Indonesia is one of the largest archipelago in the world, and in tech, it doesn't want to be left behind. Its government believes that the republic can ramp up its digital community by kicking off a number of initiatives to make this happen.
On June 17th, 2016, it is seeing a government-backed initiative called the "1,000 startups movement." The program's goal is to grow 1,000 startups until the year 2020.
It’s designed as a roadshow consisting of a series of workshops, hackathons, bootcamps, and incubation programs. The program is designed to be like a funnel in which will see individuals progress from participation in basic entrepreneurship seminars, to building prototypes and eventually to joining an incubation program.
From June to September, the movement will take off in Jakarta, Yogyakarta and Surabaya. From September to December, it'll focus on Bandung, Semarang and Malang. And by early 2017, the program will take place in Medan, Pontianak, Denpasar and Makassar.
The goal is to have 200 new startups emerge across those 10 cities each year. Starting in 2016, the number would come up to 1,000 startups by the end of 2020.
As for the initiators, they were the Indonesia's Ministry of Communication and Information technology, and Kibar, an organization pronouncing itself as a tech startup ecosystem builder. The initiative first came to live when Kibar partnered with GSV Labs to set up accelerator programme for Indonesian startups in Silicon Valley
Pembukaan secara resmi Kick Off Gerakan Nasional 1000 Startup Digital (17/6) -hm.f pic.twitter.com/GgC6UpK0KY
— Kementerian Kominfo (@kemkominfo) June 17, 2016
The History And Math
Today's economic movement shifted a bit if compared to yesteryear and beyond. Corporate businesses may have a stronger foundation and bigger influence, but startup communities are blooming out of nowhere - and increases by the number each time anyone of them failed.
Kibar's mission, as stated by its Chief Executive Yansen Kamto, is to build an end-to-end ecosystem for young Indonesian entrepreneurs by providing ignition programmes
Indonesia's plan to have 1,000 startups is one of the ways to leverage the community by helping potential individuals to achieve their dreams, and in overall to help the growth of the industry and the economy. As good as it can be, the plan is indeed ambitious. Especially when considering the goal to achieve a total valuation of $10 billion.
History has a lot to tell. If we learn from them, we can conclude that 90 percent of startups will eventually fail. Most failure are due to either their first year, the second or the fifth. This comes to an extent that the golden rule of thumb cited "90 percent of startups will fail".
If we do the math, the ambition could be a success if 100 startups survive the program in the long term. Each of that 100 should grow to at least a "centaur" with a valuation of $100 million.
To create 1,000 qualified startups, the government would need to plant "10,000 seeds," said Andi Boediman from venture capital firm Ideosource.
Alternatively, the movement could also achieve its total valuation goal by having at least 10 startups "unicorns" with each valuing at $1 billion or higher. This is inline with the government's target for at least 11 of them to become successful in terms of user base, although the Minister of Communication and Informatics Rudiantara didn't give a specific number.
So Indonesia's ambition for 1,000 is a great deal of ambition.
Indonesia's entire startup history has only produced a handful of companies that succeeded in reaching the unicorn status. Some of them are Traveloka, Tokopedia and Go-Jek. And if we include numbers, Indonesia currently accounts at about 3,000 startups.
And another challenge, and this is unfortunate, the movement does not have any monetary support from the government. A spokesperson for the "1,000 startup movement" said that the government's support doesn't include any monetary backing, it's "just an endorsement," she said.
A Restructure To Support
Funding is crucial since tech initiatives do benefit from exposure and training sessions supplied by workshops and incubators. This is the big reason why government-backed program is essential to their success.
"Since the beginning, we have always believed that the government has to be present in the ecosystem. They should support by creating regulations and policy that favor the ecosystem,” said Kamto.
But without seed funding or good cash flow, those initiatives will just remain as ideas. Proper budget allocations should be given to get potential startups off the ground.
So to make the program up and running, Kibar is on the move to find sponsors to gather massive support based on the goodwill from the community of event organizers, investors and business mentors. This is for the program to be able to sustain its five years initiative.
If everything goes well, these startups could contribute up to 1 percent to Indonesia's GDP (Gross Domestic Product), which was an estimated $895 billion in 2015, and also create around five million new jobs. Rudiantara said the government is also considering to allow startups to merely register with startup associations such as the Indonesia E-Commerce Association (idEA), instead of applying for the usual business licence. He said that the government is still looking at ways to structure such scheme.
