MORE LEGAL CERTAINTY NEEDED, SAY OBSERVERS
Even before the scandals surrounding TaniHub, Investree and Koinworks, Indonesia’s technology sector was already grappling with a prolonged “tech winter” characterised by slowing business activity, dwindling venture capital funding and widespread layoffs.
According to start-up data platform Tracxn, Indonesian technology companies raised just US$213 million in 2025, an 85 per cent drop from the US$1.4 billion raised at the market’s peak in 2023.
The fraud scandals and subsequent prosecution of venture capital executives risk deepening that downturn, experts said, as investors become even more selective.
“Investors will continue to seek deals in Indonesia, but they’re less likely to be active, with these cases adding further gloom to an already challenging period,” Jon Russell, a start-up consultant and editor of the Asia Tech Review newsletter, told CNA.
The effect could be even more pronounced for government-linked venture capital firms.
“Their entire investment process and governance will be under a microscope. They will be more cautious, but not in a way that necessarily helps,” said Rama of DSX Ventures.
“The risk is they become over-lawyered, slow and risk-averse, which means they’ll miss deals and won’t back early-stage founders the way a (venture capital firm) should.”
But observers also argue the industry’s recent challenges offer an opportunity to reset.
The collapse of several high-profile start-ups has exposed weaknesses in governance, financial oversight and due diligence, they said.
Investors are likely to scrutinise companies more closely, while founders may have to shift their focus from chasing ever-higher valuations to building sustainable businesses.
“Funds, founders and other stakeholders have now become aware of the need for checks and balances, including deeper due diligence, stronger board oversight, independent audits and robust corporate governance,” said Huda of CELIOS.
Still, experts caution that stronger governance alone will not restore confidence, and that Indonesia needs to make a clearer distinction between legitimate business risk and criminal conduct.
“Indonesia still needs start-ups. There are major gaps in financial services, healthcare, education, logistics and productivity that start-ups can help fill,” Russell of Asia Tech Review said.
But stakeholders need more legal certainty, said Rama of DSX Ventures.
“When the people managing state capital start calculating their personal legal risk before every investment decision, they stop making the decisions that matter. You can’t fix that with better due diligence checklists,” he said.
“Until the system draws that line with clarity, the smartest capital in Indonesia will sit on the sidelines.”