STARTUP

What is a Startup Company? Who are they & how is it different from normal business

Did you know that Indonesia is the host of 2,200 startups? This figure also places Indonesia in the fifth position with the most startups in the world! That’s amazing, huh?

In addition, Indonesia is included in the top 50 friendly countries for startups.

The existence of startups and high development in Indonesia proves that this startup business is very promising. However, before reaching this point, the startup business has a long journey.

In this article, we will introduce what a startup is. We will also take you into the history and development of startups in Indonesia. As well as helping you further identify the characteristics of startups.

What is a Startup Company?

A startup company is a start-up company that is currently in the development stage. Good development in product, service, market share, business model, etc.

A startup is like a company that is still a teenager, there are still many changes, and still in the stage of maturity. If the startup is mature, it can be considered a real company.

Well, to be more clear, let’s borrow the definition of startup according to Neil Blumenthal, a startup is a company designed to solve problems where the solutions are unlimited and success is not guaranteed.

Sound difficult? Let’s dissect the above understanding slowly…

  1. Designed to Solve Problems

In contrast to ordinary companies that issue products according to market demand. What startups produce, whether in the form of goods or services, highlights the problems that exist in the market. This makes startup products a solution to a problem that many people feel.

That’s why startups are known as problem solvers and have the characteristic of solving problems using technology.

For example, for transportation matters, you might prefer to use one of the online motorcycle taxi services in Indonesia.

Or when you want to buy goods, you might first search on one of the e-commerce sites, such as Shopee, Tokopedia, BliBli, and so on.

Not only that, there are many digital products that are useful for you, such as news media, ease of online transactions, communication, etc. Such digital service or product providers are usually startups.

Hmm, if you look at all the examples above, it looks like a startup company is like an online-based business, right? Then, is a startup the same as a digital or technology company? Certainly not.

Not all startups are tech companies. The reason is that startups use technology to run their business.

Not only developing, but technology also plays a very important role for startup companies to solve problems according to their goals.

  1. Wide Solution

The solutions brought by startup companies do not just solve one main problem. It also provides solutions to other specific problems related to the main problem.

For example, e-commerce in Indonesia is one proof of solving the problem of limited offline buying and selling of products. The solution is to bring together sellers and buyers in online stalls.

But the solution doesn’t stop there. To survive, every e-commerce always provides other solutions to consumers. For example, such as free shipping, user-friendly display, data security, and so on.

Although not related to the main problem, these things are very important and have an effect on business continuity.

  1. Success Can’t Be Guaranteed

Lastly, startup companies are high-risk businesses. And indeed not a few startups eventually collapse due to various things. One of them is a product or service that is less solution for the target market.

Wow, that’s very much related to the previous discussion, isn’t it? But that doesn’t mean startups can’t be successful. There are so many startups that can compete and even get admirable titles, such as unicorns, decacorns, and so on. So, don’t be afraid to start a startup company business, OK!

Startup Travel History

Although startup companies are fairly new types of business, their presence is not without history. There is an interesting story behind the fast-paced startup industry today.

  1. Dot-com bubble

The dot-com bubble was a time when internet-based companies attracted investors so much that they had high stock values.

Occurred in 1998-2000 in the United States, when the internet was at its peak of fame and was increasingly used by various groups.

At that time, the internet was considered an extraordinary new invention and had a bright future.

From there, many new companies emerged and made the internet the main driver, which was called startup companies.

Usually, to better show the “startup side”, this company adds an e prefix or a dot-com suffix. Well, this triggers a very tight competition.

Every startup has not attempted to sell its products or services. Rather, it is more focused on being known by many people first.

For example, by placing advertisements, providing promos or discounts, free services, and all unmitigated marketing processes. The hope is that the more familiar startup companies are, the more customers they will have in the future.

But as it turns out, this marketing competition has caused many companies to be unable to manage their finances properly, not to make a profit, and eventually to die.

The high competition for startups at that time and the bankruptcy of many companies were likened to the bursting of the dot-com bubble.

  1. New Face of Startup

That which passes, let it pass…

Now, these dark times are being paid off with the company’s rapid growth. Starting in the United States, then spreading to other countries.

In Indonesia itself, the growth of startups is growing rapidly and is accompanied by a large number of digital users.

Startups currently exist in almost every industry, such as clothing, food, media, education, health, finance, transportation, and so on.

According to MIKTI (Indonesia Digital Creative Industry Society) in the Mapping & Database of Startup Indonesia 2018, there are three areas that are the busiest being engaged in by Indonesian startup companies, namely:

  • Economics and trade: marked by the massive emergence of e-commerce startup companies.
  • The field of fintech (financial technology): exists because of the use of mobile-based applications that make it easier for users.
  • Game or game field: startup companies in this field are popular because making games is considered easier and has a broad target market.

In addition to the three fields above, there are still many industries that are controlled by startups. This development is supported by the 1000 Digital Startup Program, and other startup incubators. Due to the rapid increase in companies, Indonesia has also been helped by this digital economy.

Research from INDEF (Institute for Development of Economics and Finance) said that the digital economy contributed 5.5% of Indonesia’s GDP in 2018 and managed to absorb 5.4 million workers.

  1. The Future of Startups

It seems that it is true that currently, startups are businesses that promise a bright future. With very high internet usage, Indonesia has become a very fertile startup stall.

Imagine, Indonesia could have one decacorn startup company and four unicorn startups. Of course, it really helps the internet-based economy in Indonesia, right?

In line with this, Google’s report in e-Conomy SEA 2019 shows the economic value of the internet in Indonesia in 2019 has crossed 40 billion dollars. It is estimated that this value will pass the 130 billion dollar mark by 2025.

5+ Reasons Why It’s Called a Startup

There are several ways to tell what a startup company is and what isn’t. This is because startups have their own characteristics, as follows.

  1. Innovative and disruptive

The main characteristic of a startup is innovative and disruptive. Innovative means an update or new creation. Meanwhile, disruptive is changing a pre-existing system.

The product or service offered is mediocre? It’s not really a startup! Startups must be able to provide solutions that are “different” from the previous ones, in short, anti-mainstream.

So that the innovations created are in line with market needs, startups must always look from the consumer’s point of view first.

So that the idea that is run is not in vain. This point is closely related to the concept of customer value. For example, one of the transportation startup companies in Indonesia, Gojek.

In the past, when we wanted to use a motorcycle taxi, we had to find it ourselves and bargain the price until we got into a fist fight.

Now we can easily find motorcycle taxis online, complete with prices that are adjusted to the distance traveled.

From the example above, it can be seen that Gojek brings disruptive innovations or can change the existing system. The old conventional method has been replaced by a new system brought in by startups.

For information, the use of the best accounting software as a tool for startup needs is one form of this innovation. One of its features in the form of a warehouse stock application, it makes it easier for startup company stock management.

  1. Have a website and go mobile

When companies or shops flock to go online, it’s not for startups. Basically, startup companies use technology to grow their business. That’s why since the beginning the startup has been in the online realm.

For a startup company, having a website as an online base is mandatory. The use of the website is not just a formality, but plays a lot of things.

Starting from branding, customer education, promotional media, and even a place to sell products or services.

Not only online, but startups usually have read about the opportunity to go mobile. Go mobile is a very large field for startups to attract consumers.

The research above shows that by 2025, as many as 80% of Indonesia’s population is already using mobile-based internet. With such a large market, it is natural for startups to have their own mobile applications.

  1. There are investors

Investors play an important role in startup growth. Investors are needed by startups for several things, such as initial capital injections, development, and expansion.

Because usually startup companies are founded with amazing ideas, but not infrequently they have limited funds.

However, investors do not give money for free. Surely there is a return that investors want.

Then, what are the types of startup company investments that you must know? Here are some of them:

  • Ownership shares. It’s like buying shares. Investors provide an amount of money in exchange for a few percent of shares, so investors can also make decisions when managing startups.
  • Profit-sharing or profit-sharing. Investors have the right to receive profits according to their investments and must be prepared to accept losses as well.
  • Returns according to the amount invested. Startups must be able to return money and interest from investors within a certain time.

Investors are usually more daring to fund startups that have the opportunity to grow, even though in the early stages of startup the possibility of losing is very high.

But all will be paid off with a fast startup development and has many users.

  1. Undergoing an Incubator or Accelerator Program

What is a startup incubator? So, this program aims to help the development of startups in the early stages. This program usually consists of training, mentoring, to funding.

By following the incubator, startup companies can learn how to manage and develop their business models. Because there are not a few startup cases that have brilliant ideas but are weak in terms of management.

This guidance is carried out until the startup business is considered stable and ready to be managed independently.

Meanwhile, an accelerator is a program to accelerate the development of a startup company. Startups that follow accelerators usually already have a mature idea and are ready to run.

Accelerated by connecting startups and professional mentors. Usually consists of financiers, investors, business experts, or senior startup founders.

Accelerators are considered more exclusive than incubators with a more stringent selection level. Business ideas brought by startups will be processed and matured. In addition, it will be built in less time.

In addition to developing a business, participating in these programs is also used by startup founders to expand connections. Especially to investors and startup communities in Indonesia.

  1. High Flexibility

Startup innovation is not only at the beginning of its establishment, but also must be sustainable in order to compete with competitors.

Startups are always developing, innovating, and dynamic according to market needs. That’s why startups are famous for their high flexibility.

This really distinguishes startups from mainstream companies that are rigid, have convoluted bureaucracy, and are less able to adapt to change.

Because they are customer-oriented, startups often “catch the ball” by adjusting their internal workings.

For example, a minimalist organizational structure, operational systems according to needs, always updating market research, remote work systems, multitasking, and fast-paced decision making.

Even to further improve their performance, startups will not hesitate to rebrand if necessary. Where this is very rarely done by companies in general.

  1. Fast Business Growth

One of the reasons why it is called a startup is to have fast business development. This is because the previous points, namely, because of innovation, going mobile, utilizing technology, being easy to adapt, to having investors, make startups able to develop rapidly.

This development aims to turn startups into technology-based companies. If likened to a startup, it is the “teenage” of a company.

When a startup can monopolize an industry, it can be called a company.

Like, Google. Starting as an algorithm project to build a search engine, Google has successfully turned from a startup into a technology company.

With the help of investors, Google penetrated into other sectors of the internet industry. Like, such as issuing email services with Gmail, advertising with Google Adwords, AdSense, and so on.

In addition, startups can also be distinguished based on their growth phase. Want to know what the differences are in each phase of startup growth? Let’s see them one by one:

  • Cockroach or cockroaches, startups that are usually newly released, have a high survival rate and are very active in seeking investors or funding.
  • Ponies, the startup funding is already worth $10 million and is still working to scale it up.
  • Centaurs, symbolized as Greek mythological creatures (human half horse), have a valuation value of around 100 million dollars and are considered to have sustainable or sustainable products.
  • Unicorn is a predicate startup that has a valuation of over 1 billion dollars! In Indonesia, several startups have won this title, for example, Tokopedia, Traveloka, and Bukalapak.
  • Decacorn is aimed at startups with a valuation level of up to 10 billion dollars. At this level, startups are very likely to expand to other countries and begin to dominate the market.
  • Hector, a fully-fledged startup. Usually, the valuation level is already over 100 billion dollars. This company has successfully monopolized the industry at the international level, such as Google, Apple, Microsoft, etc.

More fully, a startup can be said to have “graduated” and become a company when it meets the following requirements:

  • The startup age is more than 3 years.
  • There are acquisitions from larger companies.
  • Has many offices.
  • Has more than 80 employees and a board of directors of more than 5 people.
  • The value of income is more than 20 billion dollars per year.
  • Or if there are company owners who sell their private shares.

What are some examples of startup companies in Indonesia?

You must be familiar with names like Grab, Bukalapak, and Zenius? Naturally, there are already many popular startup companies in Indonesia.

Uniquely, the startups that are developing in Indonesia are very varied in their fields. Starting from the trade sector to health and agriculture.

Well, here are some examples of startup companies from Indonesia:

  1. Gojek – Who doesn’t know Gojek? This startup company engaged in transportation has been established in 2010 and has become one of the pioneers of online motorcycle taxi applications in Indonesia.
  2. Tokopedia – This startup is one of the best online store platforms in Indonesia. In addition, they also recently merged with Gojek and formed GoTo.
  3. Traveloka – This startup is arguably the strongest player in the online travel industry in Indonesia. The services they offer also vary. Starting from booking plane tickets to booking tickets for tourist attractions.
  4. Ruangguru – Do you often see its advertisements on TV? Understandably, currently, Ruangguru has transformed into the most dominant online education startup company in Indonesia.
  5. HaloDoc – HaloDoc’s name is already attached to the online health application. No wonder, because HaloDoc does offer a variety of interesting services. For example, direct consultation with a doctor.
  6. Seeds – If you like investing, you must be familiar with Seeds. This startup company can help its users to invest in mutual funds easily and practically.
  7. TaniHub – Do you want to buy fresh vegetables? This one startup can help you. Because TaniHub sells a variety of fresh food ingredients that come from farmers in Indonesia.

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