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Venture capital rare bright spot in sluggish recovery
The recent IPO of Bukalapak reflects widespread excitement over the prospects of tech start-ups in Indonesia, and amid all the gloom in economic affairs during the coronavirus pandemic, venture capital is a welcome exception.
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Venture capital investment in Indonesia is on the rise as even conventional companies are jumping on the bandwagon in what some see as fear of being left behind. (Shutterstock/-)
T
he COVID-19 pandemic has made investors anxious, or at least cautious, about an economy that is taking longer than expected to recover, but there has been no shortage of money going into start-ups and tech companies as venture capital bets on the megatrend of digitalization.
According to the Financial Services Authority (OJK), venture capital financing or placement in Indonesia has risen 24.86 percent year-on-year (yoy) to Rp 16 trillion (US$1.11 billion) in June, almost matching the 25.47 percent yoy increase recorded in June 2020.
Edward Ismawan Chamdani, treasurer at Venture Capital and Startup Indonesia Association (Amvesindo), said the real figure was far higher than the recorded one, as the agency did not include investment from unlicensed venture capitalists or those headquartered outside the country.
Edward said a particular company could receive up to $3 billion on each investment. He estimated total venture capital assets in Indonesia were at least three times the figure recorded by the authorities.
“[The OJK’s] figure includes only licensed [venture capital] companies. Indonesia’s venture capital market is big. The trend [is expected to] strengthen,” Edward told The Jakarta Post on Tuesday.
So far, the pandemic had not substantially affected investments, he said. While some had decided to hold back on investments last year as the pandemic hit the economy, most of those investments had come through this year as investors were getting used to the pandemic.
“They will no longer wait and see [this year]. Investors agree that [the pandemic] should not stop investment. If there is potential in a good start-up, they will still invest their money,” Edward added.
