4 min read
- Lack of quality deals in Indonesia is a critical gap that multi-sector stakeholders need to address
- ‘Scalable entrepreneurs’ – challenges and opportunities to scaling impact business in Indonesia
- Breaking out of comfort zones – ecosystem funders and enablers have to become role models and step outside of their cities to build the social entrepreneurship environment
Despite the increasing frequency of social investment activities in Indonesia, lack of quality deals is still being cited as one of the largest issues within the ecosystem. To further support our members in addressing this gap, AVPN, with the support of YCAB Foundation, organised a focus group discussion in Jakarta. Led by Kaitlin Shilling and Chrisma Albandjar, the session was attended by both AVPN members and non-members with varying degrees of experience in the topic. The discussion revolved around these questions:
- What are the components of a successful entrepreneur? What makes them scalable?
- How to catalyse more interest and resources from the multi-sector to grow social enterprise hotspots outside of Jakarta, e.g. Bali, Makassar, or Yogyakarta?
‘Scalable’ entrepreneurs: mindset, business model, and the ecosystem
The recurring factor brought up during the discussion was the importance of the entrepreneur’s mindset to building a scalable business. Although home to more than 90% of MSMEs and a growing number of start-ups, Indonesian entrepreneurs are not always willing to scale up due to existing market challenges. Despite advances to encourage entrepreneurship, the formalisation of social enterprises in Indonesia is still largely underdeveloped.
In addition to this, some participants concurred that the sustainability of a business is more of a priority, given that many of the social enterprises in Indonesia are around 5 years old or younger. A participant pointed out that the validity of an enterprise’s business model and how likely that model will survive could be more important to focus on.
Increasing the numbers: catalysing the uptake of social enterprises in local ecosystems
Challenges to promote social entrepreneurship in Indonesia are varied; One of the compelling factors is the lack exposure to the concept outside of Java. At times, aspiring non-urban entrepreneurs also do not know that business returns with impact can be married. Participants also pointed out that many local impact businesses which they have encountered usually lack capital, business skills, and that they generally need to refine their business model further.
On the other hand, ecosystem funders and enablers based in Jakarta and other economic hubs see the risk of investing resources outside of their cities, as monitoring can be an issue. In attempts to find a happy medium, many participants referred franchising as a possible way to address this gap, where ecosystem players in Jakarta can partner with local champions to develop the ecosystems. For example, universities were looked upon by the participants as a possible instrument for knowledge disseminator, alongside developing empathy in the localised ecosystems. A mutual understanding and dialogue regarding government’s plans on developing economic hotspots may also assist in gearing the correct resources.
Investors and mentors: the need for more local champions
In the past couple of years, there has been a tremendous effort done by various organisations and businesses to increase the presence of local investors and mentors to the start-up scene in Indonesia. However, participants share that due to the vast size of the country, many non-urban entrepreneurs still do not have the same chance to consult as their counterparts in Java, as investors based in the capital are not incentivised to do so coupled with higher transaction costs. By understanding these challenges, local investors promoting entrepreneurship and impact could respond by creating supportive structures to help their own social enterprise ecosystem to grow.
Lastly, quality metrics and baselines for social enterprises are currently still missing from the sector. This in itself may already prove as a challenge to mentors and investors wanting to contribute. As for how the participants envision its design, aside from being simple, the metrics should also be tangible, so that localisation for each ecosystem and/or impact goals is achievable.
In support of the sector, AVPN is planning to expand its network to more organisations in 2018. Alongside this, our Knowledge Centre will be conducting a research on the growth of social enterprises and impact maximisation through collaboration. To learn more about this, or to be connected with our members on the ground who are doing work in this space, please reach out to firstname.lastname@example.org for enquiries.