Venture capital business is a business obtaining its financing through many sources such as financial schemes and capital participation. Then the company will use the fund to develop a venture capital partner or debtor business. In Indonesia, venture capital business is a direct investment instrument that has been thriving over the years due to the country’s attractive investment outlook, emerging markets, diverse demographics, and unique geographical conditions.
In this guide, you will know where the trend of venture capital is headed in Indonesia and how you can set up one.
Reasons Behind the Growth of Venture Capital Companies in Indonesia
The growth of the venture capital industry in Indonesia has been explosive during the past several years and the number of investments has increased more than 60 fold.
In 2017, a total of US$3 billion was collected in venture capital and it was twice the amount as compared to 2016.
The government of Indonesia is no doubt thrilled with the influx of venture capital money as it has contributed to the flourishing of local businesses, increasing spending and growing job opportunities. These are all good indicators of a healthy economy.
To encourage more venture capital investments, President Jokowi has also driven policies such as tax credits and subsidy programs. Money from venture capital not only bridges the gaps that cannot be done by existing businesses in Indonesia, but it also has fewer limitations when compared to conventional financing methods.
Other reasons that boost venture capital growth in Indonesia include the following:
- Wealthy groups and individuals exist in Indonesia
- Increasing demand for data mining and management especially in fintech
- Surging number of startups
Some of the most well-known venture companies in Indonesia are MDI Ventures, Convergence Ventures, BRI Ventures, East Venture and Ideosource.
Requirements for Starting a Venture Capital Business in Indonesia
Venture capital companies can conduct business activities including venture funds management and fee-based service activities with approval from the Indonesian Financial Services Authority.
Permitted types of legal entities for starting a venture capital business are limited liability company, cooperative, and limited partnership.
Other requirements are detailed below:
- IDR 50 billion paid-up capital for a limited liability company
- IDR 25 billion paid-up capital for a cooperative
- IDR 25 billion paid-up capital for a limited partnership company
- All paid-up capital must be paid in cash
- A venture capital company of foreign investment can only be set up in the form of a limited liability company with maximum foreign ownership of 85%
Establishment Procedure for Venture Capital Business in Indonesia
A venture capital business license must be obtained from the OJK before venture capital business activities can be conducted by a venture capital firm. Here’s a brief explanation of the process:
- The Board of Directors applies for the business license at OJK by submitting required documents.
- OJK approves or rejects the application within 30 business days upon the receipt of the application.
- Once the application is approved, the firm will receive the business license and can proceed with the business activities no later than 6 months after the receipt of the license.
How Cekindo can Assist
Cekindo offers you and your business a brand new beginning in Indonesia with our best experience and knowledge.
We help you to start your business across the country with a host of cutting-edge services that minimise your overall venture capital business setup in Indonesia.
We are a decade-old professional business consultants, and we work closely with our clients to ensure all efficient communications and outcomes for company registration, licensing, business outsourcing, legal advice, and other business services.
We’ll guide you to set up your venture capital company in Indonesia based on your budget and requirements, complying with all legal procedures.
Fill in the form below to send us your enquiry.