In this Friday, Aug. 5, 2011, photo, Acehnese browse Internet using free Wi-Fi access at a park in Banda Aceh, Aceh province, Indonesia. Venture capitalists from Silicon Valley to New York all have the same question about Indonesia’s come-from-nowhere tech frenzy: Are the young entrepreneurs that have piqued their interest, smart bets or just surfing a hype that will soon burn out. Photo: Heri Juanda

JAKARTA,
Indonesia (AP) — Venture capitalists from Silicon Valley to New York
all have the same question about Indonesia’s come-from-nowhere tech
frenzy: Are the young entrepreneurs that have piqued their interest
smart bets or just surfing a hype that will soon burn out.

A
few years ago, Internet connections were so slow in Indonesia that
trying to download a clip off YouTube could take 20 minutes on a good
day.

Now
the Muslim majority nation of 240 million people—despite the tangled
balls of telephone wire that dangle precariously over dusty, potholed
roads—boasts the world’s second largest number of Facebook users and is
third for Twitter.

It’s
also seen an explosion of Web startups, with 200 popping up so far this
year alone, said Natali Ardianto, owner of StartupLokal, which offers a
place for founders, developers and potential investors to meet.

At
the moment most of Indonesia’s tech newbies aren’t distinguished by
their creativity. Many are clones of well-established foreign companies
like Craig’s List or TripAdvisor, or Groupon, offering discount coupons
and deals.

But
with a little nurturing and eventually funds to advertise and
strategize, venture capitalists and small-scale investors hope one day
to make some money and—maybe, along the way—help discover Indonesia’s
answer to Mark Zuckerberg.

“It’s
still early and there isn’t much structure on the ground,” said Faysal
Sohail, managing director of CMEA Capital, one of the leading venture
capital firms in Silicon Valley, after a whirlwind trip to Indonesia.

“But
from a growth point of view, India and China has been predominantly
done at this stage, there are a lot of investors there already,” he
said. “So now the question is, what are the markets beyond that.”

That’s partially why I came,” he said, “to look for some new, world class entrepreneurs.”

He’s ready to invest some money, he said, but personally, not yet through a fund.

Most
of the founders of new startups are young, recent college grads working
from their living rooms or garages with two to six people, using cash
scraped together from their parents, friends and professors.

In
the majority of cases, the operations are considered too small to be
able to handle infusions of more than $500,000 to $2 million. And
business plans are still pretty rudimentary.

But there are several promising young entrepreneurs out there, Sohail and others said.

Twenty-six-year-old Eduardus Christmas, who hit the scene two years ago, is considered one of the early birds.

Inspired
by his literature-loving girlfriend, he started Evolitera, an online
publishing house offering thousands of free novels, textbooks and
scientific papers.

“I
saw a need and was trying to fill it,” Christmas said, lighting up
cigarette at an outdoor cafe. “I was also genuinely interested in
digital publishing.”

“A
lot of the newcomers in digital media seem to be attracted by the hype,
they see how fast things are growing and want to jump in,” he said.
“You’ve seen that especially in the last year, year and a half.”

These
days, Christmas is thinking more seriously about ways to make money—one
of the biggest challenges he and others face, because with only 3
percent of the population holding a credit card, there is almost no
e-commerce.

There’s also little in the way of adverting dollars.

Pulling
an iPad from his bag, Christmas shows one of his latest projects,
interactive books, starting with Indonesian classical pianist Ananda
Sukarlan.

His
newest company, Enervolution, is a registered Apple developer, and will
allow users to browse content for free and then pay for and download
Sukarlan’s music with the help of an iTunes app.

He’s hoping, in this way, to tap into a premium market.

At
this early stage, there have only been a few big success stories, most
notably the forum and classifieds portal Kaskus, which got a $100
million commitment from a local investor, and the location-based social
network Koprol that Yahoo! recently acquired.

But
plenty of others are gaining traction, thanks in large part to high
penetration of BlackBerry, iPhone and other smartphones—some of them
knockoffs — which have allowed Indonesians, despite poor infrastructure,
to shoot straight into cyber space.

The idea—as in the early days of Silicon Valley—is to build-first, find ways to capitalize later.

It may seem risky, but even Google CEO Eric Schmidt thinks the opportunities are huge.

Joining
him at a conference celebrating local entrepreneurship on the resort
island of Bali late last month were a small group of investors and
venture capitalists interested in encouraging tech-hungry youths and
also seeing what opportunities might exist for them.

They
looked at an online soccer simulation game, Football Saga, where
members train their players, join teams and compete with other clubs set
up by their friends. They also were interested in a payment gateway for
music, e-commerce and other digital content and a Web-based karaoke
site.

“You
have 180 million cell phones, but did you know that you have only about
18 percent Internet penetration?” said Schmidt. “You’re going to have
an Internet explosion.”

SOURCE: The Associated Press