Vantage Point: 2024 will see Indonesian tech startups balance growth and profitability goals

Vantage Point: 2024 will see Indonesian tech startups balance growth and profitability goals

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The Vantage Point weekly newsletter will be taking a break from your inboxes. In our 108 editions so far, we have presented insights and analysis of key developments related to the digital economy space in SE Asia, particularly Indonesia. You can access all the Vantage Point weekly posts here. We will be back with updates on Vantage Point soon!

2023 proved to be a challenging year for SE Asia’s technology startups, which faced not only a tight funding environment but also an ever-increasing scrutiny of profitability. The overall market environment led to a significant rationalisation, especially for cash-burning businesses such as e-commerce and ride-hailing.

In fintech, another well-funded sector, there has been a meaningful switch away from P2P lending, which saw some signs of asset deterioration in certain segments, more notably in the agricultural space. The real killer growth area for fintech has been in the buy-now-pay-later space, which was mostly focused on retail and to some extent MSMEs. 

The year also saw Indonesia score fairly successful IPOs with two geothermal listings including state-owned Pertamina Geothermal Energy PT and Barito Pacific-owned Barito Renewables Energy – both registering spectacular stock market performance. The EV battery-related space saw some large-sized listings with the offerings of Trimegah Bangun Persada and Merdeka Battery Materials. 

In 2024, the funding environment is likely to remain relatively tight and digital economy companies will continue for the most part to focus on profitability.

Several major players will have reached adjusted EBITDA breakeven in Q4 2023 or in Grab’s case, Q3 2023, and the focus will now move to cashflow breakeven. In Grab’s case, this is expected to happen in the second half of 2024. The next milestone would be net profit, which for most players remains a 2025 story. 

Edited by: Padma Priya

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