After a successful incorporation, small and emerging firms with growth potential frequently lack finances to get off the ground and may find it difficult to obtain funding from banks. As a result, non-bank external finance is required. Venture capital refers to the financial assistance that investors provide to new businesses and firms.
The venture capital businesses that offer such funds frequently assume that the ideas, products, and other start-ups dealings in which they are investing will eventually provide a profit. Banks, wealthy investors, and other financial institutions are among the venture capital firms.
It is also worth mentioning that venture capital in Indonesia may contain more than just money; it can also include:
- Technical expertise
- Help with business development
Though private equity investors take a risk by investing, the prospective profits are frequently appealing because they earn equity in the company, meaning that they can become significant decision-makers.
How can Venture Capital in Indonesia Help Startups?
Venture capital, which is often acquired from investors by venture capital firms and then deployed to startups, aids those startups in achieving the following goals:
Reasons for the Increase in Indonesia’s Venture Capital Firms
While Singapore has long been known as the “Silicon Valley of Southeast Asia”, Indonesia has not always been associated with startup innovation. However, venture capital businesses in Indonesia have been on the rise, with US$6.7 billion in venture capital received in 2021.
According to Kearney’s research, the Indonesian startup ecosystem is rapidly expanding, despite being younger than VCs in other Asian countries such as China, Japan, and India.
Sebastian Togelang, a Kejera Ventures investor, said that Indonesia was little-known in Silicon Valley since it was rarely discussed. Furthermore, other Asia-Pacific investors were not as interested in or as aware of Indonesian venture capital investments as they are now. The following are some of the reasons for this:
How to Start a Venture Capital Firm in Indonesia?
A recent BBBC poll named Indonesia as one of the finest areas in the world to start a business, even ahead of the United States and Australia. An idea and a willingness to try are the foundations of starting a business. There are a few requirements that a potential investor must meet in order to start a venture capital firm, whether as a foreign or domestic operator:
Venture capital (VC) is a form of investment for early-stage, innovative businesses with strong growth potential.
The main risks include:
Poor management by the startup owners which can lead to failure and loss of contributed funds by business angels.
Market trends which can shift the needs and make venture capital firms operate at losses.
Indonesia accepts foreign investors either independently or through partnership with a domestic firm if they abide by the rules and regulations governing the capital firms.
Digital industries dealing in technology contents and e-commerce including cloud services.