Fintech take on energy and agriculture challenges
Fintech continues to flourish, as Indonesia awaits the birth of its fifth unicorn. Hundreds of new startups are emerging, with some taking on the country’s energy and agriculture challenges. In addition, while certain parties encourage receiving funds only from local companies and stakeholders, others have argued the benefits of opening up to foreign investors.
- A number of parties have suggested startups should only receive funds from local investors, but others suggest it would be beneficial to open up to foreign investors. So which one should they choose?
- According to Tokopedia CEO and Co-Founder William Tanuwijaya, both local and foreign investors are equally important and can complement each other. He emphasised startups not to be anti-foreign investment, because investors might only see Indonesia as a consumer market rather than a source of digital innovation.
- According to William, foreign funds will help create companies like Go-Jek, Tokopedia, Traveloka and Bukalapak, which in turn will create more jobs. This environment will also have the potential to educate new digital talents. “This is the snowball effect we want to create,” he said.
- William gave the example of China and the United States. In China, several foreign applications are banned but they still receive foreign funding. Mark Zuckerberg of Facebook also receives investment from Russia and Hong Kong.
Five unicorns by 2019
- Mr Rudiantara, the Indonesian Minister of Information and Communication, has a similar opinion. He said it does not matter where the investment is coming from, the important thing is the investment itself. “Businesses run because of investments, therefore creating more jobs. This is the real goal.”
- He is confident more unicorns will be born due to the large investment interest in startups, and that Indonesia will have five unicorns worth over US$ 1 billion by 2019.
- “We already have four, we just need one more,” he said.
- Indonesia is the largest energy source in ASEAN and has the best sources for geothermal energy (volcano) and hydropower (water). However, Indonesia’s energy security has been declining in recent years.
- The reason, the gap between energy availability and the rapid increase for need. Based on data released by the World Energy Council in 2014, Indonesia is ranked 69th of 129 countries for energy security. Energy security includes three aspects: availability of energy sources, affordability, and continuation of new energy development.
- Departing from this, Digitaraya and New Energy Nexus SEA announced a partnership to showcase support for new initiatives in the hope that this cooperation will spawn new startups in the energy field. Both parties will also carry out their mission to provide in-depth information programs on Smart Energy.
- “Indonesia has great potential to be a leader in energy transition. New Energy Nexus SEA is delighted to work with Digitaraya to facilitate this transition and we look forward to seeing entrepreneurs change the concept that has prevented turning this into a feasible business, “said Stanley Ng, Program Manager of Nexus SEA.
- Smart Energy is an intelligent integration of renewable energy sources with low or no carbon emissions (solar, wind, sustainable biomass, hydro), efficient distribution and transmission (smart and cross-border grids, energy markets, infrastructure), and optimal consumption (demand-side management, storage, smart meters, prosumer), all of which are the future of the energy sector.
- In addition, the system also maximizes efficiency and reduces costs. Technology has proven to be helpful in energy development, but limited business model, software, finance, and innovative services are challenges that impede energy distribution.
- “At Digitaraya, our focus is to support a generation of future Indonesian entrepreneurs who are eager to build innovative solutions to address the most pressing challenges in Indonesia,” said Nicole Yap, VP Strategy Digitaraya.
- This cooperation is in line with the vision and mission of the National Movement 1000 Digital Startups.
- Two years ago, farming startup Eragano was given a special award as The Best Agriculture App in The NextDev 2016 startup competition held by Telkomsel.
- Eragano has become increasingly popular, with over 200,000 farmers in Central Java using the services and solutions offered by this startup created by Stephanie Jesselyn and Aris Hendrawan.
- The services include purchasing production facilities, the sale of crops, smart digital cultivation assistance, extensive capital access, easy access to farming insurance and agricultural information.
- Eragano’s Chief Executive, Stephanie Jesselyn, said that the most popular features of the mobile app are articles and frequently asked questions.
- “But the loan feature is also popular,” said Stephanie. She said the average farmer borrowed between Rp9 million to Rp25 million. The farmer will return the loan by selling crops to Eragano.
- She said the application cut the middleman who make it difficult for farmers. She claims the startup has not had any problems so far and revealed most farmers are happy with Eragano’s solution.
- Stephanie explained by using a gentle approach, farmers are willing to accept this new innovation and they understand they must move forward in their profession. “With enough socialisation, 90 percent of farmers want to join us,” she said.
- After two years, Eragano wants to expand its networks from Java to Nusa Tenggara, Bali and North Sumatra. Eragano is also looking into exporting crops abroad.