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<h4 style="text-align: justify;">Indonesia's tech sector had a frothy 2010 and 2011, but many startups realised in 2012 that trying to monetise eyeballs and clicks is a tough route to profitability. Armed with a new perspective, the sector is now more focused on sustainable business models and delivering breakout value to customers. As the investment environment also matures, multiple opportunities will emerge for investors willing to be flexible in terms of investment structures, and who are prepared to put in business expertise on top of their capital.</h4>
<h5 style="text-align: justify;"><b>The initial hype phase is over…now it’s time to get serious</b></h5>
<p style="text-align: justify;">Like the early days of the Silicon Valley tech boom in the 1990s, the Indonesian tech sector’s first act was characterised by a oversupply of hype and an undersupply of good solid business models. Too many startups placed their faith in being able to monetise a large user base at some unspecified point in the future, and as it became clear during 2011 and 2012 that eyeballs and clicks might not be enough, a Darwinian shakeout took place.</p>
<p style="text-align: justify;">This was a very good thing.</p>
<p style="text-align: justify;">Indonesia now has a much healthier tech sector, led by a number of rapidly-growing online companies who have clearly defined their target segments and who have begun to demonstrate a real ability to make money. Following along behind them is the second generation of Indonesian startups – more focused, more realistic, and far more fixated on delivering services which add real value to the offline and online lives of consumers and businesses.</p>
<p style="text-align: justify;">And as the startups change, so do the investors who fund them. Gone are the days of throwing a hundred thousand dollars at a Groupon clone in the hope that it will pick up enough percentage points of market share to flip to a competitor and exit. In its place is an ecosystem of angel funders, incubators, early-stage funds, mid-stage funds and technology providers who are helping to enhance the technical, marketing and business skills of the tech entrepreneurs so that they can build companies that can thrive and scale.</p>
<p style="text-align: justify;">The next three years will be very exciting times in Indonesia. Customer bases will grow. E-commerce will start to boom. Online payment options will multiply. Unique local online services will emerge. Underpinning all this will be a more methodical approach to managing the startups, driven as much by the discipline of business metrics as by the thrill of new technologies.</p>

<h5 style="text-align: justify;"><b>Indonesian startups often need active investors</b></h5>
<p style="text-align: justify;">The top Indonesian sites today have market values of around US$100 million. While billion-dollar internet companies do not yet exist in Indonesia, more $100m tech companies will emerge over the next three years. These valuations will partly be due to the rising user base (internet users will grow from 55m today to 125m by 2015), partly due to higher levels of online spending by the growing Indonesian middle class, and partly due to improved business focus and discipline.</p>
<p style="text-align: justify;">But the raw fact is that this is an investment market in the relatively early days of its development. Today there are a few hundred Indonesian startups, many of which are still two guys in a garage (or, increasingly often, in a shared incubator office). Apart from a handful of companies which are looking for expansion capital, most startups need mentoring, marketing assistance and help making connections as much as they need investment money: the Indonesian tech sector is still in capacity-building mode.</p>
<a title="Investment environment" href="http://stage.redwing-asia.com/investors/investment-environment/">[Read the full piece]</a>