Critical Point for Startup Development in Indonesia Is in the Regulations

A fintech startup engaged in peer to peer lending (online loans), Investree, said that regulations would be a critical point that determined the development of the creative and tech-companies industries in Indonesia. The reason is that the creative industries and companies are still new and developing rapidly.

Investree CEO Adrian Gunadi said that the role of the government to drive this industry is very important, especially related to regulations or frameworks. Therefore, the company not only looks at the market and business model but also sees regulations made.

Therefore, according to Adrian, the government must be able to create the right balance between regulations by including sufficient space for corporate innovation. This is important because regulations are often too strict. This might make room for innovation more narrow.

Adrian mentioned one of the strict regulations related to collateral valuation used by banks in providing credit. He felt very different from the guarantee in Investree’s assessment. According to him, guarantees in fin-tech valuation are more diverse and adjust to the company’s business model.

What Investree see here is not only collateral assets from fixed income or tangible assets but also cash flow purchases and sales. This also includes digital transactions so they can form a digital footprint on the process.

Mindset Needed in Collaboration between Government and Technology Companies

Adrian also mentioned that there must be a collaborative mindset between the government and beginners. “We need a collaborative mindset to continue working together to create a successful supporting ecosystem. There must be a balance between regulation and innovation. Light touch regulations, as mentioned by President Jokowi,” he said. What is meant by thought patterns include:

1. Make a plan and road map

He explained that making clear plans and roadmaps can help. He also stressed that the regulation does not have to limit innovation from companies. According to Adrian, investors will be more confident to invest in companies when the rules are clear.

2. No need to limit innovation

Then, to support this step, the government through the Ministry of Tourism and Creative Economy (Kemenparekraf) is currently encouraging the use of intellectual property assets as a guarantee in assessing credit to banks. This is to facilitate access to capital for beginners.

This is Kemenparekraf’s step to start facilitating companies from upstream to downstream. Hopefully, intellectual property will be included as part of the collateral for granting capital or credit.

The guarantee itself is one of the five indicators assessed by banks before giving credit to businesses. However, for start-up companies, this is difficult to fulfill because the size of the collateral applied by the bank is different from what the company has.

Increased Confidence in Investing Requires Clear Regulations

Meanwhile, as a fin-tech loan company, Investree is increasingly focused on financing short-term SME supply chains. Investree is also one of the distribution partners of the Ministry of Finance in marketing Government Bonds (SBN). The company should develop soon.

It was reported that Investree Series C funding is still ongoing. This company is not sure when the funds will be closed. “Yes, not yet, (funds) are still in process,” Investree Co-Founder & CEO Adrian Gunadi said previously during the AFPI Anniversary.

Adrian continued that series C funding was specifically held for company expansion in the region. He was also reluctant to determine the amount of fundraising and investors involved. “It depends on the needs. We have not confirmed it,” he said.

Previously, Salaam Gateway reported that Investree would close its fundraising later this year. In addition to regional expansion, Investree wants to intensively develop business units following sharia principles next year. Meanwhile, Investree is the only fin technology startup in Indonesia with a loan license from the Financial Services Authority (OJK).