Jakarta –
Startup companies or startups at the beginning of their formation tend to ‘burn money’. This is done in order to build a top of mind brand and reach the target market.
Mandiri Capital Indonesia (MCI) Chief Investment Officer Dennis Pratistha revealed that currently it has been proven that this money-burning strategy does not always work. Because basically startup is a business that also has to seek profitability.
“Currently, startups must focus on initiatives that have a positive impact on the bottom line to have a path to profitability and achieve self-sustainability. No longer growth at any cost,” said Dennis in a press release, Friday (10/2/2023).
He revealed that currently the world is entering a tech slowdown. Caused by the absence of proper future planning. Then startups tend to expect the period of exponential growth in several sectors triggered by the pandemic to continue when things return to normal.
Next is the absence of innovation produced. For example, offering a product or service that was previously popular in the market.
“Startups can still develop despite facing many challenges. As long as startups build strong and agile business fundamentals, and look for new opportunities, companies will be able to achieve a sustainable business,” said Dennis.
Globally, according to CB Insights in the State of Venture 2022 Report, companies supported by venture capital only reached US$415.1 billion in 2022 or decreased by 35% compared to 2021.
The deepest decline in funding in 2022 occurred in the digital health sector where healthtech startups decreased by 57% (yoy), retail technology startups fell by 52% (yoy), and fintech startups fell by 46% (yoy).
Meanwhile, by region, Asia experienced the biggest contraction, where funding decreased by 40% (yoy). Furthermore, the United States and Europe both fell 17% (yoy).
In 2023, startups need to pay attention to operational costs first. This does not necessarily mean reducing growth, but it can mean re-evaluating business processes with an efficient structure. “On the operational side, be it workforce, marketing, and cloud infrastructure, startups must ensure that they choose the most cost-effective model and don’t use more than they need,” said MCI Chief Financial Officer Rino Bernando.
Rino said that startup people must hone their competence and join the professional community.
Furthermore, startups are also required to innovate and solve problems. Currently investors are focusing on business fundamentals with an emphasis on earnings. Because of that startups must have the right business model in order to generate income in order to survive.
As Founder and CEO of iSeller Commerce Jimmy Petrus revealed that the collaboration with MCI and the Mandiri ecosystem resulted in a closeness to realizing iSeller’s vision to contribute to the Indonesian economy.
Ayoconnect Founder & CEO Jakob Rost said that currently the platform is trying to encourage financial inclusion in Indonesia through sustainable synergies with regulators and the banking industry. Product and technology development is important, as well as improving leadership qualities and empowering teams.
Watch Video “Behind the Storm of Startup Business Layoffs“
(kil/zlf)
