Indonesia to tighten rules for foreign venture capital

In a press conference, officials from Indonesia's Financial Services Authority (OJK) said that foreign VC funds that hope to invest in Indonesian start-ups will be required to acquire Indonesian business licenses starting in 2016. In addition, foreign GPs will be encouraged to form joint ventures with Indonesian VC funds.

OJK said the move is meant to provide more information to regulators to help prevent potential illegal activities such as money laundering. The changes are also seen as a way to promote the local VC industry and protect Indonesian GPs from being squeezed out, since larger foreign competitors will have to partner with them to do business.

Indonesia's growing start-up sector has attracted considerable attention from foreign GPs. Companies that received funding in 2015 from outside the country included game studio Touchten Games, which raised an undisclosed amount of Series C funding from US-based 500 Startups and Japanese gaming giant Gree, and restaurant discovery app Qraved, which raised $8 million from Richmond Global Ventures and China's Gobi Partners.

Several domestic VCs have already explored JVs with foreign partners. One example is Convergence Ventures, which agreed to a financial and strategic partnership with Chinese search and web services giant Baidu in November.

The two firms will trade technical resources and expertise, with Baidu benefitting from Convergence's Indonesia experience as it expands in the country and Convergence's portfolio companies taking advantage of Baidu's network in China. They also plan to launch a joint co-working space for early-stage companies in Indonesia.

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• Topics
• Southeast Asia
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• Indonesia
• Southeast Asia
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