Digital Fraud Scandals Trigger Investment Exodus from Indonesian Startups

A string of high-profile digital fraud cases involving Indonesian startups has triggered a dramatic collapse in investor confidence, with new data showing the country's once-booming tech sector now ranks fifth in Southeast Asia by deal value, down from its traditional position near the top.

The funding retreat follows scandals at companies including Investree and eFishery, prompting venture capital associations across the region to develop a unified governance framework to restore trust and guide future investment decisions.

Background and Context

Indonesia's startup ecosystem, long celebrated as Southeast Asia's second-largest innovation hub after Singapore, has faced mounting scrutiny over corporate governance failures. The recent fraud allegations have exposed structural weaknesses that foreign investors find increasingly difficult to ignore, according to industry insiders.

"Foreign investors have become extremely cautious. Their confidence in Indonesia's startup ecosystem has clearly declined," said Eddi Danusaputro, Director of BNI Venture, during a December 2025 industry discussion in Jakarta. The assessment reflects broader concerns about transparency and financial management within the sector.

Key Figures and Entities

The shift in investment patterns has been documented by data firms including DealStreetAsia and Kickstart Ventures, which tracked regional startup funding through the first half of 2025. Their analysis reveals that while Indonesia maintained its position as the second-most active market by deal count, the country plummeted to fifth place by total investment value.

Leading the regional response to the crisis, the Singapore Venture & Private Capital Association (SVCA) has partnered with national venture capital bodies—including Indonesia's Amvesindo, Thailand's TVCA, Vietnam's VPCA, and Malaysia's MVCA—to establish comprehensive governance standards for the sector.

Legal and Financial Mechanisms

The funding data paints a stark picture of Indonesia's declining fortunes. Total startup investment across Southeast Asia reached $1.85 billion in the first six months of 2025, with Indonesia capturing just $78.5 million—a 67 percent year-on-year decline that places the country behind the Philippines, Vietnam, and Malaysia by deal value.

Singapore maintained its regional dominance with $1.2 billion in funding, while emerging markets Vietnam ($275 million, up 169 percent) and Malaysia ($196 million, more than doubled) demonstrated substantial growth. Even the Philippines ($86.4 million) outpaced Indonesia despite its significantly smaller economy.

The uncertainty has prompted investors to migrate toward "New Retail" concepts—digitally enabled conventional businesses with transparent, familiar models. Companies like coffee chain Kopi Kenangan and beef brand Sei Sapi have reportedly experienced oversubscribed funding rounds as investors seek lower-risk opportunities with clear revenue streams.

"Investors feel safer because they understand the business. Implicitly, the perceived risk of being misled by founders is also lower," Danusaputro explained. This risk aversion has created a funding gap at both extremes: seed-stage investments are now considered too speculative, while late-stage deals are often rejected due to inflated valuations.

International Implications and Policy Response

In response to the crisis, Southeast Asian venture capital associations have developed the Startup Maturity Map—a graduated framework that aligns governance requirements with a company's growth stage and funding level. The initiative represents the first regional attempt to standardize startup governance across borders.

The framework recognizes that early-stage companies cannot be held to the same standards as established businesses, but it establishes clear thresholds for when certain governance mechanisms must be implemented. "For example, early-stage startups may not yet be able to produce audited financial statements. However, if a company reaches Series C and still lacks audited accounts, that becomes a serious issue," Danusaputro noted.

The maturity map outlines specific requirements at each funding stage. Pre-revenue companies (under $5 million in funding) must maintain basic governance structures and monthly cash flow reports. Early-stage companies ($5-20 million) need monthly profit and loss statements, fiduciary duty training for founders, and clear delegation of authority.

By the early growth phase ($20-75 million), companies are expected to appoint internal auditors, implement enterprise resource planning systems, undergo external audits, and establish audit and risk committees. Growth-stage companies ($75-200 million) must appoint independent directors, conduct stress testing, obtain ISO certification, and implement third-party whistleblowing mechanisms.

"As startups grow, their governance frameworks, tools, and documentation must grow with them. That is the core idea behind the maturity map," Danusaputro emphasized. The regional approach reflects growing recognition that startup governance cannot be left to market forces alone, particularly when cross-border investment is at stake.

Sources

This report draws on statements made by Eddi Danusaputro, Director of BNI Venture, during the 2025 Year-End Review discussion hosted by IFSoc in Jakarta on December 19, 2025. Investment data was sourced from DealStreetAsia and Kickstart Ventures reports covering Southeast Asian startup funding in the first half of 2025. The Startup Maturity Map framework was developed collaboratively by the Singapore Venture & Private Capital Association (SVCA) in partnership with Amvesindo (Indonesia), TVCA (Thailand), VPCA (Vietnam), and MVCA (Malaysia).