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2019 should be the year of startup startup startups. At least three startups from the United States (US) plan to make a public go debut even though only two are finally realized.

Lyft was the first to hold an IPO, namely in March 2019. A similar company, Uber, based in San Francisco, California, USA, claims to have 39 percent of the US market share. But on paper, the company suffered losses of up to $ 911.3 million despite at the same time posting revenues of $ 2.2 billion by the end of 2018.

One and a half months after the IPO, Lyft in its financial statements stated a loss for performance that ended in March 2019. The value of shares fell 27 percent with market valuation to $ 15 billion. The first week of September 2019, Lyft’s share price fell to $ 45 per share compared to the opening price of $ 72 per share.

The same thing happened to Uber, who is also headquartered in San Francisco, California, USA. Reported by The Verge, Uber became a high-value technology company that conducted an IPO after Facebook and Alibaba. The company’s market valuation was valued at $ 120 billion in October 2018. However, when the company went public in May 2019, the value shrank to only $ 75 billion at a share price of $ 45 per share.

On the first day of the IPO, Uber’s stock price even dropped 7.6 percent on the New York Stock Exchange (NYSE), as reported by CNBC. Uber’s stock value closed below $ 42 per share with market capitalization shrinking to $ 69.7 billion. The 38 percent decline in market valuations was influenced by Lyft’s shaky performance that made investors doubtful because the two companies have the same business model.

In addition, a $ 52 billion Uber loss report in the second quarter of 2019 caused a red light on Wall Street for a company that just went public. During September 2019, the value of Uber’s shares was $ 33 per share.

In the same month, startups with a business model sharing a workspace with WeWork said they were delaying their IPO implementation. The valuation of the WeWork market which touched $ 47 billion jumped to $ 6.94 billion (PDF). The reason is that investment is not in place that is often done Adam Neumann, former CEO and founder of WeWork. As a result, some 2,400 WeWork employees globally lost their jobs.

Startup Bubbles?
Like a fruit that is still young and thick, but picked and brewed so that it ripe quickly to meet the high market demand. Approximately, that’s the way most startups are or are often called startups.

The Merriam-Webster reference dictionary defines startups as a new business company. Not much different, the American Heritage Dictionary defines it as a business or business that has recently begun operations, which grew from small companies into large companies.

In the world, there are more than 4,000 startups with 429 of them holding the status of ‘unicorn’ because they have a valuation of at least $ 1 billion according to CBInsights data as of December 2019. The total valuation value is cumulatively around $ 1.33 trillion. In Indonesia, there are 992 startups with 552 of them in Jabodetabek as of 2018.

The massive emergence of startups and the drop in their performance has led many to worry that this condition is another bubble wave like what happened in 1999 and 2000, the dot-com bubble. In this midst, many internet-based companies have sprung up that even went public when they didn’t have good financial records.

The difference, in the mid-dot-com bubble, these companies are targeting public investors. Meanwhile, in the Kiwari era, startups were targeting funding from venture capital companies. As of October 2019, venture capital financing or investments in Indonesia reached Rp 11.23 trillion. That figure rose 38.13 percent compared to October 2018 which amounted to Rp8, 13 trillion according to the Financial Services Authority (OJK) (PMV1) notes.

One of the foreign venture capital in Indonesia, Convergence Ventures has injected funds of around Rp10 billion in more than 10 startups in Indonesia. “In 2020, Convergence Ventures will disburse more funds in more companies,” Donald Wihardja, Partner at Convergence Ventures, told Tirto.

Spending more investment funds in 2020 even though Indonesia and the world overshadowed by a recession is not without reason. Donald said startups that are primarily based on application technology were truly capable of changing the landscape or business road map in Indonesia. Therefore, the startup valuation is fairly real.

“The startup industry in Indonesia continues to grow rapidly and we feel the challenges faced by startup businesses and venture capital companies are not a recession, but a lack of talent,” Donald added.

Convergence Ventures, according to Donald, continue to monitor developments in the rapidly developing financial technology (fintech) sector in Indonesia. In addition to these sectors, the e-commerce, logistics, health and education sectors also have great potential to develop in Indonesia.

“In short, in Indonesia, the technology-based startup industry and applications continue to progress. We continue to invest,” Donald wrote through an instant messaging application to Tirto.

Not much different, the venture capital company Alpha JWC Ventures claimed to still believe that the business potential of Indonesia’s digital industry is still large. Therefore, he will continue to fund startups which according to them have qualified and potential qualities.

Even so, the venture capitalist who poured funds into Gibran Rakabuming’s Goola startup does not believe in the ‘jor-joran’ approach to investing. Managing Partner and Co-Founder of Alpha JWC Ventures, Jefrey Joe, admitted that his party always carried out comprehensive due diligence in every funding action undertaken.

“After that we also provide assistance in terms of operational and strategy for our startup, so that it continues to grow,” said Jefrey to Tirto.

Jefrey further emphasized the importance of calculating financial fundamentals and accountability for startups who were injected with capital from the start. “Therefore, we are not so worried about the issue of the bursting of the startup trend bubble that is now circulating a lot,” added Jefrey.

Secretary General of the Indonesian Venture and Startup Capital Association (Amvesindo) Rimawan Yasin revealed, the challenge of venture capital companies in Indonesia is not on the economic conditions facing the recession, but on the ability of startups to move the wheels of the national economy better. Thus, the foresight of venture capital in choosing a funded startup is the key to success.

“The principle of prudence is one way to mitigate risk. So, of course venture capitalists will be careful in financing. There are improvements in assessing startup progress that is not only seen from the growth in valuations, but also the level of profitability,” Rimawan explained to Tirto .

Digital Economic Expert Ibrahim Kholilul Rohman revealed, startups that are able to survive in Indonesia are those that have a large network size and also have a basis of real economic activity in their business.

“Startups that have links to the real sector, for example, in services, transportation, agriculture, and so on, are what can be more resilient in Indonesia and in the shadow of recession,” Ibrahim told Tirto.

The challenge for startups today is to be able to prove their financial performance. Thus, its size is no longer based solely on fluctuating market valuations. “This is something that startups must achieve that startups must also have a healthy income statement,” Ibrahim explained.

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