Phenomenon Of Layoffs At Startups Like What Happened To Zenius And LinkAja, This Is What Legal Practitioners Say

Illustration. (Photo: Doc. Antara)

JAKARTA - The phenomenon of Termination of Employment (PHK) that occurs in a number of startups in the country, among others, is because startup companies in Indonesia do not focus on business, run out of funds, and do not have a good strategy to develop in the market. This was stated by Hendra Setiawan Boen, an analyst and debt restructuring legal practitioner from the Frans & Setiawan Office.

According to Hendra, the main problem for startups is that their operational funds are completely dependent on outside funding through fundraising, private placements and loans.

"Indeed, funds from investors are very useful if you want to expand, but of course you can't always rely on outside parties. This startup must be able to calculate when the company can be independent, break-even point, return loan funds from investors and start making profits," said Hendra in a written statement, quoted from Antara, Friday, May 27.

He gave an example of a large Indonesian startup company that has been around for decades but is still operating with debts of tens of trillions of rupiah and investors keep injecting capital.

“For me, this kind of practice is unreasonable and unsustainable. If a startup investor suddenly runs out of money, will the startup still be able to operate or are they even looking for other investors for capital injections?” he said.

Two Indonesian start-up companies, PT Fintek Karya Nusantara (Finarya) or LinkAja and Zenius Education, recently announced the layoffs of hundreds of employees. Both continue the trend of layoffs by several other startups such as Fabello, TaniHub, and UangTeman.

Prior to this, several Indonesian startups eventually had to go out of business, including Airy Rooms, Stoqo, Qlapa, and Sorabel.

Hendra advised Indonesian startups not to be in too much of a hurry to boom. Better to grow organically. If you really want to expand, then look for investors. Funds from investors are only a tool to develop and not the main purpose of establishing a startup.

Hendra gave an analogy for investors in startups that are like baby walkers for babies who can learn to walk. But in the end the baby must be able to walk alone without any assistive devices. If not, there is a problem and the baby should be taken to a child development specialist.

"It's better to have a company that develops slowly but is healthy and lasts a long time than to become big in one day but withers the next day," concluded Hendra.