This is a blog article by BLOCK71 Jakarta. Check out their website for more interesting articles on the start-up space by the community for the community in Indonesia!
In 2016, the Indonesian government launched the ‘National Movement for 1000 digital startups’. By working hand in hand with local community builders, this initiative aims to create 1000 startups by the year 2020, with a total valuation of $10 billion (Rp 133 trillion).
One of the five strategies implemented by the government is at the incubation stage. Why does the government place such emphasis at the incubation stage to fulfil the goals of the initiative?
First of all, we should all understand what incubators are, before moving on to explain how their roles will help to grow the ecosystem.
Incubation is a process that helps start-ups in their early and pre-money stages. The assistance provided by the incubators usually come in the form of mentoring, validation and direction, co-working spaces and sometimes investments as well. The party that provides these incubation activities are referred to as incubators, and their main goal is to help accelerate start-up growth.
1: Access to communities and business networks
Incubators are places where entrepreneurs gather. Many of them have had encountered similar problems beforehand and are able to give relevant advice to those with such problems. Meeting entrepreneurs at incubators can lead to productive discussions, expand networks as well as finding solutions to existing problems.
Early-stage start-ups usually find it hard to find a suitable business partner. If not for the high prices, businesses would rather work with matured start-ups and corporations than relatively early-stage ones. Incubators hold the access to key players with high potential that opens up big opportunities for start-ups. Incubators backed by large corporations can also become potential partners themselves. The help from incubators usually manifests as direct introductions or hosting events that invite big players in the start-up community.
2: Support of experienced mentors
Building a start-up requires an entrepreneur to be able to work on everything at once, especially in the pre-money stages when there are no funds to hire experienced individuals. Outside of the product that the star-tup builds, an entrepreneur must also have qualified knowledge of business aspects such as marketing, sales, business development, operations and finance.
Mentors who are entrepreneurs will be able to share their entrepreneurial journeys with start-ups that they mentor. They will be able to give accurate directions and stimulating ideas to solve the problems that arise. Within an incubator, there are usually a number of mentors who dedicate their time and resources to the startups. Incubators also frequently host workshops with relevant topics for startups.
3: Idea Validation
As a start-up, building solutions that are desired by the masses are considered the most valuable. Entrepreneurs usually come up with innovative ideas, but are unsure if the ideas will succeed. That is why it is important for them to to obtain opinions of others on their products. Incubators are the right places to seek validation on whether the products fulfil the market needs, solve existing problems, or have a business direction that makes sense in the long run.
Aside from that, as part of the validation process, entrepreneurs also have to step out of their comfort zone and talk to as many potential users as possible. Incubators are great places to meet potential users and get their feedback.
4: Infrastructure help
In the business sector of Jakarta, office rent is prohibitively expensive for pre-seed start-ups. Incubators provide co-working spaces that can be used either for free or at very affordable prices. Start-ups will have access to office spaces complete with fast internet, work desks, meeting rooms, pantries and other office needs. The open concept and well-design start-up offices also often encourage creativity.
With all the peripherals provided, startups are able to focus on building their product without worrying about administrative activities. Co-working spaces are where entrepreneurs gather and come up with creative ideas. As they are building their businesses together, like-minded founders and teams can cheer each other on and help each other when needed. It is at incubators where such lasting relationships between start-ups are forged and maintained even after start-ups have gained successes.
5: Access to investors
Incubators are places where investors scout for interesting start-ups to partner with. Start-ups with validated ideas and show significant growth will generally appeal to investors.. Some incubators also have demo days to introduce start-ups and provide a platform for them to pitch to investors.
Investors generally have confidence to those start-ups who are at incubators with track record in producing successful start-ups. Corporations are often behind incubation programs to support the start-up development in Indonesia and most of them invested in startups relevant to their business or have high potential of success
