Dear reader, The Indonesia Venture Capital Report 2023, prepared by AC Ventures and Bain & Company, sheds light on the dynamic shifts in the country’s VC landscape. The past year witnessed a recalibration due to global economic uncertainties, prompting caution in investment momentum. Projections for 2023 are sobering, with an anticipated 70-80% decline in deal value compared to the previous year. Despite these challenges, the report underscores the resilience of Indonesia’s VC sector, maintaining stable deal values and recording a 20% YoY increase in deal volumes in 2022. The maturing Indonesian VC market reflects a shift in investor priorities towards startups with strong unit economics and clear paths to profitability. Notably, there is a decline in conversion rates from seed to Series A/B funding rounds, indicating a more measured and rational approach from investors. While macroeconomic headwinds, US-China tensions, and regulatory changes pose challenges, Indonesia’s attractive macroeconomic fundamentals, including a growing middle class and a burgeoning digital economy, position it as a bright spot in the region. The report anticipates an upswing in Indonesia’s VC industry, with a focus on emerging investment themes like ESG, climate tech, electric vehicles, health tech, and D2C brands. Despite a shift from traditional trade sales to IPOs, market pressures may affect mega-IPOs. Optimism surrounds early-stage deals in electric mobility and healthcare sectors, emphasising profitability. Global investors are bullish on Indonesia’s digital economy, projected to reach US$360 billion by 2030, aligning with the country’s commitment to a net-zero future through initiatives like IDXCarbon. Sainul, Editor.