Growth Startup in Indonesia

Tokopedia Company

Arranged By:
Group 4

1. Ryan Maulana Saputra (4518012110)

2. Nurhikma Aurellia Damayanti (4518012112)
3. Fitriyani HS (4518012113)
4. Nutfainna Ahmad Madika (4518012123)

3 Management D

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 TABLE OF CONTENT

Cover .......................................................................................................................................... 1

Table Of Content........................................................................................................................ 2
Preface........................................................................................................................................ 3
CHAPTER 1 FOREWORD
A. Background ....................................................................................................................... 4
B. Problem Formulation ........................................................................................................ 4
C. Writing Purpose ........................................................................................................................... 4
CHAPTER 2 DISCUUSSION

A. Definition of Startup .......................................................................................................... 5

B. Startup Training ................................................................................................................. 7

C. Startup Ecosystem .............................................................................................................. 8
D. Startup Investing ................................................................................................................ 9
E. Unicorns ........................................................................................................................... 11
F. The Startup Business in Indonesia ................................................................................... 11
G. Tokopedia ........................................................................................................................ 13
CHAPTER 3 CLOSING

A. Inference .......................................................................................................................... 16

REFERENCES ....................................................................................................................... 17

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 PREFACE

Assalamualaikum Warahmatullahi Wabarakatu…

Praise be to God Almighty for the blessings of his grace, and that we were given the opportunity
to able to complete this paper work entitled “Growth Startup in Indonesia Tokopedia”.

This Paper is structured so that readers can know Growth Startup in Indonesia. This paper was
compiled with help from various paties. Both parties come from outside as well as from parties
concerned itself. But hopefully these papers can be finally resolved.

Hopefully this paper can give a broader insight to the reader. Although the paper has
advantages and disadvantages. Thank You

Wassalamualaikum Warahmatullahi Wabarakatuh…

Makassar, 19 September 2019

Author

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 CHAPTER 1

FOREWORD

A. Background

A startup or start up is a company or project initiated by an entrepreneur to

seek, effectively develop, and validate a scalable business model. Hence, the concepts
of startups and entrepreneurship are similar. However, entrepreneurship refers to all
new businesses, including self-employment and businesses that never intend to grow
big or become registered, while startups refer to the new businesses that intend to grow
beyond the solo founder, have employees, and intend to grow large.

B. Problem Formulation
1. What is Startup?
2. What is Unicorn?
3. What Is Tokopedia?
4. How Much Unicorn Invest in Tokopedia?

C. Writing Purpose
The Purpose of mamking this paper the reader will understand and be able to explain :
1. Startup
2. Unicorn
3. The Growth Startup in Indonesia

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 CHAPTER 2

DISCUSSION

A. Definition of Startup
A startup or start up is a company or project initiated by an entrepreneur to
seek, effectively develop, and validate a scalable business model. Hence, the concepts of
startups and entrepreneurship are similar. However, entrepreneurship refers to all new
businesses, including self-employment and businesses that never intend to grow big or become
registered, while startups refer to the new businesses that intend to grow beyond the solo
founder, have employees, and intend to grow large. Start ups face high uncertainty and do have
high rates of failure, but the minority that go on to be successful companies have the potential
to become large and influential. Some startups become unicorns, i.e. privately held startup
companies valued at over US$1 billion.
1. Startup Actions
Startups typically begin by a founder (solo-founder) or co-founders who have a
way to solve a problem. The founder(s) of a startup will begin market validation by
problem interview, solution interview, and building a minimum viable product (MVP),
i.e. a prototype, to develop and validate their business models. The startup process can
take a long period of time (by some estimates, three years or longer), and hence
sustaining effort is required. Sustaining effort over the long term is especially
challenging, because of the high failure rates and uncertain outcomes.

2. Design Principles
Models behind startups presenting as ventures are usually associated with
design science. Design science uses design principles considered to be a coherent set
of normative ideas and propositions to design and construct the company backbone. For
example, one of the initial design principles in effectuate is "affordable loss".It's better
to first make a must-have for a small number of users (early adopters) than a nice-to-
have for a large number of users. It is much easier to get more users than to go from
nice-to-have to must-have.

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3. Heuristic and Biases in Startup Action
Because of the lack of information, high uncertainty, the need to make decisions
quickly, founders of startups use lots of heuristics and exhibit biases in their startup
actions. Biases and heuristics are parts of our cognitive toolboxes in the decision
making process, and they help us to take a decision as quick as possible under
uncertainty, but sometimes become erroneous and fallacious.

Entrepreneurs often become not only overconfident about their startups but also
about their personal influence on an outcome (case of the illusion of control).
Entrepreneurs tend to believe they have more degree of control over events, discounting
the role of luck. Below are some of the most important decision biases of entrepreneurs
to start up a new business.

1. Overconfidence: Perceive a subjective certainty higher than the objective

accuracy.
2. Illusion of control: Overemphasize how much skills, instead of chance, improve
performance.
3. The law of small numbers: Reach conclusions about a larger population using
a limited sample.
4. Availability bias: Make judgments about the probability of events based on how
easy it is to think of examples.
5. Escalation of commitment: Persist unduly with unsuccessful initiatives or
courses of action.

Startups use a number of action principles (lean startup) to generate evidence as quickly
as possible to reduce the downside effect of decision biases such as an escalation of
commitment, overconfidence, and the illusion of control.

4. Partnering
Startups may form partnerships with other firms to enable their business model
to operate.To become attractive to other businesses, startups need to align their internal
features, such as management style and products with the market situation. In their 2013
study, Kask and Linton develop two ideal profiles, or also known as configurations or
archetypes, for startups that are commercializing inventions. The inheritor profile calls
for a management style that is not too entrepreneurial (more conservative) and the

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 startup should have an incremental invention (building on a previous standard). This
profile is set out to be more successful (in finding a business partner) in a market that
has a dominant design (a clear standard is applied in this market).

In contrast to this profile is the originator which has a management style that is
highly entrepreneurial and in which a radical invention or a disruptive
innovation (totally new standard) is being developed. This profile is set out to be more
successful (in finding a business partner) in a market that does not have a dominant
design (established standard). New startups should align themselves to one of the
profiles when commercializing an invention to be able to find and be attractive to a
business partner. By finding a business partner, a startup has greater chances of
becoming successful.

B. Startup Training
Many institutions and universities provide training on startups. In the context of
universities, some of the courses are entrepreneurship courses that also deal with the topic
of startups, while other courses are specifically dedicated to startups. Startup courses are
found both in traditional economic or business disciplines as well as the side of information
technology disciplines. As startups are often focused on software, they are also occasionally
taught while focusing on software development alongside the business aspects of a startup.

“The best way of learning about anything is by doing.” – Richard Branson

Founders go through a lot to set up a startup. A startup requires patience and resilience, and
training programs need to have both the business components and the psychological
components. Entrepreneurship education is effective in increasing the entrepreneurial
attitudes and perceived behavioral control,[32]helping people and their businesses
grow. Most of startup training falls into the mode of experiential learning (Cooper et al.,
2004; Pittaway and Cope, 2007), in which students are exposed to a large extent to a real-
life entrepreneurship context as new venture teams (Wu et al., 2009). An example of group-
based experiential startup training is the Lean LaunchPad initiative that applies the
principles of customer development (Blank and Dorf, 2012) and Lean Startup (Ries, 2011)
to technology-based startup projects.

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 As startups are typically thought to operate under a notable lack of resources, have little
or no operating history, and to consist of individuals with little practical experience, it is
possible to simulate startups in a classroom setting with reasonable accuracy. In fact, it is
not uncommon for students to actually participate in real startups during and after their
studies. Similarly, university courses teaching software startup themes often have students
found mock-up startups during the courses and encourage them to make them into real.

Startups should they wish to do so. Such mock-up startups, however, may not be
enough to accurately simulate real-world startup practice if the challenges typically faced
by startups (e.g. lack of funding to keep operating) are not present in the course setting. To
date, much of the entrepreneurship training is yet personalized to match the participants
and the training.

C. Startup Ecosystem
The size and maturity of the startup ecosystem is where a startup is launched and where
it grows to have an effect on the volume and success of the startups. The startup ecosystem
consists of the individuals (entrepreneurs, venture capitalists, angel investors, mentors,
advisors); institutions and organizations (top research universities and institutes, business
schools and entrepreneurship programs and centres operated by universities and colleges,
non-profit entrepreneurship support organizations, government entrepreneurship programs
and services, Chambers of commerce) business incubators and business accelerators and
top-performing entrepreneurial firms and startups. A region with all of these elements is
considered to be a "strong" startup ecosystem.

One of the most famous startup ecosystems is Silicon Valley in California, where major
computer and internet firms and top universities such as Stanford University create a
stimulating startup environment, Boston (where Massachusetts Institute of Technology is
located) and Berlin, home of WISTA (a top research area), numerous creative industries,
leading entrepreneurs and startup firms.

Although there are startups created in all types of businesses, and all over the world,
some locations and business sectors are particularly associated with startup companies.
The internet bubble of the late 1990s was associated with huge numbers of internet startup
companies, some selling the technology to provide internet access, others using the internet

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 to provide services. Most of this startup activity was located in the most well known startup
ecosystem - Silicon Valley, an area of northern California renowned for the high level of
startup company activity:

The spark that set off the explosive boom of "Silicon startups" in Stanford Industrial
Park was a personal dispute in 1957 between employees of Shockley Semiconductor and
the company’s namesake and founder, Nobel laureate and co-inventor of
the transistor William Shockley... (His employees) formed Fairchild Semiconductor
immediately following their departure...

After several years, Fairchild gained its footing, becoming a formidable presence in this
sector. Its founders began leaving to start companies based on their own latest ideas and
were followed on this path by their own former leading employees... The process gained
momentum and what had once began in a Stanford’s research park became a veritable
startup avalanche... Thus, over the course of just 20 years, a mere eight of Shockley’s
former employees gave forth 65 new enterprises, which then went on to do the same...

Startup advocates are also trying to build a community of tech startups in New York
City with organizations like NY Tech Meet Up and Built in NYC. In the early 2000s, the
patent assets of failed startup companies are being purchased by what are derogatorily
known as patent trolls, who then take the patents from the companies and assert those
patents against companies that might be infringing the technology covered by the patent.

D. Startup Investing
Startup investing is the action of making an investment in an early-stage company (the
startup company). Beyond founders' own contributions, some startups raise additional
investment at some or several stages of their growth. Not all startups trying to raise
investments are successful in their fundraising. In the United States, the solicitation of
funds became easier for startups as result of the JOBS Act. Prior to the advent of equity
crowdfunding, a form of online investing that has been legalized in several nations, startups
did not advertise themselves to the general public as investment opportunities until and
unless they first obtained approval from regulators for an initial public offering (IPO) that
typically involved a listing of the startup's securities on a stock exchange. Today, there are
many alternative forms of IPO commonly employed by startups and startup promoters that

9
do not include an exchange listing, so they may avoid certain regulatory compliance
obligations, including mandatory periodic disclosures of financial information and
factual discussion of business conditions by management that investors and potential
investors routinely receive from registered public companies.

Investors are generally most attracted to those new companies distinguished by their
strong co-founding team, a balanced "risk/reward" profile (in which high risk due to the
untested, disruptive innovations is balanced out by high potential returns) and "scalability"
(the likelihood that a startup can expand its operations by serving more markets or more
customers). Attractive startups generally have lower "bootstrapping" (self-funding of
startups by the founders) costs, higher risk, and higher potential return on investment.
Successful startups are typically more scalable than an established business, in the sense
that the startup has the potential to grow rapidly with a limited investment of capital, labor
or land. Timing has often been the single most important factor for biggest startup
successes, while at the same time it's identified to be one of the hardest things to master by
many serial entrepreneurs and investors.

Startups have several options for funding. Revenue-based financing lenders can help
startup companies by providing non-dilutive growth capital in exchange for a percentage
of monthly revenue. Venture capital firms and angel investorsmay help startup companies
begin operations, exchanging seed money for an equity stake in the firm. Venture
capitalists and angel investors provide financing to a range of startups (a portfolio), with
the expectation that a very small number of the startups will become viable and make
money. In practice though, many startups are initially funded by the founders themselves
using "bootstrapping", in which loans or monetary gifts from friends and family are
combined with savings and credit card debt to finance the venture. Factoring is another
option, though it is not unique to startups. Other funding opportunities include various
forms of crowdfunding, for example equity crowdfunding, in which the startup seeks
funding from a large number of individuals, typically by pitching their idea on the Internet.

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E. Unicorns
Some startups become big and they become unicorns, i.e. privately held startup
companies valued at over US$1 billion. The term was coined in 2013 by venture
capitalist Aileen Lee, choosing the mythical animal to represent the statistical rarity of such
successful ventures. According to TechCrunch, there were 279 unicorns as of March 2018,
and most of the unicorns are in China, followed by the USA. The unicorns are concentrated
in a few countries: China (131), US (76), India (14), UK (7), Indonesia (4), Argentina (4),
Singapore (3), Switzerland (2), South Korea (2), Hong Kong (2), and 13 countries (1 each).
The largest unicorns included Ant Financial, ByteDance, DiDi, Uber, Xiaomi, and Airbnb.

F. The Startup Business in Indonesia

The development of the Startup in Indonesia is quite rapid and promising. Every year
or even every month many new startup founders emerge. According to data from
bekraf.go.id in 2018, there are currently at least 992 local startups here in Indonesia. The
potential of Indonesian internet users that are increasing from year to year is certainly a
promising market to establish a Startup. Based on some research, internet users in Indonesia
estimated to reach 70 million people. In addition, the increase in people's purchasing power
along with the increase in per-capita income of the people of this country also influenced
the development of the digital industry.

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 Startups in Indonesia can be Classified into four groups, namely:
1. Startup Game Creator (e.i Tahu Bulat, Tebak Kata, and many more…)
2. Startup Educational Application (e.i Ruang Guru, Zenius, and many more…)
3. Startup Trade such as e-commerce and Information (e.i Tokopedia, Shopee, and many
more…)
4. Other Startup

According to Silicon Valley's Startup Mentor Molly Nagler, almost all Startups are
failed in the beginning. But they are should turn all the failure into positive things. A Startup
Founder should learn from mistakes so that he/she would have a chance to explore something
new and knowledge, just like a concept of trial and error. Therefore, local Indonesian startups
surely can continue to grow, so that they can reach global internet users.

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G. Tokopedia
Tokopedia is a unicorn technology company, which is based in Jakarta, Indonesia. It
was founded in 2009 by William Tanuwijaya and his best friend, Leontinus Alpha Edison.
As of November 2018, the company is valued at about $7 billion. Tokopedia describes its
mission as democratizing commerce through technology. It maintains status as the most
visited E-commerce site in Indonesia.

1. History of Tokopedia
PT Tokopedia was founded by William Tanuwijaya and Leontinus Alpha
Edison on February 6, 2009. The company manages Tokopedia.com, which was
publicly launched on August 17. Since it was officially launched, Tokopedia managed
to become one of Indonesia's internet companies that grow rapidly.

2. Investment
PT Tokopedia received initial seed funding from PT Indonusa Dwitama in 2009
of IDR 2.5 billion. In the following years, Tokopedia attracted capital injections from
global venture capitals including East Ventures (2010), CyberAgent Ventures (2011),
NetPrice (2012), and SoftBank Ventures Korea (2013). In October 2014, Tokopedia
managed to make history as the first technology company in Southeast Asia to receive
a US$100 million investment (around IDR 1.2 Trillion) from Sequoia
Capital and SoftBank Internet and Media Inc (SIMI). In April 2016, Tokopedia raised
another $147 Million. In 2017, Tokopedia received $1.1 Billion investment from
Chinese e-commerce giant Alibaba.. Again in 2018, the company secured $1.1 Billion
funding round led by Chinese e-commerce giant Alibaba Group Holding and
Japan's SoftBank Group putting its valuation to about $7B.

3. Business
As a technology company, Tokopedia has several main businesses.
The marketplace is Tokopedia's best-known product. Tokopedia provides a free
C2C business platform for merchants and buyers. The marketplace helps merchants to
reach more audience than other channels. There are also official stores for well-known
brands to do their B2C business. Through its marketplace products, Tokopedia offers
millions of products in 25 categories.

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 Tokopedia also provides digital products such as credit, BPJS payments, utility
payments, telephone payments, credit cards, flight tickets, event tickets, games
vouchers, and many more.

In 2016, Tokopedia offered financial technology (FinTech) products.

Tokopedia's FinTech products include digital wallets, investments, business capital
loans, virtual credit cards, protection products, credit scoring based on data for a loan,
and many more. In 2018, Tokopedia launched Mitra Tokopedia application to sell these
FinTech products. In December 12, 2018, Fortune reported that PT Tokopedia had
raised another $1.1 billion.

4. Tokopedia Funding Rounds

Date Round Amount Investor

Alibaba Group,
Series G -
Nov 21, 2018 $ 1.100.000.000 SoftBank Vision
Tokopedia
Fund
Series F –
Aug 17, 2017 $ 1.100.000.000 Alibaba
Tokopedia
Apr 11, 2016 Series E - Tokopedia $ 147.000.000 Unknown
Softbank Internet
and Media (Simi),
Sequoia Capital,
Oct 21, 2014 Series E - Tokopedia $ 100.000.000 SoftBank Telecom
Corp, SoftBank
Ventures Korea,
Softbank
Cyberagent, East
Series D -
Jun 12, 2013 Undisclosed Amount Ventures, Softbank
Tokopedia
Ventures Korea
Netprice Com, Sbi
Apr 04, 2012 Series C - Tokopedia Undisclosed Amount Investment, Beenos
Partners

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 Series B -
Apr 19, 2011 $ 700.000 Cyberagent
Tokopedia
Series A -
Mar 15, 2010 Undisclosed Amount East Ventures
Tokopedia
Feb 06, 2009 Seed Undisclosed Amount Indonusa Dwitama

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 CHAPTER 3

CLOSING

A. INFERENCE
A startup or start up is a company or project initiated by an entrepreneur to
seek, effectively develop, and validate a scalable business model. Hence, the
concepts of startups and entrepreneurship are similar. However, entrepreneurship
refers to all new businesses, including self-employment and businesses that never
intend to grow big or become registered, while startups refer to the new businesses
that intend to grow beyond the solo founder, have employees, and intend to grow
large.

The development of the Startup in Indonesia is quite rapid and promising. Every
year or even every month many new startup founders emerge. According to data
from bekraf.go.id in 2018, there are currently at least 992 local startups here in
Indonesia. The potential of Indonesian internet users that are increasing from year
to year is certainly a promising market to establish a Startup. Based on some
research, internet users in Indonesia estimated to reach 70 million people. In
addition, the increase in people's purchasing power along with the increase in per-
capita income of the people of this country also influenced the development of the
digital industry.

Tokopedia is a unicorn technology company, which is based in Jakarta,

Indonesia. It was founded in 2009 by William Tanuwijaya and his best friend,
Leontinus Alpha Edison. As of November 2018, the company is valued at about
$7 billion. Tokopedia describes its mission as democratizing commerce through
technology. It maintains status as the most visited E-commerce site in Indonesia

16
 REFERENCE

https://en.wikipedia.org/wiki/Startup_company (Accessed on 19 October 2019)

https://www.startupranking.com/top/indonesia (Accessed on 19 October 2019)
https://www.cekindo.com/blog/startups-indonesia (Accessed on 19 October 201œ9)
https://www.tokopedia.com/about/?lang=en (Accessed on 19 October 2019)
https://en.wikipedia.org/wiki/Tokopedia (Accessed on 19 October 2019)
https://www.egogohub.com/insight/the-growth-of-startups-in-indonesia (Accessed on 19
October 2019)
https://www.startupranking.com/startup/tokopedia/funding-rounds (Accessed on 19 October
2019)
https://techcrunch.com/2018/12/11/tokopedia-raises-1-1b/ (Accessed on 19 October 2019)
https://www.crunchbase.com/organization/tokopedia/funding_rounds/funding_rounds_list#se
ction-funding-rounds (Accessed on 19 October 2019)
https://e27.co/tokopedia-confirms-us1-1b-investment-alibaba-20170817/ (Accessed on 19
October 2019)
https://www.bloomberg.com/news/articles/2018-12-12/softbank-vision-fund-alibaba-lead-1-
1-billion-tokopedia-round (Accessed on 19 October 2019)
https://www.techinasia.com/indonesia-tokopedia-raises-147m (Accessed on 19 October 2019)
https://techcrunch.com/2017/08/17/alibaba-tokopedia/ (Accessed on 19 October 2019)
https://jakartaglobe.id/corporate-news/tokopedia-secures-1-1b-alibaba-softbank/ (Accessed
on 19 October 2019)
https://www.techinasia.com/tokopedia-raises-11b-softbank-alibaba (Accessed on 19 October
2019)
https://www.tokopedia.com/blog/injak-tahun-ke-10-tokopedia-tetap-fokus-di-indonesia-
dengan-menjadi-super-ecosystem/ (Accessed on 19 October 2019)

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