Why Startup Investment Failures Are Viewed as Corruption Cases?

Prosecutors at the Corruption Court in the Central Jakarta District Court, on Thursday 21 May 2026, demanded prison terms of 9–12 years for the former executive of the technology agriculture startup TaniHub Group and its investors, namely venture capital firms MDI Ventures and BRI Ventures. The case concerns alleged corruption and money laundering in the management of a USD 25 million investment fund by MDI Ventures and BRI Ventures into TaniHub Group during 2019–2023. The prosecutors also sought 12 years’ imprisonment and a Rp 1 billion fine each for former MDI Ventures CEO Donald Wihardja and former MDI Ventures Investment Vice President Aldi Adrian Hartanto. The prosecutors also sought 11 years for former BRI Ventures CEO Nicko Widjaja. Meanwhile, former Vice President of Investment at BRI Ventures, William Gozali, faced a nine-year sentence. Both were also ordered to pay fines of Rp 1 billion each. Nicko, via his personal Instagram account now managed by his lawyers, posted on Saturday 22 May 2026, saying he felt crushed, as did his wider family. He wrote that he found it hard to understand the prosecutors’ charges, and claimed that every business carries risk, hoping the funding provided by BRI Ventures and MDI Ventures to TaniHub Group could be evaluated on its fundamentals. “There is no abuse of power. No conflicts of interest, kickbacks, personal gains, malice, and all actions were undertaken in good faith. Today I am broken, but that does not shake my belief in the facts, the process, justice, and truth,” Nicko wrote. The post quickly went viral on social media, with many netizens questioning the prosecutors’ rationale. Some argued that investing in a startup that ultimately failed is part of business risk, the ‘laws of nature’ of innovation, and not a wrongdoing that harms the state. The law firm Soesilo Aribowo & Partners, representing Donald Wihardja and Aldi Adrian Hartanto, said the charges were unfair, arguing the prosecutors could not differentiate each defendant’s role. “The prosecutors’ indictment does not reflect the facts revealed in court. It is merely a copy of the indictment. We will file detailed objections to the indictment in the defence notes read in court on Wednesday 3 June 2026,” the firm said. TaniHub Group has previously faced operational and financial problems, culminating in warehouse closures and staff cuts in 2022. Its lending platform, TaniFund, also ran into trouble, and its licence was revoked by the Financial Services Authority (OJK) in 2024. Rhenald Kasali, professor of Economics and Business at the University of Indonesia (FEB UI), said on Saturday that technology startups can be seen as game changers, and that how they operate differs from more traditional sectors, including venture capital. He argued that if a banking conglomerate runs venture capital, it should be separated from the parent bank to avoid operational and logical conflicts in banking. “Venture capital firms combine a range of technology startups to nurture an information technology ecosystem while bearing the possibility of large profits or losses; investing inherently does not immediately strengthen the ecosystem,” Kasali said. Rama Mamuaya, a startup industry observer, explained that venture capital firms pool capital from institutional investors—such as pension funds, foundations, and wealthy families—and invest in startups by purchasing equity rather than lending. The fundamental difference from banking is that banks typically issue loans repayable with interest, regardless of profitability, whereas venture capital firms hold equity. If a startup grows and its value increases, the VC’s shares rise; if the startup fails or goes bankrupt, the VC’s shares fall. The risk is shared. If losses arise from products failing, bankruptcy, or losing to competitors, that is business risk, not a legal violation. Venture capital firms usually seek an exit within 7–10 years via three main routes: (1) the startup lists on a stock exchange; (2) acquisition by a larger company; (3) secondary sale to other investors. “Venture capital firms do not operate like conventional businesses. Their model is portfolio-based, not project-based,” Kasali added. This is what differentiates venture capital from traditional business models. For example, a bank with 100 debtors, 30 defaulting, would suffer a large loss, whereas a venture capital firm managing 20 portfolios could distribute risk rather than rely on a single project.