A few years ago, Indonesia's tech sector was unambiguously booming. According to Deal Street Asia, Indonesian start-ups raised over $9 billion in venture capital in 2021. Green-jacketed Go-Jek drivers were everywhere, new unicorns were being minted seemingly every month, and just about everyone had a new idea for an app that was going to revolutionize the economy, change the world and make them rich in the process.
One of Go-Jek's co-founders, Nadiem Makarim, became Minister of Education in 2019 and was expected to push big systemic reforms. Home-grown e-commerce platform Bukalapak went public in 2021, raising over $1 billion at a nearly $6 billion valuation. Go-Jek merged with Tokopedia to create GoTo, a behemoth that stretched across the entire digital ecosystem, then had their own splashy IPO in 2022 which valued the company at around $30 billion. At the time, it seemed like nothing but upside.
The world of 2026 is a very different place. Investment has dried up, with Deal Street Asia reporting that start-up funding fell to around $300 million in 2025. GoTo's stock price has plummeted since 2022, wiping out billions in shareholder value while majority ownership of Tokopedia was sold to China's ByteDance. Index provider MSCI recently warned that if conditions don't improve, GoTo could be removed from its investment indexes. Meanwhile, Nadiem Makarim is facing up to 18 years in prison after a highly controversial corruption trial. How did a promising boom end up taking such a turn?
Interest rates are part of it. When interest rates are low, it pushes investors out of bonds and into higher yielding (and potentially riskier) assets. A lot of Indonesia's tech sector boom was fueled by low interest rates driving venture capital into the start-up ecosystem. After the pandemic, rates started rising and have stayed elevated. This naturally saps some of the liquidity out of the global financial system and has reduced investor appetite for things like Indonesian tech start-ups.
The end of easy money also pulled back the curtain to some degree and revealed that a lot of Indonesia's tech start-ups were not performing as advertised. This includes high-profile frauds like eFishery, an agritech start-up that was valued at over $1 billion at one point and backed by major investors including Temasek and SoftBank. It turned out, the company founder was simply making up revenue numbers and keeping two sets of books. The extent of this fraud and others undermined confidence in the governance and regulatory oversight of Indonesia's tech sector.
But even clearly legit firms, like GoTo, are not living up to expectations and struggling to create value for shareholders. Since going public in 2022, GoTo's market cap has fallen from $30 to around $3 billion and it has yet to post a full year profit. Grab has been angling to buy it, while state-owned investment fund Danantara has also thrown itself into the mix. GoTo clearly serves an important function in the Indonesian economy by reducing transaction costs and boosting spending. But it has so far not been able to do so and consistently be profitable.
To me, this seems to be the real issue with Indonesia's tech boom. Many of the start-ups and products launched over the last decade have struggled to clearly articulate or demonstrate what kind of value they were creating, and for whom. Is it social value for the Indonesian economy and consumers, or is it financial value for shareholders and investors? Can it be both? As we move into the next phase of the industry's development under tighter monetary conditions, and with digital lenders now seemingly carrying the torch, the answers to these questions will become ever more relevant.
