Indonesia’s startup ecosystem still faces challenges in domestic funding, with only around 10%-15% of digital startup funding estimated to come from local venture capital (VC) firms, while most funding comes from foreign investors, including the United States, China, and Singapore (09/08).

Nailul Huda, Director of Digital Economy at the Center of Economic and Law Studies (CELIOS), said the dependence on foreign funding makes Indonesian startup investment vulnerable to changes in global market conditions.

He said higher funding costs overseas could reduce investment in Indonesian digital startups. This could eventually lead to a prolonged tech winter for local digital startups.

“As a result, when the cost of funds overseas increases, investment in local digital startups decreases. In the end, our digital startups will experience a prolonged tech winter,” Nailul told KONTAN on Sunday (9/8/2026).

Domestic VC Provides Only 10%-15% of Startup Funding

Nailul estimated that domestic VC firms provide only around 10%-15% of funding for Indonesian digital startups.

The majority of startup funding still comes from foreign investors. According to Nailul, this dependence makes the availability of investment vulnerable to changes in global market conditions.

Regulations Challenge Domestic Venture Capital

Nailul also highlighted regulations that he said do not yet fully support the development of domestic VC firms.

One of the issues is the lack of certainty about the position of VC firms under tax regulations, including fiscal incentives.

These limitations have also encouraged several Indonesian digital startups to seek funding through Singapore. Nailul said the investment sources could actually come from Indonesia, either directly or indirectly.

Startup Governance and Fraud Raise Investor Caution

Governance problems and fraud involving startups have also made VC firms more cautious when providing investment.

According to Nailul, this situation could further reduce funding for startups that need capital to develop their businesses.

Celios Urges Government to Support Domestic VC

Nailul encouraged the government to consider incentives for VC firms to increase funding for domestic startups.

“The role of venture capital must go deeper, not only as a provider of capital, but also as a mentor for startup management,” Nailul said.

He said this support is needed to help startups maintain their business performance and strengthen business governance.

PHOTO: FREEPIK

This article was created with AI assistance.

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