to navigate this next chapter of technology-driven growth with you.
Stay ahead,
Foundry Collective Team
When Founders Grow Up
The Indonesian startup ecosystem has experienced a reckoning. Not a collapse, but a recalibration. In the span of a year, the market shed USD318.1 million in funding as per 2025Q3. Valuations that seemed permanently inflated have deflated. Governance crises that were once unthinkable have become cautionary tales. Yet beneath the contraction lies a more consequential transformation: the shift from a venture-capital-dependent market to one where profitability, discipline, and strategic acquisition have become the language of success.
The turning point arrived in April 2025, when Fore Coffee, a premium coffee chain, raised IDR353.4 billion (approximately USD24 million) on the Indonesia Stock Exchange. The event seemed almost trivial: a domestic equity listing in a market besieged by macroeconomic headwinds. It was not. It was a statement that an Indonesian startup could achieve profitability without chasing billion-dollar valuations or perpetual venture capital. That message has reverberated through the ecosystem ever since.
The Governance Crisis That Changed Everything
In late 2024, eFishery, an agritech startup once valued at USD110 million, imploded. The company, which had raised capital from prominent regional venture funds and had become emblematic of Indonesian agricultural technology ambitions, collapsed amid allegations of fraud and governance failures. The case was not merely an isolated incident; it was a reckoning.
Investor response was immediate and severe. In Q1 2025, startup funding contracted 97 percent year-over-year as capital providers demanded enhanced due diligence, forensic scrutiny of financial claims, and board-level governance standards. Trust, which had been assumed and abundant in the exuberant years of 2020 to 2023, became the scarcest commodity in the ecosystem.
The eFishery case triggered an institutional response. Indonesia’s Financial Services Authority (OJK) implemented a sweeping regulatory overhaul, codifying standards for fintech regulation, crypto assets, and credit expansion. In February 2024, OJK Regulation 3/2024 expanded the definition of recognized fintech business models and introduced new risk management protocols. In January 2025, OJK assumed supervision of digital assets and cryptoassets (previously managed by the commodity futures regulator Bappebti), signaling that regulators would no longer tolerate speculative excess or governance lapses in the fintech sector.
Perhaps most tellingly, OJK introduced new regulation for “Buy Now, Pay Later” (BNPL) lending, capping interest charges and establishing stricter debt collection practices. These measures reflected regulatory concern about unsustainable credit expansion. Simultaneously, all fintech lenders were mandated to participate in SLIK, Indonesia’s national credit reporting system, by July 2025, aligning digital credit providers with traditional financial institutions in risk management and transparency.
Andreas Surya, Partner and Director of Investment at Kejora Capital, emphasized the importance of founder selection in an era of scrutiny, “The current funding environment demands selectivity. We need founders who are true industry experts, people who genuinely understand the sector they’re entering. Not founders chasing FOMO (Fear of Missing Out). If you want to enter banking, you must have founders who understand banking. If you’re entering logistics, you need someone who has actually worked in logistics. We also conduct more thorough background checks and integrity assessments. Reference checks alone are no longer sufficient. We look deeper at the founding team’s track record and character because governance failures almost always start with integrity issues.”
For sophisticated investors and founders, this regulatory tightening is not an obstacle; it is a competitive advantage. Companies that achieve early compliance with evolving standards and can credibly demonstrate transparent financial reporting, board independence, and fraud prevention will attract institutional capital disproportionately. Governance, once a checkbox exercise, has become a differentiator.
Profitability Becomes Currency
For years, Indonesia’s startup narrative followed a predictable script. Founders raised capital at astronomical valuations. They burned cash in pursuit of user growth. They promised that profitability would eventually arrive, after network effects had crystallized and markets had consolidated. Investors, seduced by the prospect of thousand-fold returns, participated willingly. That era has concluded.
Willson Cuaca, Co-Founder and Managing Partner at East Ventures, captured the shift in investor expectations.
“The fundamental message has been consistent since we began: focus on the founder. And today, that hasn’t changed. Founders must understand that building a business in a startup is a long-term endeavor. A decision made today doesn’t show results tomorrow; it shows results five or six years from now. When all the governance failures and fraud allegations emerged at the end of 2024, that wasn’t a decision made in 2024. It was a decision made years earlier. The key is to focus early on doing the right thing, because in a few years, when you see the results, it will be clear whether you made the right call.”
Willson continued, “Focusing on profitability is not a new concept. We’ve advised this since 2022. When the global situation changed, we told our portfolio companies to prioritize profitability over growth. And they did, almost all of them are profitable now. But the media tends to amplify bad news more than good news. When a company becomes profitable, that’s not a headline to make. When there’s a scandal, everyone reports it.”
Fore Coffee’s successful IPO is instructive not because it is revolutionary (premium coffee chains are hardly a novel concept) but because of the economics that justified it. By September 2024, the company had generated USD43.2 million (or IDR727 billion) in net sales, growing 135% year-over-year. EBITDA had surged 187% in the same period. The company operated 216 outlets across 43 Indonesian cities, including tier-2 and tier-3 urban centers, plus one location in Singapore. This was not a company burning cash in pursuit of scale. It was a company printing money while expanding.
The market responded with enthusiasm. Retail investors oversubscribed the IPO 200.63 times, representing one of the most robust responses in recent Indonesian equity history. On its first day of trading, shares surged 34%, immediately hitting the automatic rejection upper limit. The signal was unambiguous: disciplined, operationally sound, profitable businesses command a premium.
Following Fore Coffee, Super Bank Indonesia (SUPA), a digital banking platform backed by Grab, Singtel and KakaoBank, moved toward its own IPO listing in December 2025, further validating the thesis that regulatory compliance and sustainable unit economics are now prerequisites for public market access. The IPO window, which seemed permanently sealed in 2024, has cracked open again, but only for founders who have prioritized profitability over vanity metrics.
In establishing profitability benchmarks, Willson emphasized, “Coffee companies achieve 60-70% gross margins. So why can’t tech companies? If you’re building something more sophisticated than a coffee shop, shouldn’t your margins be stronger? Set a benchmark. We use profitable companies like Fore as the standard and ask the next company: when will you hit these numbers? We’re not talking about EBITDA, we’re talking about net profit after tax.”
The implication is stark: the venture capital model, where founders pursue growth-at-any-cost with the implicit assumption that profitability can be engineered later, is no longer viable in Indonesia. Investors and founders alike must recalibrate.
The Merger Renaissance
If the IPO signal communicated a shift in investor preferences, the merger and acquisition (M&A) renaissance demonstrated that alternative exits have matured considerably. In late December 2025, General Atlantic, the USD118 billion global growth investor, closed its acquisition of Sociolla, Indonesia’s leading beauty and lifestyle e-commerce platform, for approximately USD250 million.
The transaction structure reveals the sophistication of contemporary Indonesian exits. Of the USD250 million acquisition price, USD200 million represented secondary purchases from existing shareholders (a dividend for early-stage investors), while USD10 million was injected as primary capital to fund operations. This hybrid approach solved a persistent problem in Indonesian venture capital: the lack of clear liquidity events for early-stage investors. Rather than waiting indefinitely for an IPO, existing shareholders like Pavilion Capital and L Catterton could exit at attractive valuations while newer investors, like General Atlantic, could acquire control stakes at economics that reflected current market conditions.
General Atlantic did not acquire Sociolla to harvest short-term gains. Its thesis centered on three structural advantages: regional expansion potential (Sociolla operates in both Indonesia and Singapore), profitable unit economics, and professional governance. These are precisely the criteria that sophisticated international investors now demand from Southeast Asian startups. The era of acquiring growth-at-any-cost has ended.
Across the Indonesian ecosystem, M&A activity accelerated in 2025. Grab’s acquisition of Chope, the restaurant reservation platform, exemplified how regional super-apps consolidate fragmented categories. Gojek’s historical acquisitions of Loket, MokaPOS, and Kudo demonstrated the same logic: regional platforms with access to capital can acquire adjacent capabilities far more efficiently than building them organically.
“While it is promising, M&A is genuinely challenging in Indonesia. One bottleneck is valuation. When a mainstream corporate acquirer evaluates a startup, negotiations take a long time. Valuations rarely align smoothly. International investors such as General Atlantic and BlackRock demonstrate flexibility in structuring transactions. For founders and investors, we must trust the fundamentals: the opportunity, the market potential. These exits shouldn’t be foreclosed. At the same time, we have to be realistic. Currently, the strongest exit path in Indonesia is the IPO. M&A and secondary transactions exist, but IPO remains the most viable option given current market conditions,” said Surya.
For founders of operationally sound companies, this development is consequential. The IPO path, always uncertain and distant, is no longer the sole ambition. A strategic acquisition from a well-capitalized international acquirer or regional conglomerate can deliver liquidity far more quickly, with less regulatory uncertainty and less exposure to public market volatility. The M&A market has matured precisely as the IPO window has reopened, a healthy balance for ecosystem participants seeking exits.
Where Money Actually Flows
The Fintech Concentration
Fintech remains Indonesia’s dominant startup category by funding. As per Q3 2025, fintech startups secured USD53.5 million across 5 disclosed transactions, representing 32,8% of total equity funding. At the regional level, Indonesia ranked third in Southeast Asia for fintech funding and second in deal volume, capturing 18% of regional fintech funding.
Leading fintech companies continue to demonstrate remarkable scale and resilience. Akulaku, a buy-now-pay-later platform, has raised USD522 million and reached a USD2 billion valuation while generating 14% revenue growth in 2024, reaching USD53 million in annual revenue with USD4.5 million in pre-tax profit. Xendit, a payment infrastructure provider, has raised USD515 million and is expanding into Mexico, Colombia, Brazil, Australia, and the United States by 2026. Kredivo Group, a digital credit platform, has raised USD390 million and launched its own digital bank, Krom Bank.
This concentration in fintech reflects a fundamental reality: Indonesia has 270 million people and limited traditional banking penetration outside urban centres. Digital payment systems, micro-credit platforms, and investment applications address genuine market gaps. Unlike discretionary consumer apps, fintech solutions solve infrastructure problems, a structural advantage that continues to attract capital.
The Profitability Pivot in Consumer Retail
A significant inflection occurred in the first half of 2025. Capital began flowing toward new retail and direct-to-consumer (D2C) companies demonstrating strong unit economics and early profitability. Examples include Hangry (food and beverage D2C), SEIndonesia (consumer goods), Flash Coffee (coffee retail), and One Nutrition (nutritional supplements). These companies share defining characteristics: high-margin direct-to-consumer models, strong customer loyalty, scalable operations, and clear paths to profitability.
In an environment where capital is scarce and impatient, efficiency metrics such as customer acquisition cost (CAC) payback period, unit economics, and burn rate have replaced user growth metrics as investment criteria. Founders of consumer companies that can demonstrate sustainable unit economics now attract capital more readily than founders pursuing hypergrowth at any cost.
Willson offered guidance for founders navigating this new landscape.
“Don’t focus on vanity metrics. Founders get seduced by big numbers like GMV. GMV isn’t revenue. But the GMV looks impressive. That only works when capital is cheap and the ecosystem is nascent. Indonesia passed that stage years ago. We don’t even track GMV in our portfolio anymore. Build real business value. Understand your unit economics. Focus on net profit after tax, not EBITDA. Be adaptive, when economic cycles change, change your metrics accordingly. That’s what separates strong founders from those who get stuck in the past.”
Surya added, “Startups need to be agile in a different way. They can’t simply pursue growth for twelve months straight. They need to alternate, spend time fixing fundamentals, then spend time growing. If fundamentals are wrong, growth will break things. Fix the foundation, grow, then fix problems that emerge at scale, then grow again. This iteration must be fast, but it must also be deliberate. You can’t pause development for a year, but you also can’t ignore foundational issues while chasing growth.”
Green Economy and Infrastructure: Underexploited Opportunities
A recent ecosystem report by ERIA identified an underexploited opportunity in green entrepreneurship. Although 87% of 304 surveyed ecosystem organizations identify as green-focused, only 107 provide green-specific funding. Capital remains concentrated in Jakarta, with persistent gaps in climate-ready financing and technical expertise for non-obvious green businesses: agriculture, waste reduction, and supply chain optimization.
Similarly, Indonesia’s digital infrastructure remains a constraint. In early January 2026, Indosat, Arsari Group, and Northstar announced a 925 million rupiah fibre-optic platform to address a critical gap: broadband connectivity in non-urban regions. As digital services penetrate tier-2 and tier-3 cities, infrastructure investment is becoming a logical destination for patient capital. The return profiles may be pedestrian compared to venture-backed software startups, but the structural necessity ensures sustained capital flows.
The Middle East Nexus: Indonesia’s Next Frontier
A striking trend emerged in 2025 to 2026. Indonesian startups increasingly pursued expansion into the Middle East and North Africa (MENA), framed as a strategy to diversify revenue and access new customer bases amid constrained domestic funding. The rationale is compelling.
MENA attracted USD171.5 million in startup funding in 2025. The Middle East has 240 million Muslims, aligned with 240 million Muslims in Southeast Asia, creating natural alignment around Islamic finance principles and halal-certified products. Xendit, the payment infrastructure provider, has explicitly targeted Gulf markets. D2C brands are scaling into regional export markets with halal compliance certifications.
For sophisticated investors, regional expansion should not be viewed as a distraction from the home market. Rather, it represents a necessary response to capital constraints and market saturation in Southeast Asia. Companies demonstrating competence in cross-border payments, halal compliance, and Islamic finance stand to capture disproportionate value.
Contraction as Feature, Not Bug
Total startup funding in Indonesia reached USD161 million in the first half of 2025, representing a 38 percent decline from 2024. Seed-stage funding collapsed even more dramatically, falling 68 percent from 2023 levels. In Q1 2025 alone, funding contracted 97 percent year-over-year.
These numbers, on their surface, suggest a crisis. They do not. Instead, they reflect rational capital discipline following years of excess. Startups that raised at USD100 million valuations on minimal revenue are now recalibrating expectations downward. Investors, burned by governance crises and valuation resets, are demanding premium risk-adjusted returns. Macroeconomic headwinds persist: global interest rates remain elevated, compressing startup valuations across emerging markets.
Critically, there is no capital shortage for strong companies. Fintech leaders, D2C brands with strong unit economics, and infrastructure plays continue attracting funding. The contraction is selective: early-stage, unprofitable, governance-weak companies face a severe capital drought, while operationally sound companies access growth capital with relative ease. The ecosystem is not broken. It is filtering.
Global Capital Enters
Indonesia’s maturing ecosystem has begun to attract global players that previously stayed on the sidelines. In December 2025, Robinhood Markets entered Indonesia by acquiring PT Buana Capital Sekuritas, a licensed brokerage, and PT Pedagang Aset Kripto, a digital asset platform. Rather than bypassing regulation, Robinhood chose institutional acquisition, signaling confidence in Indonesia’s governance, licensing, and market readiness. By 2027, it plans to offer Indonesian users access to US equities, crypto assets, and its full brokerage suite, expanding global market access for approximately 19 million capital market investors and 17 million crypto traders. For international incumbents, this approach reflects a shift toward compliance, profitability, and institutional rigor over growth at any cost.
Amazon’s entry reinforces this thesis through operational investment. In September 2025, the tech-giant led a USD 51.9 million funding round in Astro, a Jakarta-based quick commerce startup, acquiring a 14 percent stake. The investment reflects confidence in Indonesia’s dense urban markets and on demand consumption patterns. Astro’s unit level profitability, logistics efficiency, and execution track record, supported by Accel, Tiger Global, and Peak XV, align with Amazon’s regional strategy of backing local leaders while building proprietary capabilities, as seen in the parallel launch of Amazon Now in India. Together, these moves signal that Indonesia’s consumer and logistics infrastructure has reached a level of maturity attractive to large scale global capital.
The Regulatory Apparatus: Order Emerges
In a significant milestone, the Indonesian government reported that digital economy tax revenues reached IDR44.55 trillion (USD3 billion) through November 2025. OpenAI was officially designated as a VAT collector for online services, the first AI platform assigned this status globally.
This development signals three concurrent transformations. First, the digital economy has achieved fiscal maturity: taxation is now systematic rather than ad hoc. Second, Indonesian tax authorities are aligning with OECD frameworks for digital services taxation, signalling integration into global governance standards. Third, regulators recognise artificial intelligence’s economic role and are integrating AI platforms into tax collection infrastructure.
For startups, this creates both burden and opportunity. Compliance costs rise, but the formalisation of tax regimes reduces regulatory ambiguity and creates a more level playing field. Founders no longer navigate a regulatory grey zone; they operate within an increasingly codified framework.
The Consolidation Imperative
Indonesia’s e-commerce market illustrates the consolidation logic. In December 2023, ByteDance acquired a 75 percent stake in Tokopedia for over USD1.5 billion, merging the platform with TikTok Shop Indonesia. The combined entity now dominates Indonesian e-commerce while supporting micro, small, and medium enterprises (MSMEs), a consolidation that benefits both parties while reducing competitive fragmentation.
For startups, the implication is stark: competing against well-capitalised regional super-apps (Grab, Gojek, Tokopedia-TikTok Shop) is increasingly difficult. Rather than pursuing aggressive growth in red-ocean categories, founders should identify underexploited categories, develop defensible differentiation, or prepare for eventual acquisition. The acquisition premium will depend on operational metrics: profitability, unit economics, and governance quality. It will not depend on vanity metrics like user counts or growth rates.
2026 and Beyond
The Indonesian startup ecosystem enters 2026 fundamentally recalibrated. Several dynamics will persist:
Selective capital allocation. Funding volumes will remain elevated but highly selective. Categories with structural tailwinds (fintech, agritech, healthtech, edtech, and green technology) will attract capital disproportionately. Early-stage, capital-intensive, governance-weak startups will face a prolonged fundraising winter.
An expanding IPO pipeline. With Fore Coffee’s success and SUPA’s imminent listing, the IPO window has cracked open. Expect 2 to 3 additional public offerings in 2026 from mature Indonesian startups in sectors like D2C consumer brands and financial services.
M&A acceleration. Strategic acquirers, both foreign platforms and regional conglomerates, will aggressively pursue acquisitions. For investors, M&A will become an equally attractive exit as the IPO, particularly for companies with strong operational metrics but limited public market arbitrage.
Regulatory clarity. OJK’s codification of fintech standards, crypto regulation, and BNPL rules signals a shift towards predictability. Companies that achieve early compliance will benefit from regulatory favouritism and access to institutional capital at more favourable terms.
Regional expansion. Indonesian startups will increasingly pursue expansion into MENA, India, and Vietnam. Companies with competence in cross-border payments, localisation, and regulatory navigation will capture outsized value.
The Verdict: Maturation, Not Decline
Indonesia’s startup ecosystem is not in crisis. It is in transition.
The mania of 2020 to 2023, when valuations were divorced from fundamentals and capital was abundant, has yielded to a more disciplined era characterised by profitability over growth, governance over exuberance, and sustainability over scale-at-any-cost. For sophisticated investors and stakeholders, this environment is not a warning signal. It is an opportunity.
Willson concluded with a final call to action, “For everyone in the ecosystem, the message is the same. Build value, not vanity. VCs should assess founders based on integrity and industry expertise, not just enthusiasm. Founders should focus on fundamentals: unit economics, governance, and sustainable growth. We need to create an ecosystem that’s optimistic and disciplined at the same time. The opportunity in Indonesia is real. The fundamentals are strong. We just need patience and discipline.”
Capital is flowing towards disciplined, well-governed companies with clear paths to profitability and regional expansion. The winners, those companies that emerge from this contraction with strengthened market positions and access to growth capital, will define Indonesia’s next decade of technology-driven development. The ecosystem’s maturation is complete. The next phase of growth has begun.