On Monday, the Association of Indonesian Venture Capital and Startups (AMVESINDO) released a report that revealed the performance of venture capital (VC) investments in the country in the first half of 2023. According to the report, the Indonesian VC industry saw consistent growth, with investments reaching IDR27.35 trillion (US$1.7 billion) in June 2023.
A combination of conventional and Sharia-based VC investments, the number was an increase from December 2022’s position of IDR25.94 trillion.
As seen in the following graphic (in IDR trillion), with the blue graphic representing conventional VC and the red graphic representing Sharia-based VC, the steady increase signifies investors’ trust in the potential of the Indonesian tech startup ecosystem, despite back-to-back global crises.
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The number of VC firms operating and investing in Indonesia also remains consistent at 55 organisations.
According to AMVESINDO Chairman Eddi Danusaputro in a press statement, this signifies positive movements in the industry.
“However, there is still a need for a pentahelix collaboration between involved parties, including the government and VC firms, in order to achieve stronger and more exponential growth,” he said.
In order to achieve that, AMVESINDO proposed five recommendations to support the growth of the VC industry in Indonesia:
- The association calls for separating the category of VC firms from financing firms. This separation is based on the consideration that the role of VC firms in Indonesia is still relatively small in the non-bank financial industry
- The association also calls for a separation between VC firms that focus on financing and those that focus on equity participation, completed with different sets of regulations for both categories
- The association highlights the need for incentives, stronger regulation and licensing, and education to promote VC investments to local investors
- The association also aims to encourage regional VC firms to conduct more equity participation investments
- The association supports collaboration to strengthen the VC investments industry through education and certification
e27 noted in a recent listicle about the Indonesian startup ecosystem that VC investments in H1 2023 were mostly dominated by early stage startups in various verticals. There are also a number of acquisition and international expansion moves made by Indonesian startups, which were previously known to put a stronger focus on the local market.
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Image Credit: RunwayML
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