At the beginning of September, Jakarta prosecutors paraded three suspects in an alleged USD 25 million corruption and money laundering scandal involving investment funds at agriculture startup TaniHub.
The case has reverberated through Indonesia’s startup ecosystem, casting a spotlight on governance weaknesses, because it implicates two prominent venture capital firms owned by state enterprises: BRI Ventures, owned by Bank Rakyat Indonesia, and MDI Ventures, owned by telecommunications operator Telkom Indonesia.
BRI Ventures’ former CEO, Nicko Widjaja; its former head of investment, William Gozali; and the former vice president of investment at MDI Ventures, Aldi Adrian Hartanto were named as suspects in the case. Their detention came five weeks after prosecutors arrested TaniHub’s former CEO, Ivan Arie Setiawan; former board member Edison Tobing and former MDI Ventures CEO Donald Wihardja.
What is making waves is that the TaniHub case is not a one-off governance scandal. Late last year, a whistleblower at aquaculture technology company eFishery, whose backers include SoftBank and Singaporean state investment firm Temasek, reported irregularities in the company’s financial records, prompting investors to launch a probe and forensic audit. That probe reported that the company’s revenue for the January to September 2024 period had been inflated fivefold.
Three eFishery executives, including founder and former CEO Gibran Huzaifah Amsi El Farizy, were later named suspects by Indonesian police, along with former vice president Angga Hadrian Raditya and former vice president for aquaculture financing Andri Yadi.
“This is a wake-up call and momentum for startups in Indonesia to improve,” former minister of communication and information Rudiantara told Nikkei Asia.
Investment data demonstrates how stark the crisis is. According to DealStreetAsia’s “Southeast Asia Startup Funding Report: H1 2025,” venture capital funding in Indonesia was just USD 80 million in the first half of the year, a steep drop from the USD 200 million logged during the same period in 2024.
Total funding in 2024 was only USD 440 million, a 95% decline from the USD 9.44 billion recorded in 2021. Separate data shows Indonesia, Southeast Asia’s largest economy, has fallen behind neighbors such as the Philippines in terms of startup investment. This is stark realignment compared to a few years ago when Indonesian businesses such as GoTo Group—created through a merger between ride-hailing app Gojek and online shopping app Tokopedia—and travel app Traveloka attracted investment that pushed their valuations into the billions of dollars.
Moreover, figures from the past two years show that nearly all of this capital has gone to early-stage startups, with no funding for later-stage businesses this year.
Investor wariness about weak governance among startup founders in Indonesia is a key cause for concern, said Rudiantara, who was minister between 2014–2019 and is now a senior official at the Indonesian Governance Development Foundation. “The tech winter in Indonesia and ASEAN is impacted by governance issues, resulting in a shortage of funding for later-stage startups,” he said.
Chandra Firmanto, managing partner at Jakarta-based venture capital firm Indogen Capital, said due diligence was often compromised at the peak of the startup boom.
“In one fundraising round, we told a startup that we would need a month to review their financial statements, but they told us that others only needed two weeks,” he said, adding that the scandals have served as “shock therapy” for the investor community, with funds now scrutinizing their portfolios more thoroughly.
“With the current cases we’re seeing, we apparently dodged a bullet,” he said, declining to name the company.
To address these governance concerns, Southeast Asia’s venture capital associations in April launched a “maturity map” for the region’s startup ecosystem aimed at strengthening governance.
“The Southeast Asia private capital ecosystem has grown rapidly and delivered substantial inbound investment to the region over the last decade or more. However, poor governance conditions and their impact on investment flows and perception can endanger the speed of this development,” the guideline document said.
eFishery and TaniHub rose to prominence over the last decade, driving disruption and innovation while reaching notable valuation milestones. At its peak, eFishery was valued at USD 1.4 billion and employed 2,000 people, while TaniHub raised USD 81.5 million in two funding rounds, claimed to support 110,000 farmers and 350,000 consumers, and was lauded by then-President Joko Widodo in a 2019 presidential election debate.
Nailul Huda, an economist for the digital economy at the Center of Economic and Law Studies, said that investors need to take a more hands-on approach to governance.
“Investors often take a passive stance toward company performance, focusing narrowly on financial results,” he told Nikkei. “What is needed is closer alignment with the continuity of a startup’s mission, which often involves disruptive business models that require sufficient time and steady support to succeed.”
Using eFishery’s loans from HSBC, OCBC, NISP and DBS as an example, he said: “By nature, startup investments take years to mature, with value often measured through long-term growth and valuations rather than short-term profitability. That is why instances such as eFishery’s claim of profitable growth enabling it to secure bank loans should have raised red flags for investors.”
Eddi Danusaputro, chairman of the Indonesia Venture Capital Association for Startups (Amvesindo), said another red flag should be the length of a startup’s cash burn model. “If it lasts for five to seven years, and you’re still burning cash, that’s certainly unhealthy and there’s something wrong with the business model,” he said.
In the wake of the scandals, the government, through the Financial Services Authority (OJK), has stressed that the eFishery and TaniHub cases do not reflect the broader state of the venture capital industry. “The venture capital industry still plays a strategic role in supporting funding for startups and MSMEs (micro, small and medium enterprises),” Agusman, OJK’s supervisor for multifinance, venture capital and other financial services, said in a statement released in September.
Last year, OJK drew up a five-year road map to guide the development of Indonesia’s venture capital industry.
It places governance and risk management at the center of its agenda, identifying them as the first pillar to strengthen venture capital firms.
“This road map outlines the efforts OJK will undertake, together with the industry, to build venture capital institutions that are sound, integrity-based, and focused on financing startups to support MSME development and consumer protection, while contributing to national economic growth,” Agusman said.
But just two years into the road map, high-profile cases involving MDI Ventures and BRI Ventures have highlighted persistent governance lapses.
Some startups have grasped the governance nettle and are reaping the rewards. Andi Taufan Garuda Putra, founder and CEO of Amartha, a 15-year-old fintech company focused on microfinance, said good governance begins with leadership values. “Integrity as a leader is a must. It all starts with us to see how far we will go.”
Since its founding, Amartha has stuck to its core mission of financing MSMEs managed predominantly by women in rural areas. It has disbursed loans worth IDR 35 trillion rupiah (USD 2.1 billion) to 3.3 million customers.
“Our business is managing risk. … And what we have done so far is uphold our mandate,” Putra said.
Unlike many startups that pursued aggressive cash burning strategies before the 2020 pandemic, Amartha has taken a more cautious approach.
“We invest in resources, talent, and marketing that align with cash-flow capabilities,” Putra said. “The formation of Amartha’s business is not solely aimed at investor profit, but to create value for small business partners in rural areas.”
This has paid off. In June, it secured USD 55 million in funding from Sweden’s Swedfund, Finland’s Finnfund, and the Belgian Investment Company for Developing Countries (BIO). This was part of a broader USD 199 million syndicated loan arranged by the International Finance Corporation, the private sector arm of the World Bank Group.
As Amartha’s president commissioner, Rudiantara highlighted another key to the company’s resilience: focusing on continuity of business development rather than chasing rapid growth. This contrasts conspicuously with TaniHub, which quickly expanded from B2B funding to peer-to-peer lending.
In August, Amartha launched a payment system and e-wallet service within its user ecosystem, an expansion strategy that took at least a decade to finalize.
Danusaputro and Firmanto both said the ongoing slump in tech funding is being prolonged by difficult macroeconomic conditions, notably the US Federal Reserve’s high interest rates, which continue to restrain capital flows into developing economies. “Globally, Southeast Asia remains weak, not just Indonesia,” Danusaputro said.
“Funding is still happening, but what’s being looked at is no longer solely the top line, but rather the path to profitability, sustainability and other measures. “For investors, he added, the exit pathway is critical. “Investing is easy, divesting is difficult,” Danusaputro said.
Firmanto added that “VCs have money, but they’re only looking for good late-stage deals where startups are in a cash crunch and in need of support.”
However, he said he remained cautiously optimistic, noting that money from developed economies which are barely growing and experiencing population decline is beginning to flow more into Southeast Asia, with Indonesia seen as a key market.
“This is especially the case with Hong Kong acting as a funnel for funds from China, as well as from South Korea and Japan,” he said.
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.