Financing Indonesian Tech Startups

AmCham’s ICT Committee holds lunch with venture capital companies and government agencies to discuss startup financing and development

By Gilang Ardana
Thursday, June 15, 2017

The Indonesian government and venture capital firms need to work together to further accelerate the growth of tech startups through stronger financing.

This was the key takeaway from AmCham Indonesia’s ICT and Venture Capital luncheon, held on May 4, featuring speakers from venture capital firms Kejora Ventures and Fenox Venture Capital, the Financial Services Authority (OJK) and the Creative Economy Agency (BEKRAF).

The event was opened by a keynote speech from Fadjar Hutomo, BEKRAF financing deputy, who shared the current status of the tech startup ecosystem and its potential as a key development focus for the future.

“In Indonesia, 90 percent of the source of funds are in the banking system, at around Rp 5,000 trillion,” said Fadjar. “Meanwhile, assets under the management of local venture capital is only around Rp 10 trillion.”

For this, Fadjar emphasized that BEKRAF aims to help shift Indonesia from a “saving society” into an “investing society,” to help provide start-ups with a larger pool of financing to help them accelerate growth.

AmCham ICT Committee Chair Abhishek Shah, the CFO of IBM Indonesia, then outlined the setting for Indonesian startups and their financing. He also briefly explained the role of the ICT Committee, and its focus and agenda for the year ahead.

He then led a panel discussion with Hendrikus Passagi, Senior Research Executive for the OJK Strategic Policy Development Department; Andy Zain, Managing Director of Kejora Ventures; Retno Dewati, SEA Regional Manager, Fenox Venture Capital and BEKRAF’s Fadjar.

During his presentation, Hendrikus highlighted the very positive progress of financial technology (fintech) development and explained the prerequisites needed to achieve a stronger fintech ecosystem. He explained that the OJK has been very open to dialogue so that its regulations help startups, not limit them.

“In creating the OJK regulation on peer-to-peer lending, for instance, most of the text of the regulation came from fintech players,” he said.

He added that the OJK is willing to engage more with startups to create a more conducive regulatory environment.  “Our office is always available to welcome startups to have discussions with us,” he said.

The speakers from venture capital companies, Zain from Kejora and Retno from Fenox, went into further detail on the state of play of Indonesian startups.

Zain highlighted the key features that make Indonesia one of the top destinations for investment.  “It is about the country’s large market, low penetration, high growth, productive age population and growing income per capita,” he said, going on to explain the current state of play of startup investment in ASEAN, and how Indonesia can attract more investment.

Retno emphasized that the government should focus on Indonesian startups as the country is building the right momentum. “Many diaspora and returnees are coming to Indonesia, which will help the country boost the domestic start-up ecosystem.”

Yet for Retno, a lot needs to be done to realize this.

“Even though we have gained strong development, research finds that Indonesia’s ecosystem is actually still far from great. We even lose to our neighbors that started at pretty much the same time, like Singapore and Bangalore. It proves that there is still a lot of homework for us to do.”

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