Startup funding in Indonesia has slowed in recent years. After reaching its peak in 2021, investment value declined significantly over the following years. Deal activity, meanwhile, has continued, although at a more limited scale compared with the expansion period.

Funding data compiled by Tech in Asia shows that the surge in 2021 marked the highest point of the past decade. Since then, investment value has fallen sharply and has yet to return to its previous level. The number of deals has also declined, although the contraction has been less pronounced than the drop in investment value.

The difference in the pace of decline between investment value and deal frequency indicates that investment activity has not come to a complete halt. Deals are still taking place, but with smaller funding sizes. This pattern reflects a shift in how investors are deploying capital amid more cautious market conditions.

Over the past five years, the majority of startup funding in Indonesia has consistently gone to early-stage companies, particularly at the Seed and Pre-seed stages. Based on the same data, the share of funding at these stages ranged from 40–46 percent throughout 2019–2024. This was significantly higher than funding for later stages such as Series A and Series B+, each of which generally accounted for less than 20 percent.

However, a clearer shift in the funding distribution emerged in 2025. The share of Seed and Pre-seed funding fell to 28 percent, while Pre-Series A funding rose sharply to 28 percent, well above the 5–11 percent range recorded during 2019–2024.

With this composition, early-stage funding as a whole remained the largest component of total funding in 2025. At the very least, this pattern reflects a shift in the composition of early-stage funding, building on trends seen in previous years.

The slowdown in startup funding has not been limited to Indonesia. A similar trend has also emerged across Southeast Asia after the region recorded a significant surge in 2021. This pattern reinforces the view that the slowdown has been widespread across the region rather than purely local.

Compared with Indonesia, funding dynamics at the regional level show more widespread pressure. Across Asia, the slowdown has been reflected not only in limited growth in investment value, but also in a decline in the number of transactions. This suggests that funding pressure has been broader and regional in nature, rather than affecting only one particular country.

According to KPMG’s Global VC Investment 2025 report, venture capital investment in Asia increased only slightly from around US$21.2 billion in Q3 2025 to US$21.4 billion in Q4 2025. Over the same period, however, the number of transactions fell significantly from 3,132 to 2,474 deals. KPMG also noted that investment levels remained well below the region’s historical average, indicating that the recovery has yet to gain strong momentum.

Interestingly, this occurred as global VC investment increased quarter-on-quarter, from US$125.6 billion to US$138.1 billion. This means that the increase in global funding has not been distributed evenly across regions. Much of the growth has been concentrated in certain markets, while Asia continues to see limited momentum amid global geopolitical and economic uncertainty.

Exit Remains a Key Consideration for Investors

The slowdown in startup funding in Indonesia has been driven largely by constrained exit opportunities. Data shows that mergers and acquisitions (M&A) have become increasingly rare, both in terms of the number and value of transactions. M&A activity among technology companies in Indonesia has tended to be inconsistent and dependent on a small number of large transactions.

In addition, data from the Indonesia Stock Exchange (IDX) shows that initial public offering (IPO) activity among startups and technology companies has come under pressure after surging in 2021. That year marked the peak in the value of funds raised through technology company IPOs during the period observed.

In the following years, the value of funds raised through IPOs declined, even as the number of technology companies going public temporarily increased. This pattern shows that IPO activity continued, but at a smaller fundraising scale.

From 2024 into 2025, the pressure became more evident. The number of technology company IPOs declined, while the amount of funds raised fell to its lowest level. The IPO data provides additional context for investors’ cautious view of exit opportunities for technology companies, particularly after the period of aggressive expansion earlier in the decade.

According to Init 6 Venture Partner Rexi Christopher, exits are an important factor in assessing future liquidity opportunities and potential returns on startup investments. This is particularly relevant because VC investment funds typically have a life cycle of only 8–10 years. After that period, VCs need to return the capital they received from their limited partners, along with multiple returns on the investment.

“In the end, many investors are struggling to find an exit strategy,” Rexi told Tech in Asia.

Although funding pressure remains, several analysts see opportunities for improvement emerging toward 2026. Global interest rates have begun to decline, while easing inflationary pressures are seen as creating room for capital market activity to recover, including a potential revival of IPOs in the technology sector. Although market sentiment is unlikely to recover immediately, more stable external conditions are beginning to create renewed expectations among industry players.

Roshan Behera, Partner at Redseer Strategy Consultants, said that the barriers that previously held companies back from going public are no longer as intense as they were several years ago. “So we will be slightly more optimistic about the potential for technology startup IPOs next year,” he said.

In line with this view, Tech in Asia data shows that around 24 startups in Southeast Asia have either announced or been rumored to have IPO plans, with approximately nine companies targeting listings in 2025–2026. Of these, three Indonesian startups—IDN, Shipper, and Traveloka—have reportedly been considering going public within the next few years.

This indicates that interest in the public markets remains intact. However, companies pursuing this route are likely to face higher standards and stronger fundamental requirements than during the previous period of expansion.