Indonesian venture capital investors had 27.35 trillion rupiah ($1.8 billion) in cumulative assets as of end-June 2023, up 5.4% year-to-date and 14% year-on-year, according to the Association of Indonesian Venture Capital and Startups, or Amvesindo.
The growth from 25.94 trillion rupiah as of end-December 2022, and 23.99 trillion rupiah in end-June 2022, marks a positive development for the startup ecosystem in the country.
“As the venture capital industry moves toward improvements, one of the indicators is the growth of its assets throughout the first half of 2023. However, penta helix collaboration is needed between the stakeholders including the government and VCs to reach exponential growth,” Eddi Danusaputro, Amvesindo chairman, said in a statement.
As part of efforts to improve the VC industry in the archipelago, Danusaputro offered several suggestions for the government and the Financial Services Authority (OJK), such as classifying VCs and financing companies differently.
Danusaputro argued that different sets of rules must be applied to VCs and other financing companies as the two have different business models.
VCs, according to Danusaputro, only represent a small chunk of assets compared to other non-bank financial institutions. For example, the total assets of VCs at the end of June were 27.35 trillion rupiah while financing companies had 524.4 trillion rupiah in assets during the same period.
Danusaputro expressed the need to strengthen regulations on joint investment contracts and to ensure a more efficient licensing process. According to OJK regulations, venture funds are defined as joint investment contracts known as KIB. KIB is inked between venture capital companies and custodian banks.
While the structure is similar to venture funds elsewhere, DealStreetAsia learnt that the Indonesian regulation stipulates that each venture fund only has one investment thesis. A VC seeking to add a new thesis has to form a new venture fund.
Amvesindo was founded in May 2016 as an Indonesian association that includes VCs and startups. The association received official recognition from the country’s OJK in October of the same year.
Amvesindo has 81 companies as members, including East Ventures, Ideosource, Kejora Ventures, MDI Ventures, BNI Ventures, and others.