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The Uptake | Bang for your buck

Written by The Uptake Published on   2 mins read

Capital efficiency is the order of the day.

Hi, it’s Edmund.

Last week, I had an interesting chat with Cynthia Krisanti, director of Lestari, an innovation accelerator based in Indonesia. She shared her views on the country’s evolving startup ecosystem and highlighted several noteworthy developments in Indonesia’s maturing startup landscape.

One trend she highlighted was how more startups have been moving into tier-2 and tier-3 cities in Indonesia in recent years. Another observation she made was how investors in Indonesia are shifting their focus from B2C to B2B. And why is that? B2B startups are generally more efficient in terms of fund usage and equity, she explained.

This makes a lot of sense, especially in the current macro environment, rife with inflation, interest rate hikes, and geopolitical crises. It’s no surprise VCs are now scrutinizing capital efficiency, which measures how efficiently a company uses its capital.

In previous years, growth was prioritized by investors. But now, VCs want to see profitability. And startups have entered a stage that calls for them to balance long-term growth and short-term profit.

These aren’t easy times for startups. They have to contend with the hardest fundraising climate in over a decade. Following a record year for venture financings and IPOs, the tech financing market has largely been frozen in 2022, particularly at the late stage. At the earlier stages, companies are being forced to show a more efficient sales model and strong revenue retention in order to capture investor interest.

Meanwhile, if you want to read more about Indonesia’s startup ecosystem, check it out here.


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