Indonesia's VC Market Set for Steep Plunge in 2023

Indonesia's VC Landscape in 2023

Jakarta, Indonesia - Indonesia's venture capital ecosystem is projected to see a significant pullback this year, according to a new report from AC Ventures and Bain & Company.

The report forecasts VC deal value could decline to 80% in 2023 compared to last year.

Several factors are driving the sharp drop, including worsening macroeconomic conditions globally, rising interest rates, and weaker consumer and business confidence levels.

Challenges Behind the Drop

The report shows that large deals above $50 million plunged 88% versus 2021. However, smaller deals under $10 million saw healthy growth.

Investment trends shifted toward ESG and climate tech, emphasizing electric vehicles and battery technologies.

A few sectors bucked the downturn, as aquaculture deal value grew 1.2x and health tech jumped from $8 million in H1 2022 to $51 million in H1 2023. This excludes Halodoc's $100 million series D round in July.

While Indonesia's startup funding environment has cooled significantly, smaller deals continue. Key sectors like sustainability and healthcare are also attracting investor interest despite broader VC market challenges.

As macro conditions stabilize, Indonesia's strong fundamentals and demographics could reignite more robust VC activity. But deal flow is down-shifting as investors grow more selective amid global uncertainty.