What Is a Startup? A Guide to Startups in Indonesia

If you read a lot of technology news, you have certainly heard about startups. Everyone has a different definition of what a startup is. Most people think of a startup as a small company that has only been running for a few months or even a few years. In reality, deciding whether a business counts as a startup is not that simple. Startups in Indonesia can be found in many fields.

Startup Definition

If you search the internet for the definition of the word startup, you will find many different answers. At first, the word described fledgling businesses that usually worked in apps and technology. Such companies were called startups because they were touted as the big technology companies of the future.

According to Wikipedia, however, a startup is an entrepreneurial business, usually a new and fast-growing one, that aims to meet a market need by developing a viable business model around an innovative product, process, service or platform. You should know that a startup is usually a company designed to develop and validate a scalable business model effectively. At the core of a startup are the concepts of innovation, ambition, scalability and growth. Startups in Indonesia vary widely.

A startup typically offers a service or product that is not yet offered or well known in the market. At the beginning, setting up a startup usually costs more than it earns. Most startups are sponsored by other people, other companies or loans. The single most important element of a startup is arguably its ability to grow.

One expert says the focus of a startup is business growth: a startup is a company designed to scale quickly. With growth as its focus, a startup is expected to grow regardless of its geographic location. This also sets startups apart from small businesses. One thing that still confuses many people is the difference between a startup and an SME (small and medium-sized enterprise, known in Indonesia as UKM). Startups in Indonesia are more than that.

Startups and SMEs can be told apart by how they are financed. A startup is usually a company backed by investor funding. Raising money for a startup is not easy because competition is high. You need a pitch that can catch the attention of venture capital. Clear growth metrics are a big part of seeking funding for a startup. SMEs, meanwhile, raise their funds differently from startups.

That is an overview of startups in Indonesia that are worth knowing about. You can also dream of building a startup with capital loans from the venture capital firms or investors that operate in Indonesia. Many well-known Indonesian startups, such as Tokopedia and Traveloka, also have investors who provide capital to their companies.

Read also: Types of Fintech Startups in Indonesia