Indonesian Startups Still Dependent on Foreign Funding, CELIOS Highlights Role of Local VCs

The Indonesian startup ecosystem continues to face challenges regarding the availability of domestic funding. Nailul Huda, Director of Digital Economy at the Center of Economic and Law Studies (CELIOS), estimates that only about 10%-15% of funding for Indonesian digital startups originates from domestic venture capital (VC) firms. The majority of funding still comes from foreign investors, including those from the United States, China, and Singapore.

According to Huda, this dependence on foreign funding makes startup investment vulnerable to changes in global market conditions. An increase in the cost of funds abroad can suppress investment in local digital startups. “As a result, when the cost of funds abroad increases, investment in local digital startups declines. Ultimately, our digital startups will experience a prolonged tech winter,” Huda told KONTAN on Sunday (9/8/2026).

These limitations have also prompted a number of Indonesian digital startups to seek funding through Singapore, even though, according to Huda, the source of investment could originate from Indonesia, either directly or indirectly. On the other hand, governance issues and fraud within startups have made VCs more cautious in channelling investments. This situation has the potential to further suppress funding for startups that need capital to grow their businesses.

“The role of venture capital must be deeper, not just as a capital injector, but also as a mentor for startup management,” Huda stressed. He believes this mentorship is necessary to help startups maintain company performance while strengthening business governance.