The Association of Indonesian Venture Capital and Startups, known for short as Amvesindo, is an independent organization that convenes venture capital firms and startups in Indonesia. Amvesindo recently announced that, as of June 2023, Indonesian VC companies have jointly accrued IDR 27.35 trillion (USD 1.79 billion) worth of assets under management (AUM).
The latest figure marks a 5.43% year-to-date increase compared to the total AUM of IDR 25.94 trillion (USD 1.7 billion) recorded in December 2022. This growth can be attributed to the consolidation of both conventional and Sharia-compliant VC companies in Indonesia.
“The venture capital industry is progressing favorably, as evidenced by the growth in venture capital industry assets during the first half of 2023. However, collaborative efforts involving a [five-pronged] approach from various stakeholders, including the government and venture capital companies, are still essential to achieve even better or exponential growth,” said Eddi Danusaputro, chairman of Amvesindo.
With an uptick in investment activity, Amvesindo has put forth several initiatives to Indonesia’s Financial Services Authority, aiming to enhance the contributions of the VC industry. These initiatives include:
- Separation of VC companies: This entails decoupling VC companies from financing companies, enabling the former to enhance their role and make more significant contributions to the industry. This recommendation stems from observations that VC companies have hitherto played relatively limited roles within the non-banking financial sector, where they are presently classified as financing companies.
- Distinguishing financing-focused and equity participation-focused VC companies: This proposes differentiating between VC companies that focus primarily on financing and those centered on equity participation. The significance of this differentiation lies in the need to standardize regulations between financing companies and equity participation-based VC firms, despite their distinct business models. The current regulations have led to a decline in the number of VC companies.
- Incentives for investors: This seeks to incentivize investors by strengthening regulations linked to joint investment contracts (JIC) and streamlining future licensing processes. Additionally, joint education initiatives involving the association and other pertinent stakeholders will be vital to attract more local investors to participate in VC funds.
- Encouraging equity participation: This recommends VC companies, particularly those based in the region, to partake in equity-related business activities. Achieving this shift could lead to a higher percentage of equity-based financing products that can be leveraged by regional VC companies.
- Enhancing industry competence: This entails collaborative efforts among stakeholders to strengthen the VC industry through competency enhancements and certifications. The Amvesindo Institute was established to deliver such efforts, with plans to secure authorization from Indonesia’s national professional certification agency.
“Regarding the improvement of industry competence, we [have] also just established [the] Amvesindo Institute … in the first semester of 2023. Amvesindo Institute operates as a revenue and profit oriented endeavor so that, as an association, Amvesindo can operate more effectively. Amvesindo Institute is open to collaborating with companies in a B2B model. Amvesindo also invites non-venture capital companies to join us so that innovation through technology can be further enhanced,” said Dennis Pratistha, vice chairman I of Amvesindo.
Established in 2016, Amvesindo comprises 85 members representing a diverse array of entities, including VC companies, startups, service providers, among others. The association serves as a platform for dialogue among its members to advocate for the interests of VC companies while liaising with relevant financial service entities.
Amvesindo was founded by five Indonesian VC firms, namely Astra Financial (PT Astra Mitra Ventura), Celebes Capital (PT Celebes Artha Ventura), PT Mandiri Capital Indonesia, PT Pertamina Dana Ventura, and PT Ventura Giant Indonesia. These firms recognized the importance of VC companies coming together to address pressing issues and established Amvesindo to present a unified voice alongside other industry stakeholders.